Colorado Legal Ethics

V. LAW FIRMS AND ASSOCIATIONS

5.1   Rule 5.1 Responsibilities of a Partner and Supervisory Lawyer

5.1:100   Comparative Analysis of Colorado Rule

¥ Primary Colorado References: CO Rule 5.1
¥ Background References: ABA Model Rule 5.1, Other Jurisdictions
¥ Commentary:

5.1:101      Model Rule Comparison

Colo.RPC 5.1 and its Comment are identical to MR 5.1 and its Comment.

5.1:102      Model Code Comparison

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

5.1:200   Duty of Partners to Monitor Compliance with Professional Rules

¥ Primary Colorado References: CO Rule 5.1(a)
¥ Background References: ABA Model Rule 5.1(a), Other Jurisdictions
¥ Commentary: ABA/BNA ¤ 91:201, ALI-LGL ¤ 12, Wolfram ¤ 16.2

To date, Colorado courts have not considered this section and no Colorado Bar Association formal or informal ethics opinion has been written concerning this section.

5.1:300   Monitoring Duty of Supervising Lawyer

¥ Primary Colorado References: CO Rule 5.1(b)
¥ Background References: ABA Model Rule 5.1(b), Other Jurisdictions
¥ Commentary: ABA/BNA ¤ 91:201, ALI-LGL ¤ 12, Wolfram ¤ 16.2

To date, Colorado courts have not considered this section and no Colorado Bar Association formal or informal ethics opinion has been written concerning this section.

5.1:400   Failing to Rectify the Misconduct of a Subordinate Lawyer

¥ Primary Colorado References: CO Rule 5.1(c)
¥ Background References: ABA Model Rule 5.1(c), Other Jurisdictions
¥ Commentary: ABA/BNA ¤ 91:201, ALI-LGL ¤ 5, Wolfram ¤ 16.2

To date, Colorado courts have not considered this section and no Colorado Bar Association formal or informal ethics opinion has been written concerning this section.

5.1:500   Vicarious Liability of Partners

¥ Primary Colorado References: CO Rule 5.1
¥ Background References: ABA Model Rule 5.1, Other Jurisdictions
¥ Commentary: ABA/BNA ¤ 91:201, ALI-LGL ¤¤ 8, 10

To date, Colorado courts have not considered this section and no Colorado Bar Association formal or informal ethics opinion has been written concerning this section. See also SectionÊ1.1:600, Vicarious Liability.

5.2   Rule 5.2 Responsibilities of a Subordinate Lawyer

5.2:100   Comparative Analysis of Colorado Rule

¥ Primary Colorado References: CO Rule 5.2
¥ Background References: ABA Model Rule 5.2, Other Jurisdictions
¥ Commentary:

5.2:101      Model Rule Comparison

Colo.RPC 5.2 and its Comment are identical to MR 5.2. The Colorado comments to RuleÊ5.2 are identical to MRÊ5.2 comments.

5.2:102      Model Code Comparison

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

5.2:200   Independent Responsibility of a Subordinate Lawyer

¥ Primary Colorado References: CO Rule 5.2(a)
¥ Background References: ABA Model Rule 5.2(a), Other Jurisdictions
¥ Commentary: ABA/BNA ¤ 91:201, ALI-LGL ¤ 5, Wolfram ¤ 16.2

To date, Colorado courts have not considered this section and no Colorado Bar Association formal or informal ethics opinion have been written concerning this section.

5.2:300   Reliance on a Supervisor's Resolution of Arguable Ethical Issues

¥ Primary Colorado References: CO Rule 5.2(b)
¥ Background References: ABA Model Rule 5.2(b), Other Jurisdictions
¥ Commentary: ABA/BNA ¤ 91:201, ALI-LGL ¤ 5, Wolfram ¤ 16.2

To date, Colorado courts have not considered this section and no Colorado Bar Association formal or informal ethics opinion have been written concerning this section.

5.3   Rule 5.3 Responsibilities Regarding Nonlawyer Assistants

5.3:100   Comparative Analysis of Colorado Rule

¥ Primary Colorado References: CO Rule 5.3
¥ Background References: ABA Model Rule 5.3, Other Jurisdictions
¥ Commentary:
¥ CO Commentary: Fleishman, Ethical Responsibilities Regarding Non-Lawyer Assistance, 44 Trial Talk 26 (Nov. 1995)

5.3:101      Model Rule Comparison

Colo.RPCÊ5.3 and its Comment are identical to the Model Rule and its Comment.

