Abstracts of Responses to Letter Inquiries
The following abstracts of informal CBA Ethics Committee (Committee) letter opinions are offered as potential sources of guidance to the bar on matters of ethical concern. Because they abridge the letter opinions and omit facts and circumstances tending to identify the inquiring attorney, the abstracts are not exhaustive, and therefore should serve only as a starting point for, or supplement to, thorough research and analysis. Inquirers are advised in advance whether the opinion provided to them will be abstracted and published. The full letter opinions are not provided to persons other than the original inquirer. The letter opinions and these abstracts are issued for advisory purposes only and are not binding in any way on the Colorado Supreme Court or the Appellate Discipline Commission.
Abstract No. 2011–1
Statement of Facts
A legal professional corporation has a single shareholder who also acts as the sole director. The corporation has for a number of years employed an associate. The associate was offered an opportunity to purchase an equity interest in the corporation but, for a variety of reasons, declined. Despite the associate’s lack of equity, the shareholder wishes to change the name of the corporation to include the name of the shareholder and the associate.
Do the Colorado Rules of Professional Conduct permit the corporate name of a legal professional corporation to include the name of an attorney engaged in the corporation’s practice but who is not a shareholder?
Assuming the corporation carries malpractice insurance meeting the coverage requirements of C.R.C.P. 265(I)(A)(4), the Committee concludes that the use of the proposed firm name is permissible.
Colo. RPC 7.5 no longer prohibits law firms from practicing under a trade name, as long as it does not imply a connection with a government agency or with a public or charitable legal services organization. In addition, the trade name cannot violate Colo. RPC 7.1, which prohibits false or misleading communications about the attorney or the attorney’s services. The proposed name clearly does not imply a connection with a government agency or with a public or charitable legal services organization, so the corporation is not prohibited from including the associate’s name in the name of the firm unless it is false or misleading under Colo. RPC 7.1(a).
Ethics opinions in other states have prohibited inclusion of the name of an associate attorney in the firm name because such a name implied a general partnership, which today is a rarity. Because of the evolution in law firm structures (for example, limited liability entities and non-equity partners are permitted under C.R.C.P. 265), as well as the changes in ethical rules regarding firm names, the Committee believes that the line of reasoning in the ethics opinions of other states prohibiting the practice of including the names of associates in a corporation’s or firm’s name is no longer persuasive.
The Committee believes that consumers of legal services understand the concept of limited liability. Because the associate attorney practices in the law firm or for the corporation, the Committee does not believe the inclusion of the associate’s name would be misleading to clients or potential clients. On the contrary, the Committee believes that permitting the use of the associate’s name provides a benefit to consumers by informing them that the associate practices for the corporation.
The Committee does not address questions of law and expresses no opinion as to whether, if the associate remains an employee and the firm name is changed, the associate would be exposed to malpractice liability as if he or she were a shareholder. The Committee also does not express an opinion on the effect of its conclusion on firms that fail to maintain malpractice coverage as specified in C.R.C.P. 265.
Abstract No. 2011–2
Statement of Facts
A former city attorney (attorney) is now associated with a private law firm. The attorney’s practice focuses on local government issues, representing local governments and persons who have business before local governments. The attorney has been engaged to represent the interests of a client with respect to an ordinance that was adopted when the attorney was the city attorney. The attorney submitted a critique of the ordinance to the city, suggesting that it might violate state and/or federal constitutional limitations.
1. Does Colo. RPC 1.11 or Colo. RPC 1.9 apply in this situation?
2. Is it permissible for the attorney to represent clients as a lobbyist with respect to an ordinance that was adopted while the attorney was city attorney?
Conclusion and Analysis
1. Colo. RPC 1.11 is intended to govern the issue of when an attorney may represent a client in a matter before the former employing government entity. In some circumstances, however, former government attorney may be subject to Colo. RPC 1.9 and the conflict of interest provisions of that section.
Colo. RPC 1.11 applies. The Comment to that rule indicates that application of the rules should not be so restrictive as to inhibit transfer of employment to and from the government. Were the rules overly restrictive, the government’s ability to attract qualified candidates would be inhibited. Thus, a broader interpretation is used in this context than that used in Colo. RPC 1.9, which construes the conflict definition more narrowly. A former government attorney could, in theory, comply fully with the requirements of both rules; however, the result would render Colo. RPC 1.11(a) superfluous in adverse representations, and enlarge the scope of the attorney’s resulting disability beyond that contemplated by either rule standing alone. Because it is clear that Colo. RPC 1.11 is intended to define conflict of interest issues as they relate to obligations of former government attorneys, the Committee believes that Colo. RPC 1.11 occupies the field to the exclusion of sections (a) and (b) of Rule 1.9.
