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End-of-life notice: American Legal Ethics Library

As of March 1, 2013, the Legal Information Institute is no longer maintaining the information in the American Legal Ethics Library. It is no longer possible for us to maintain it at a level of completeness and accuracy given its staffing needs. It is very possible that we will revive it at a future time. At this point, it is in need of a complete technological renovation and reworking of the "correspondent firm" model which successfully sustained it for many years.

Many people have contributed time and effort to the project over the years, and we would like to thank them. In particular, Roger Cramton and Peter Martin not only conceived ALEL but gave much of their own labor to it. We are also grateful to Brad Wendel for his editorial contributions, to Brian Toohey and all at Jones Day for their efforts, and to all of our correspondents and contributors. Thank you.

We regret any inconvenience.

Some portions of the collection may already be severely out of date, so please be cautious in your use of this material.


Colorado Legal Ethics

1.8   Rule 1.8 Conflict of Interest: Prohibited Transactions

1.8:100   Comparative Analysis of Colorado Rule

Primary Colorado References: CO Rule 1.8
Background References: ABA Model Rule 1.8, Other Jurisdictions
Commentary:

1.8:101      Model Rule Comparison

Colo.RPC 1.8 is virtually identical to the Model Rule with two minor exceptions and one major exception. The minor changes occur in Colo.RPC 1.8(a)(2) and 1.8(i). Colo.RPC 1.8(a)(2) sets forth more stringent requirements when a lawyer proposes to enter into a business transaction with a client or to otherwise acquire a pecuniary interest adverse to the client. While MR 1.8(a)(2) states that the client must be given "a reasonable opportunity to seek the advice of independent counsel in the transaction," Colo.RPC 1.8(a)(2) further requires the lawyer to inform the client "that the use of independent counsel may be advisable." (Both the Colorado and Model Rules also require that the transaction and the terms on which the lawyer acquires the interest be "fair and reasonable," that those terms be fully disclosed in writing to the client, and that the client consent in writing to the transaction and terms.)

The second minor change occurs in Colo.RPC 1.8(i), which expands the Model Rule's list of family relationships that may result in personal but not imputed disqualification to include "one who has a cohabiting relationship" with the lawyer. The Comment to Colo.RPC 1.8 reflects this change from the Model Rule.

Colo.RPC 1.8(e) addresses the provision of financial assistance to a client in connection with pending or contemplated litigation. The Colorado Rule substantially narrows the circumstances in which a lawyer may advance funds to a client. MR 1.8(e)(1) expressly permits the repayment of advanced court costs and expenses to be contingent on the outcome of the matter; MR 1.8(e)(1) permits a lawyer representing an indigent client to pay the client's court costs and expenses. The Colorado Rule does not include either of these provisions. Rather, Colo.RPC 1.8(e) expressly provides that a lawyer may advance costs and expenses only if "the client remains ultimately liable for such expenses," and that "[a] lawyer may forego reimbursement of some or all of the expenses of litigation" only "if it is or becomes apparent that the client is unable to pay such expenses without suffering substantial financial hardship." Thus, the Colorado Rule, unlike the Model Rule, does not permit repayment of advanced costs and expenses to be contingent on the outcome of the matter. While the phrasing is different in the two rules, it does appear that Colo.RPC 1.8(e), like MR 1.8(e)(2), would permit a lawyer to advance the costs and expenses of an indigent client without any repayment obligation, so long as the client is indigent at the time the agreement is made. For all other clients (including those who are not indigent at the time they enter into a fee agreement with the lawyer, but become indigent at some later date), the agreement must reflect that the client remains ultimately liable for repayment of advanced costs and expenses.