The Committee Comment emphasizes that all lawyers are responsible for the acts of those they supervise, regardless of the lawyerÕs status as partner, associate or otherwise.

5.3:102      Model Code Comparison

DR 4-101(D) provided that a lawyer Òshall exercise reasonable care to prevent his employees, associates, and others whose services are utilized by him from disclosing or using confidences or secrets of a client . . . .Ó Similarly, DR 7-107(J) provided that Ò[a] lawyer shall exercise reasonable care to prevent his employees and associates from making an extrajudicial statement that he would be prohibited from making under DR 7-107.Ó

5.3:200   Duty to Establish Safeguards

¥ Primary Colorado References: CO Rule 5.3(a)
¥ Background References: ABA Model Rule 5.3(a), Other Jurisdictions
¥ Commentary: ABA/BNA ¤ 91:201, ALI-LGL ¤¤ 4, 5, Wolfram ¤ 16.3
¥ CO Commentary: Fleishman, Ethical Responsibilities Regarding Non-Lawyer Assistance, 44 Trial Talk 26 (Nov. 1995)

In instances where the use of lay legal assistants by the attorney would not constitute aiding in the unauthorized practice of law, or where lay representation is expressly authorized by the Supreme Court, the attorney must ensure certain conduct by the legal assistant. CBA Formal Op. 79, Use of Legal Assistants in Client Representation (Feb. 18, 1989, addendum 1995). Specifically, the assistant must possess the requisite knowledge, judgment and skill necessary for proper and competent representation of the clientÕs interests under all the circumstances. Id.

The CBA Ethics Committee recognizes the value of using legal assistants to increase the attorneyÕs ability to provide quality professional services at a reasonable cost. CBA Formal Op. 61, Legal Assistants (Oct. 23, 1982, addendum 1995). Opinion 61 specifically addresses the ethical guidelines for a lawyer in directing legal assistants who are not licensed lawyers. The opinion addresses seven general responsibilities of the supervising attorney.

1. A lawyer shall ascertain the assistantÕs abilities, limitations and training, and must limit the assistantÕs duties and responsibilities to those that can be competently performed in view of those abilities, limitations and training.

2. A lawyer shall educate and train assistants with respect to the ethical standards which apply to the lawyer.

3. A lawyer is responsible for monitoring and supervising the conduct of assistants to prevent the violation of the ethical standards which apply to the lawyer, and the lawyer is responsible for assuring that assistants do not do anything which the lawyer could not do.

4. A lawyer shall continually monitor and supervise the work of assistants in order to assure that the services rendered by the assistant are performed competently and in a professional manner.

5. A lawyer is responsible for assuring that the assistant does not engage in the unauthorized practice of law.

6. A lawyer shall assume responsibility for the improper conduct of assistants and must take appropriate action to prevent recurrence of improper behavior and activities.

7. Assistants who deal directly with lawyerÕs clients must be identified to those clients as nonlawyers, and the lawyer is responsible for obtaining the understanding of the clients with respect to the role of and the limitations which apply to those assistants.   

Id. There are no Colorado cases that specifically address an attorneyÕs duty to establish safeguards.

5.3:300   Duty to Control Nonlawyer Assistants

¥ Primary Colorado References: CO Rule 5.3(b)
¥ Background References: ABA Model Rule 5.3(b), Other Jurisdictions
¥ Commentary: ABA/BNA ¤ 21:8601, ALI-LGL ¤¤ 4, 5, Wolfram ¤ 16.3

People v. Stewart, 892 P.2d 875 (Colo. 1995), involved an attorney who allowed clients to meet first with her nonlawyer assistant, who collected a retainer.. In some cases, the nonlawyer assistant dispensed legal advice to the clients. Allowing clients to meet repeatedly with the nonlawyer assistant and to receive legal advice from him evidenced the attorneyÕs failure to properly supervise and monitor her assistants and constituted a violation of Colo.RPC 5.3(b) and (c). The attorney charged with these and other violations of the Colorado Rules of Professional Conduct was suspended from the practice of law for three years (she suffered from a mental disorder that caused the misconduct). Id.

In People v. Gennings, 808 P.2d 839, 844, fn. 4 (Colo. 1991), the Supreme Court stated that the District Attorney did not violate the Code of Professional Responsibility by commissioning a nonattorney to conduct a polygraph examination who allegedly coerced an inculpatory statement from a defendant through improper means. The Court noted that the examiner was acting at the request of and as an agent of the District AttorneyÕs office in administering the polygraph examination to the defendant. ÒThe District Attorney, as her principal, could be responsible for any misconduct on her part if the District Attorney ordered or ratified the misconduct.Ó The Court cited MR 5.3, Colorado not yet having adopted it.