2. Yes. The attorney’s representation of the city as city attorney at the time the ordinance was considered and adopted is not sufficient to rise to the level that would be necessary to trigger the conflict of interest provisions of Colo. RPC 1.11.
Colo. RPC 1.11 indicates that an attorney shall not represent a private client in connection with a matter in which the attorney participated personally and substantially as a public officer or employee, unless the appropriate government agency consents after consultation. An initial examination of this question appears to indicate that the attorney’s situation may trigger the conflict of interest provisions of Colo. RPC 1.11; however, it first must be determined whether the representation at issue constitutes a matter. If no matter is involved, then the level of involvement is immaterial, and no waiver is required.
Colo. RPC 1.11(d) states that the term “matter” includes, “any judicial or other proceeding, application, request for a ruling or other determination, contract, claim, controversy, investigation, charge, accusation, arrest, or other particular matter involving a specific party or parties and any other matter covered by the conflict of interest rules of the appropriate government agency.” (Emphasis added.)
It is apparent to the Committee that because there are no identifiable parties, other than the city itself, and it is not possible to define a discrete set of isolatable transactions in this instance, the attorney is not prevented by conflict of interest rules from representing clients in the scenario described.
Abstract No. 2011–3
Do certain types of group lawyer advertising constitute impermissible for-profit referral services? Formal Ethics Opinion 106 describes a referral service to include an entity that indirectly or directly operates for the purpose of referring potential clients to lawyers. The Committee uses this description as a basis for the following discussion.
Under the applicable rules of professional conduct, an attorney may not pay a for-profit referral service to obtain clients because such services are considered referral services and not advertising.
Colo. RPC 7.2(a) provides that “a lawyer may advertise services through written, recorded or electronic communication, including public media.” Colo. RPC 7.2(b) provides that a lawyer “shall not give anything of value to a person for recommending the lawyer’s services.” Comment 5 to Colo. RPC 7.2 states that, while a lawyer may advertise and communicate as permitted by the rule, he or she “is not permitted to pay another person for channeling professional work.”People v. Zimmerman, 938 P.2d 131, 132-33 (Colo. 1997) (determining that an attorney who paid a for-profit referral agency for referrals violated Colo. RPC 7.2(c), now Colo. RPC 7.2(b)). See also Colo. RPC 1.5(e) (prohibiting an attorney from receiving and paying referral fees). Colo. RPC 7.2(b), carves out three exceptions to this prohibition and allows an attorney to: “(1) pay the reasonable costs of communications permitted by this rule; (2) pay the usual charges of a not-for-profit lawyer referral service or legal service organization; and (3) pay for a law practice in accordance with Rule 1.17.” (Emphasis added.)
[I]f company offers to provide a lawyer with all personal injury referrals within a particular geographic area in return for a monthly fee, the fee well may be an impermissible referral fee rather than a permissible publication cost.
Formal Ethics Opinion 106 at 4-330 (2007). An attorney likely violates Colo. RPC 1.5(e) and 7.2(b) if he or she purchases leads or referrals from a for-profit company. The key fact is that the attorney pays to have calls or leads directed to him or her by a service provider who is in the business of obtaining client leads for profit. Such a service provider appears to be a for-profit referral service that channels professional work to the attorney in exchange for a fee. Payment of such a fee violates Colo. RPC 7.2(b).
Abstract No. 2011–4
Does Colo. RPC 1.11(d)(2)(ii) limit the ability of a lawyer employed in a managerial capacity by a governmental agency to negotiate for private employment with a person or entity that is a party or attorney in any matter in which the agency is involved?
An attorney on inactive status who serves in a managerial capacity of a government agency (1) confers with the government’s counsel (counsel) with respect to the agency’s interpretation of statutes and its policies and procedures without reference to any specific matter, person, or entity; (2) negotiates with persons or entities concerning agency procedures and advise counsel during negotiations with persons or entities as to broad policy questions without having any decision making authority; (3) reviews counsel’s motions and briefs in specific cases that are in litigation; (4) advises agency employees concerning investigations they are performing and whether to take those matters to an adversarial proceeding or litigation; and (5) prepares legal opinions concerning the construction of applicable statutes or ordinances.