1.8:102      Model Code Comparison

Paragraph (a) corresponds to, though it differs from, DR 5-104(A), which provided that a lawyer "shall not enter into a business transaction with a client if they have differing interests therein and if the client expects the lawyer to exercise his professional judgment therein for the protection of the client, unless the client has consented after full disclosure. Colo.RPC 1.8(a) is broader than the Code provision in several respects. First, it expands its scope to "an ownership, possessory, security or other pecuniary interest adverse to a client" in addition to "a business transaction with a client." Second, it requires that the terms of the transaction be substantively "fair and reasonable to the client" and fully disclosed to the client. Third, it requires the lawyer to tell the client that independent counsel may be advisable, and to afford an opportunity for the client to seek the advice of independent counsel. Fourth, it requires the client's consent to be in writing. EC 5-3 stated that a lawyer "should not seek to persuade his client to permit him to invest in an undertaking of his client nor make improper use of his professional relationship to influence his client to invest in an enterprise in which the lawyer is interested."

Similar to paragraph (b), DR 4-101(B)(3) precluded a lawyer from "[u]s[ing] a confidence or secret of his client for the advantage of himself, or of a third person, unless the client consents after full disclosure" or unless one of the exceptions to the confidentiality rule applies. Colo.RPC 1.8(b) uses the phrase "information relating to representation of a client" instead of "confidence or secret" of a client, consistent with a lawyer's broader non-disclosure obligations under Colo.RPC 1.6(a). EC 4-5 echoed DR 4-101(B)(3) and further required the lawyer to prevent the misuse of client information by the lawyer's employees and associates. EC 4-6 stated that "[t]he obligation of a lawyer to preserve the confidences and secrets of his client continues after the termination of his employment."

The only provisions similar in subject matter to paragraph (c) were EC 5-5 and EC 5-6. EC 5-5 stated that a lawyer "should not suggest to his client that a gift be made to himself or for his benefit," and emphasized the risk of accepting a gift from a client. EC 5-5 further stated that "[o]ther than in exceptional circumstances, a lawyer should insist that an instrument in which his client desires to name him beneficially be prepared by another lawyer selected by the client." EC 5-6 stated that a lawyer "should not consciously influence a client to name him as executor, trustee, or lawyer in an instrument."

Paragraph (d) is substantially similar to DR 5-104(B), but refers to "literary or media" rights rather than only to "publication" rights. EC 5-4 expanded upon the restrictions set forth in the DR.

The first sentence of paragraph (e)(1) is identical to DR 5-103(B). EC 5-8 also addressed advancement of costs and expenses. The balance of Colo.RPC 1.8(e) had no counterpart in the Model Code.

Paragraph (f) is drawn largely from DR 5-107(A)(1), which required the client's consent to payment of the lawyer by a third party. EC 2-21 was to the same effect. In addition to client consent, Colo.RPC 1.8(f)(2) and (3) require, respectively, that there be "no interference with the lawyer's independence of professional judgment or with the lawyer-client relationship," and that the lawyer protect from disclosure information relating to the representation of the client. DR 5-107(B) provided that a lawyer "shall not permit a person who . . . pays him to render legal services for another to direct or regulate his professional judgment in rendering such legal services."

Paragraph (g) is substantially identical to DR 5-106. The Colorado Rule addresses criminal pleas in addition to civil settlements.

The first clause of paragraph (h), regarding an agreement prospectively limiting the lawyer's malpractice liability to a client, is similar to DR 6-102(A). EC 6-6 further advised against the prospective limitation of a client's potential malpractice claims. There was no counterpart in the Model Code to the second clause of paragraph (h), regarding the settlement of a malpractice claim with an unrepresented client or former client.

Paragraph (i) had no counterpart in the Model Code.

Paragraph (j) is substantially identical to DR 5-103(A). EC 5-7 also addressed the general undesirability of the lawyer's acquisition of a proprietary interest in the cause of action or subject matter of litigation.

1.8:200   Lawyer's Personal Interest Affecting Relationship

Primary Colorado References: CO Rule 1.8(a)
Background References: ABA Model Rule 1.8(a), Other Jurisdictions
Commentary: ABA/BNA 51:501 et seq., ALI-LGL 207, Wolfram 7.6, 8.11

[The discussion of this topic has not yet been written.]

1.8:210      Sexual Relations with Clients

[The discussion of this topic has not yet been written.]

1.8:220      Business Transactions with Clients

[The discussion of this topic has not yet been written.]