See also Abstract 98/99-05 (Private investigator retained by attorney secretly tape-recorded a witness interview). In CBA Formal Op. 84, Listing of Support Personnel Names on Letterhead and Business Cards (Feb. 26, 1990, addendum 1995), the Colorado Bar Association opined that a law firm providing business cards to nonlawyer employees or placing nonlawyersÕ names on letterhead is responsible for the use to which nonlawyer employees put such business cards or letterheads. The Committee further noted that a lawyer may not avoid his or her ethical responsibility with respect to nonlawyer assistants by claiming the violation was the responsibility of a nonlawyer employee. ÒA lawyer is responsible for the ethical conduct of such personnel. [DR 3-101(A) and Colorado Ethics Opinion (Oct. 23, 1982)].Ó

Similarly, in CBA Formal Op. 98, Dual Practice (Dec. 14, 1996), the Colorado Bar Association Ethics Committee noted the importance of recognizing the potential application of Rule 5.3 when a lawyer is engaged in multiple separate professions or businesses, and has nonlegal employees.

5.4   Rule 5.4 Professional Independence of a Lawyer [Restrictions on Form of Practice]

5.4:100   Comparative Analysis of Colorado Rule

¥ Primary Colorado References: CO Rule 5.4
¥ Background References: ABA Model Rule 5.4, Other Jurisdictions
¥ Commentary:

5.4:101      Model Rule Comparison

Colo.RPCÊ5.4 differs from MR 5.4. Colo.RPCÊ5.4(a)(2) permits a lawyer who undertakes to complete unfinished legal work of a deceased lawyer to pay to the deceased lawyerÕs estate a portion of the fees earned that fairly represents the value of the services rendered by the deceased lawyer. Colorado Rule 1.17 then governs all sales of a law practice. (See also MR 1.17.) MR 5.4(a)(2) applies to purchases of the practices of deceased, disabled or disappeared lawyers, and permits the purchasing lawyer pursuant to MR 1.17 to pay the agreed upon purchase price. The Colorado Supreme Court adopted MRÊ5.4(a)(2) in concept, but it changed the wording of Colo.RPCÊ5.4(a)(2). The Colorado Comments note that subsections (a), (b) and (c) are virtually identical to DR 3-102(A), DR 3-103(A), and DR 5-107(B) respectively.

Colo.RPCÊ5.4(d) is significantly different from MRÊ5.4(d). While MRÊ5.4(d) prohibits lawyers from practicing with or in the form of professional corporations or associations only if the circumstances outlined in Rule 5.4(d)(1)-(3) exist, Colo. RPCÊ5.4(d) prohibits lawyers from practicing with or in the form of a professional corporation or association or a limited liability company, except in accordance with CRCPÊ265 (which includes limited liability partnerships).

The Comment to Colo.RPC 5.4 includes the Comment to MRÊ5.4 verbatim. In addition, the Colorado Comment includes several additional paragraphs that discuss: (a)Êguidance to better protect the lawyerÕs ability to exercise independent professional judgment in a professional corporation setting, and (b)Êways for lawyers who are employees of legal assistance organizations to protect and maintain their professional independence.

5.4:102      Model Code Comparison

The Colorado Committee Comment to Colo.RPCÊ5.4 states that the Colorado Rule is virtually identical to the corresponding Colorado Code sections (DRÊ3-102(A), DRÊ3-103(A), DRÊ5-107(B), and DRÊ5-107(C)).

5.4:200   Sharing Fees with a Nonlawyer

¥ Primary Colorado References: CO Rule 5.4(a)
¥ Background References: ABA Model Rule 5.4(a), Other Jurisdictions
¥ Commentary: ABA/BNA ¤ 41:801, ALI-LGL ¤ 60, Wolfram ¤¤ 16.4, 16.5

Colo.RPCÊ5.4 prohibits a lawyer or law firm from sharing legal fees with a nonlawyer so as to avoid the possibility of nonlawyer interference with the exercise of the lawyerÕs independent professional judgment. CBA Formal Op. 87, Collaboration With Non-Lawyers in Preparation and Marketing of Estate Planning Documents (July 14, 1990, revised Dec. 14, 1991, addendum 1995). Additionally, such a prohibition prevents the total fee paid by the client from being unreasonably high. Id..