Colo. RPC 1.11(d)(2)(ii) applies to you regardless of whether (1) your responsibilities involve the practice of law; and (2) you are on active or inactive status. The rule provides that “a lawyer currently serving as a public officer or employee . . . shall not . . . negotiate for private employment with any person who is involved as a party or as a lawyer for a party in a matter in which the lawyer is participating personally and substantially. . . .” (Emphasis added.) It is not limited to lawyers employed by governmental entities as lawyers but applies to every lawyer employed by a governmental agency “as a public officer or employee.”
Under Colo. RPC 1.11(d)(2)(ii), a lawyer who is a public employee may not negotiate for employment in connection with a “matter” in which the lawyer is “personally and substantially” involved. “This Rule prevents a lawyer from exploiting public office for the advantage of a private client.” Cmt. 1 to Colo. RPC 1.11.
Whether a lawyer is participating “personally and substantially” in a “matter” is a highly fact-specific inquiry. Therefore, the Committee is unable to provide a definitive opinion but can provide some guidance as to the interpretation of these terms and how these interpretations might apply to your various roles with the agency.
“Matter” Under Colo. RPC 1.11. Under Colo. RPC 1.11, the term “matter” is limited to a particular matter involving a specific party. The rule states that the term “matter” includes: “(1) any judicial or other proceeding, application, request for a ruling or other determination, contract, claim, controversy, investigation, charge, accusation, arrest or other particular matter involving a specific party or parties.” Colo. RPC 1.11(e) (emphasis added). The term “matter” thus “contemplates a discrete and isolatable transaction or set of transactions between identifiable parties.” CBA Formal Op. 57: Conflicts of Interest (March 21, 1981, addendum 1995) (interpreting Colo. RPC 1.11(a)’s predecessor provision, DR 9-101(B), and quoting ABA Formal Op. 342) (internal quotations omitted).
Accordingly, it is a former public employee’s personal knowledge “of particular background facts and data”—and not a general “knowledge of procedures and substantive law of an agency”—that gives rise to a conflict of interest under Colo. RPC 1.11. CBA Formal Op. 57. See also ABA Annotated Model Rules (2006) at 206 (definition of “matter” excludes legislation, rulemaking, and other policy determinations); cf. D.C. Ethics Op. 297 (2001) (former U.S. Department of Interior lawyer who had been actively involved in proposed regulations may represent Indian tribe in negotiated rulemaking regarding regulations; rulemaking of general application is not a “matter” within meaning of Colo. RPC 1.11(a)).
“Personal & Substantial” Participation. Although Colo. RPC 1.11 does not define “personal and substantial” participation, the term requires more than a mere “passing upon” of a matter by a government employee. CBA Formal Op. 57. “Substantial responsibility” requires that the official becomes “personally involved to an important, material degree, in the investigative or deliberative processes regarding the transactions or facts in question.” CBA Formal Op. 57 (quoting ABA Formal Op. 342) (emphasis added) (internal quotations omitted). See also Osborn v. Dist. Ct., 619 P.2d 41, 45 (Colo. 1980). Several Colorado cases discuss the requirement of personal and substantial participation in applying the predecessor rule—DR 9-101(B)—to Colo. RPC 1.11.
In Osborn, a former deputy district attorney joined a firm that was retained by the defendant in a case in which she had been involved while working for the government. 619 P.2d at 44. The Colorado Supreme Court held that the attorney had personally and substantially participated in the prosecution of the defendant while working as a deputy district attorney, because the attorney interviewed the victim, the arresting officers, and important prosecution witnesses. She also discussed the case with the lead prosecutor, with whom she shared an office. Id. at 45.
In Cleary v. District Court, 704 P.2d 866 (Colo. 1985), on the other hand, the Supreme Court held that a former deputy district attorney had not had a personal and substantial participation because he had had no personal involvement in the investigation, preparation, or prosecution of the case and had had no discussions about the case. Id. at 871. The Court noted that the requirement of substantial responsibility requires actual rather than theoretical conduct and that the attorney’s mere opportunities to learn facts about the case while acting as deputy district attorney were not relevant in determining whether his actions violated DR 9-101(B). Id. at 870-71. See also People v. Anaya, 732 P.2d 1241 (Colo.App.1986) (former deputy district attorney not disqualified for substantial responsibility where, although attorney engaged in informal discussions with prosecutors, the attorney had not read the defendant’s file or interviewed the defendant or other witnesses), rev’d on other grounds, 764 P.2d 779 (Colo. 1988).