1.8:300   Lawyer's Use of Client Information

Primary Colorado References: CO Rule 1.8(b)
Background References: ABA Model Rule 1.8(b), Other Jurisdictions
Commentary: ABA/BNA 55:501-55:2001 , ALI-LGL 113-117A, Wolfram 6.7

[The discussion of this topic has not yet been written.]

1.8:400   Client Gifts to Lawyer

Primary Colorado References: CO Rule 1.8(c)
Background References: ABA Model Rule 1.8(c), Other Jurisdictions
Commentary: ABA/BNA 51:601, ALI-LGL 208, Wolfram 8.12

[The discussion of this topic has not yet been written.]

1.8:500   Literary or Media Rights Relating to Representation

Primary Colorado References: CO Rule 1.8(d)
Background References: ABA Model Rule 1.8(d), Other Jurisdictions
Commentary: ABA/BNA 51:701, ALI-LGL 48, Wolfram 9.3.3

[The discussion of this topic has not yet been written.]

1.8:600   Financing Litigation

Primary Colorado References: CO Rule 1.8(e)
Background References: ABA Model Rule 1.8(e), Other Jurisdictions
Commentary: ABA/BNA 51:801, ALI-LGL 48, Wolfram 9.2.3

[The discussion of this topic has not yet been written.]

1.8:610      Litigation Expenses

[The discussion of this topic has not yet been written.]

1.8:620      Living and Medical Expenses

[The discussion of this topic has not yet been written.]

1.8:700   Payment of Lawyer's Fee by Third Person

Primary Colorado References: CO Rule 1.8(f)
Background References: ABA Model Rule 1.8(f), Other Jurisdictions
Commentary: ABA/BNA 51:901, ALI-LGL 215, 216, Wolfram 8.8

[The discussion of this topic has not yet been written.]}

1.8:710      Compensation and Direction by Third Person

[The discussion of this topic has not yet been written.]

1.8:720      Insured-Insurer Conflicts [see also 1.7:315]

[The discussion of this topic has not yet been written.]

1.8:730      Lawyer with Fiduciary Obligation to Third Persons [see 1.13:520]

[The discussion of this topic has not yet been written.]

1.8:800   Aggregate Settlements

Primary Colorado References: CO Rule 1.8(g)
Background References: ABA Model Rule 1.8(g), Other Jurisdictions
Commentary: ABA/BNA 51:375, ALI-LGL 209, Wolfram 8.15

[The discussion of this topic has not yet been written.]

1.8:900   Agreements Involving Lawyer's Malpractice Liability

Primary Colorado References: CO Rule 1.8(h)
Background References: ABA Model Rule 1.8(h), Other Jurisdictions
Commentary: ABA/BNA 51:110l, ALI-LGL 76, Wolfram 5.6.7

[The discussion of this topic has not yet been written.]

1.8:910      Prospective Limitation of Malpractice Liability

[The discussion of this topic has not yet been written.]

1.8:920      Settlement of Legal Malpractice Claim

[The discussion of this topic has not yet been written.]

1.8:1000   Opposing a Lawyer Relative

Primary Colorado References: CO Rule 1.8(i)
Background References: ABA Model Rule 1.8(i), Other Jurisdictions
Commentary: ABA/BNA 51:1301, ALI-LGL 203, Wolfram 7.6.6

[The discussion of this topic has not yet been written.]

1.8:1100   Lawyer's Proprietary Interest in Subject Matter of Representation

Primary Colorado References: CO Rule 1.8(j)
Background References: ABA Model Rule 1.8(j), Other Jurisdictions
Commentary: ABA/BNA , ALI-LGL 47, 53, 55, Wolfram 8.13, 9.6.3

[The discussion of this topic has not yet been written.]

1.8:1110      Acquiring an Interest in Subject Matter of Representation

[The discussion of this topic has not yet been written.]

1.8:1120      Contingent Fees [see also 1.5:600]

[The discussion of this topic has not yet been written.]

1.8:1130      Lawyer Liens

[The discussion of this topic has not yet been written.]

1.8:1140      Retention of Files to Collect Fees

[The discussion of this topic has not yet been written.]