Sharing compensation with a nonlawyer violated DR 3-102, the predecessor to Rule 5.4. Id. A lawyer may employ a nonlawyer to provide services, but payment for those services may not be based on a percentage of the lawyerÕs fee. See People v. Easley, 956 P.2d 1257 (Colo. 1998) (an attorneyÕs contingent fee arrangement with private investigators based on the lawyerÕs recovery of attorneyÕs fees violated Colo.RPCÊ5.4(a) as it impermissibly Òshared legal fees with a nonlawyerÓ). See also People v. Shipp, 793 P.2d 574 (Colo. 1990) (a lawyerÕs agreement with a prison inmate to pay her a referral fee for retainers he received from her referrals was an impermissible sharing of fees with a nonlawyer); People v. Bengert, 885 P.2d 241 (1994).

In CBA Formal Op. 105, Opinion on Temporary Lawyers (May 22, 1999), the Colorado Bar Association Ethics Committee noted that where the services of a placement agency are employed to obtain a temporary lawyer, both the temporary lawyer and engaging lawyer or law firm must insure that the financial arrangements do not involve the sharing of legal fees with nonlawyers in violation of Colo.RPCÊ5.4(a). Similarly, CBA Formal Op. 98, Dual Practice (Dec. 14, 1996), notes that lawyers involved in practicing law and a separate business are prohibited from sharing legal fees with a nonlawyer.

CBA Formal Op. 87, Collaboration with Non-Lawyers in Preparation and Marketing of Estate Planning Documents (July 14, 1990, revised Dec. 14, 1991, addendum 1995), discussed fee splitting or partnership with a nonlawyer. Specifically, the Committee noted that a lawyer may not pay a commission to the nonlawyer salesperson of the estate documents, or have a prearranged split of the fee for services between the lawyer and the nonlawyer.

On the other hand, the Colorado Bar Association Ethics Committee opined that it is ethical for an attorney employed by a lender on a salaried basis to seek recovery of an attorney fee on behalf of the lender pursuant to an attorneysÕ fee clause, when the fee claimed is only a pro rata portion of those amounts paid to the lawyer in the form of salary or benefits. CBA Formal Op. 72, Recovery of Attorney Fee by Lender Using In-House Counsel (April 19, 1986, revised Jan. 19, 1991, addendum 1995). While the attorneysÕ fees recovered go to the lender, it is only reimbursement for the attorneysÕ fees paid to the in-house lawyer. See also CBA Formal Op. 54, Fees Charged in Foreclosures or Redemption (undated, addendum 1995). See also CBA Formal Op. 63, LawyerÕs Relationship with a Traffic Clinic (Feb. 19, 1983, addendum 1995).

5.4:300   Forming a Partnership with Nonlawyers

¥ Primary Colorado References: CO Rule 5.4(b)
¥ Background References: ABA Model Rule 5.4(b), Other Jurisdictions
¥ Commentary: ABA/BNA ¤ 91:401, ALI-LGL ¤ 60, Wolfram ¤¤ 16.4, 16.5

People v. Bengert, 885 P.2d 241 (Colo. 1994), involved an attorney who formed a partnership with a nonlawyer where some of the activities of the partnership involved the practice of law, violating DR 3-103(A), the precursor to Colo.RPC 5.4(b). The attorney was suspended from the practice of law for one year and one day for this violation. See generally CBA Formal Op. 63, LawyerÕs Relationship with a Traffic Clinic (Feb. 19, 1983, addendum 1995).

Rule 5.5(b) specifically addresses the prohibition on the practice of law by nonlawyers. The Committee Comment to Rule 5.5 specifically notes that the phrase Ònonlawyer,Ó as used in the old DR 101 has been replaced with Òperson who is not a member of the Colorado bar.Ó The Committee claims Òthe latter phrase is better, especially since it should eliminate some of the confusion that now arises when lawyers who are licensed elsewhere relocate to Colorado and begin work . . . before gaining admission to the Colorado bar.Ó Colo.RPC 5.5 Committee Comment. No Colorado cases address this change in the rule.

See also CBA Formal Op. 63, LawyerÕs Relationship with a Traffic Clinic (Feb. 19, 1983, addendum 1995); ÒNegotiation and the Unauthorized Practice of Law,Ó 23 Colo. Law 361 (1994).