Note, however, that as to the narrow issue of negotiating employment under C.R.C.P. 1.11(d)(2)(ii), the rule applies only to “matters” on which a public officer or employee is currently working—it is not a continuing rule of disqualification. See C.R.C.P. 1.11(d)(2)(ii) (“a lawyer . . . shall not . . . negotiate for private employment with any person who is involved as a party or as a lawyer for a party in a matter in which the lawyer is participating personally and substantially . . .”) (emphasis added).
In light of these interpretations of “matter” and “personal and substantial” participation, it appears that Colo. RPC 1.11(d)(2)(ii) could apply to some of the matters on which you have worked. For example, if you are personally negotiating with particular persons concerning a pending matter, contributing to briefs in pending matters in litigation, or advising agency employees about a pending matter (whether before or during litigation), those would appear to be “matters” in which you are participating “personally and substantially”—meaning that you could not negotiate for employment with the adverse parties or their lawyers during their pendency. However, your consultations with counsel with respect to the interpretation of particular statutes, ordinances, or agency procedures would not appear to constitute “matters” in which you are participating “personally and substantially” so as to trigger Colo. RPC 1.11(d)(2)(ii)—even if those interpretations or procedures might indirectly affect particular persons. We reiterate that, for those tasks you determine to be “matters” within the meaning of Colo. RPC 1.11(d), the rule applies only for the duration of the matter.
Abstract No. 2011–5
An attorney’s office is paperless—that is, all client files, documents, information, and attorney work product (client information) is maintained electronically. The attorney has an office network that includes a network server, and the client files and records are backed up by the network at regular intervals.
1. Does the use of an Internet service for storage and backup of client files and information violate an attorney’s duty of confidentiality to his or her clients?
2. Does the failure to engage such a service violate a duty to adequately protect and secure client information?
Conclusions and Analysis
A lawyer’s ethical obligation with respect to maintaining the confidentiality of client information is governed by Colo. RPC 1.6, which generally provides that a lawyer shall not reveal client information except where: (1) the client gives informed consent; (2) the disclosure is impliedly authorized to carry out the representation; or (3) there are other disclosures permitted by the exceptions set forth in Rule 1.6. The Committee does not believe that the exceptions to the rule apply to this scenario. Colo. RPC 1.6, cmt. 1, states that a lawyer must act competently to safeguard the information relating to the representation of a client against inadvertent or unauthorized disclosure by the lawyer or other persons who are participating in the representation of the client or who are subject to the lawyer’s supervision. Colo. RPC 1.6, cmt. 17, further provides that a lawyer must take reasonable precautions to prevent information relating to the representation of a client from going to unintended recipients when it is being transmitted.
CBA Formal Ethics Opinion 90, adopted on November 14, 1992, generally addresses the issues of preservation of client confidences in view of modern communications technology. Opinion 90 requires that attorneys use reasonable care when using electronic communications to make certain that confidential information is not disclosed to unauthorized persons. Opinion 90 further requires that a lawyer should carefully consider the methods used for the communication of confidential information and has a duty to select communication methods that are not likely to result in unintentional disclosure of protected information.
The scenario presented indicates that the client information will be stored outside the direct control of the attorney or, at a minimum, under shared control. This raises potential ethical concerns about the confidentiality and security of the client information and whether it is adequately protected. The Committee believes that if an attorney decides to use a third-party service provider for electronic storage, he or she must use reasonable care and competently safeguard the confidential information from unauthorized access or disclosure. Reasonable care requires an adequate investigation into the selection of the service provider and a contract in which the provider represents that it will keep all information confidential and protected from unauthorized access or disclosure. Acting competently in selecting a service provider would include having sufficient knowledge of the service being provided and an understanding of the access and security provisions of the service. Although it is not possible to guarantee that client information will not be improperly accessed or disclosed, it is necessary that the attorney take reasonable care to prevent such access or disclosure.
Other state bar associations have addressed the first issue and have similarly opined. See State Bar Association of North Dakota Ethics Committee Opinion 99-03, dated June 21,1999; State Bar Association of Nevada Standing Committee on Ethics and Professional Responsibility Formal Opinion No. 33, issued February 9, 2006; Advisory Committee on Professional Ethics Appointed by the Supreme Court of New Jersey Opinion 701 dated April 24, 2006; and Alabama Ethics Opinion 2010-02, Retention, Storage, Ownership, Production and Destruction of Client Files.
With respect to the second question, the Committee believes that the same standards of reasonable care and competency apply in deciding whether to use a third-party Internet provider to store client information in addition to or instead of the attorney’s own computer backup system. The attorney has general obligations to maintain client documents and files, which would apply to this question. The Committee expresses no opinion as to whether the attorney should use an independent storage provider in addition to his or her own office backup program.