There is no requirement that out-of-state lawyers appearing in federal courts in Colorado be affiliated with local (Colorado) counsel. The United States District Court for the District of Colorado and the United States Court of Appeals for the Tenth Circuit define the requirements for admission to practice before them, without distinction as to whether the attorney applicant is licensed by the State of Colorado or by some other state. See D.C. Colo. L.R. 83.5A; Fed. R. App. P. 46, Tenth Circuit Rule 46, and Section 0.2:270, supra.

5.5:240      Performing Legal Services in Another Jurisdiction

There are no Colorado cases or Formal Opinions on this topic. CRCP 241.1 (Ch. 20, Colorado Rules of Procedure Regarding Lawyer Discipline . . .) provides that every lawyer licensed to practice law in the State of Colorado is subject to the disciplinary jurisdiction of the Supreme Court in all matters relating to the practice of law. The practice of law subject to the jurisdiction of the Colorado Supreme Court is not limited by its terms to Colorado.

Given the recent California Supreme Court decision in Birbrower, Montalbano, Condon & Frank, P.C. v. Superior Court, 17 Cal. 4th 119, 949 P.2d 1 (1998) (holding New York law firm violated California misdemeanor unauthorized practice of law in preparing to represent a California affiliate of a longstanding New York client of the firm in an arbitration in California), one wonders whether the Colorado Supreme Court would literally apply subsection a so as to accept an out-of-state determination of unauthorized practice of law seemingly different than ColoradoÕs.

5.5:300   Assisting in the Unauthorized Practice of Law

¥ Primary Colorado References: CO Rule 5.5(b)
¥ Background References: ABA Model Rule 5.5(b), Other Jurisdictions
¥ Commentary: ABA/BNA ¤ 21:8201, ALI-LGL ¤ 4, Wolfram ¤ 15.1

Rule 5.5(b) prohibits assisting a person who is not a member of the Colorado bar in the performance of the unauthorized practice of law. The purpose of this rule is to protect Òthe public in its need for and reliance on the integrity and competence of those who undertake to render legal services.Ó CBA Formal Op. 87, Collaboration With Non-Lawyers in Preparation and Marketing of Estate Planning Documents (July 14, 1990, addendum 1995). The Colorado Supreme Court has held that Òaiding a nonlawyer in the unauthorized practice of law is a violation of a duty owed to the legal profession.Ó People v. Macy, 789 P.2d 188, 189 (Colo. 1990).

What constitutes the unauthorized practice of law is not precisely defined, but is determined by the court on a case-by-case basis. See Denver Bar AssÕn v. Public Util. CommÕn, 154 Colo. 273, 391 P.2d 467 (1964). Generally, advising, counseling or assisting others with their legal rights will constitute the practice of law. Id. See People v. Cain, 957 P.2d 346 (Colo. 1998) (determining preparation of deeds of trust and a promissory note constituted the practice of law).

A lawyer may not assist a nonlawyer corporation that provides legal services to third parties. CBA Formal Op. 87, Collaboration With Non-Lawyers in Preparation and Marketing of Estate Planning Documents (July 14, 1990, addendum 1995). For example, an attorney who counsels a non-attorney corporation or nonlawyers on the sale of living trusts is considered to have engaged in the unauthorized practice of law. See People v. Cassidy, 884 P.2d 309 (Colo. 1994). See also People v. Volk, 805 P.2d 1116 (Colo. 1991) (an attorneyÕs review of living trust documents for a nonlawyer assisted a nonlawyer in the unauthorized practice of law); People v. Schmitt, 126 Colo. 546, 251 P.2d 915 (1952) (the creation and sale of trust documents by nonlawyers constitutes the unauthorized practice of law).

In People v. Felker, 770 P.2d 402 (Colo. 1989), a lawyer allowed a lawyer under suspension in another state and permanently enjoined from the practice of law in Colorado to provide legal advice to clients on multiple occasions. The court held that she had aided a nonlawyer in the unauthorized practice of law. In People v. Stewart, 892 P.2d 875 (Colo. 1995), the court held that the delegation of legal duties to an unsupervised nonlawyer assistant constituted aiding a person not a member of the Colorado bar in the unauthorized practice of law.

See generally, CBA Formal Op. 63, LawyerÕs Relationship With a Traffic Clinic (Feb. 19, 1983, addendum 1995); CBA Formal Op. 98, Dual Practice (Dec. 14, 1996) (risk of assisting unauthorized practice of law when involved in second occupation with nonlawyers); CBA Formal Op. 61, Legal Assistants (Oct. 23, 1982, addendum 1995).