Clients' Rights During Transitions Between Attorneys, 1014 COBJ, 2014, October, Pg. 39

AuthorRob Marsh, Lisha R McKinley, J.

43 Colo.Law. 39

Clients' Rights During Transitions Between Attorneys

Vol. 43, No. 10 [Page 39]

The Colorado Lawyer

October, 2014

Articles

Clients' Rights During Transitions Between Attorneys

Rob Marsh, Lisha R McKinley, J.

About the Authors

Rob Marsh is a shareholder and director at Silver & DeBoskey, P.C., where he represents and advises businesses, governmental entities, and individuals in complex commercial, real estate, and professional matters at both the trial and appellate levels— marshr@s-d.com. Lisha McKinley is a trial attorney with Silver & DeBoskey, P.C. Her practice emphasizes commercial matters, with a focus on business, real estate, and professional responsibility issues—mckinleyl@s-d. com; www.silverdeboskey. com.

Colo. RPC 1.16(a)(3) grants clients the right to terminate the attorney-client relationship at will and select or replace counsel if the primary lawyer for the matter transitions away from the firm. This article examines the interplay between client and attorney's interests in case files and attorney's liens, the appropriate accounting and distribution of funds to avoid disputes concerning payment, and lawyers' ethical obligations to provide notice to clients where cooperation between the departing lawyer and his or her former law firm is no longer feasible.

For many attorneys, the words "consumer protection" do not immediately bring to mind a client's rights relative to a current or former attorney. Consumers of legal services, however, are no less entitled to protection from improper business practices than customers of any other business. To the contrary, an attorney's ethical obligations to current and former clients heighten the applicable standards and give rise to unique issues.

For example, Colorado law consistently recognizes a client's absolute right to counsel of his or her choice and to discharge an attorney for any or no reason.[1] No less apparent is an attorney's right to withdraw from an ongoing representation, subject to any limitations imposed by a fee agreement, court rules or orders, or the attorney's ethical obligations.2

When confronted with the actual or potential transition of an ongoing matter to a new firm, however, an attorney's personal and economic interests may no longer align with the client's interests in an efficient transition and successful conclusion of a pending matter. In that event, and particularly where there is an outstanding balance due to a departing attorney, the person who was previously the client's most zealous advocate may well become an equally motivated adversary. This article addresses some of the client's fundamental rights in such cases consistent with Colorado law and the Colorado Rules of Professional Conduct (Colo. RPC).

Notice and Full Disclosure

As an initial matter, when an attorney who had substantial responsibility for a client's case departs from a firm or withdraws from a case, the client is entitled to formal notice of the departure.3 Questions arise, however, over the content of the required notice. What can, should, and must the firm and/or attorney say to clients about the departing lawyer and the conduct of the client's business moving forward? Is there any obligation to disclose potentially damaging information about the attorney or the firm if it potentially could have a material impact on the representation or the client's choice of counsel?

A recent Colorado Court of Appeals decision addressed a firm's ethical obligation to warn clients a bout the dangers of being represented by an attorney whose abilities are compromised, but leaves unresolved the question of whether a firm could subject itself to liability for the content or lack of information it provides to clients in such a notice.4 Accordingly, in this evolving area, all concerned must tread carefully to avoid trampling the clients' rights, which are the paramount consideration in any transition.5

Colo. RPC 1.4 requires a lawyer to keep clients "reasonably informed about the status of a matter" and to "explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation." When representation terminates for any reason, the client is entitled to be sufficiently informed of his, her, or its absolute right to choose whether to continue being represented by the firm, by the departing lawyer, or by new counsel.6 A joint communication from the firm and the departing lawyer is "highly preferable."7 Nevertheless, when that is not possible, both the remaining and the departing lawyers are required to notify the client of the change in the firm's or departing lawyer's status, and to offer the client enough information to enable the client's informed selection of counsel.8

To that point, in Moye White LLP v. Beren, the Colorado Court of Appeals ruled that a client was not entitled to know that one of the attorneys representing him had a history of substance abuse, mental health, and disciplinary problems.9 In reaching that result, the court examined the common law duty to inform a client and concluded that, because the potential impact of the attorney's personal issues was not material to the representation, and the attorney was not "materially impaired" during the representation, the client did not have a right to be informed of the issues the attorney was facing or previously had faced.10 Critically, the trial court found that the attorney's work product did not suffer at any point during representation due to his personal issues, and this fact was unchallenged on appeal.11 The firm also had established monitoring programs, the attorney's suspension had been stayed by the Office of Attorney Regulation Counsel, and the firm's nondisclosure was held not to be misleading to the client.12 Consequently, there was no common law, statutory, or fiduciary duty to inform the client of the attorney's past disciplinary history, mental illness, alcoholism, or arrests.13

The decision leaves unresolved, however, related questions concerning what disclosures are permissible in connection with an attorney's withdrawal and the client's choice of counsel. For example, where concerns exist, can or should a firm disclose to a client that the departing lawyer may lack the experience or resources necessary to effectively continue the client's representation? Or should a departing attorney disclose to a client a law firm's history of billing disputes or practices with other clients? From Beren, it appears that such disclosures may be required where they are material to the client's choice of counsel or the effective continuation of the representation.

In their zeal to retain clients, however, the lawyers must also remember their duty of candor14 and their duty to refrain from misrepresentation, fraud, deceit, and dishonesty.15 A client who receives misleading or false information about a departing lawyer could potentially make a claim for relief based on fraud, and the defamed attorney could bring an action against his or her previous firm for slander, defamation, tortious interference with contract, or other ethical violations.16

Proper Accounting Among Firms

Pursuant to Colo. RPC 1.15A(b), a client is also entitled on request to a full and accurate accounting of all amounts received by or due to an attorney.17 Again, however, in cases of transition, issues may arise concerning how amounts received by an attorney should be applied between current and former counsel.

For example, in LaFond v. Sweeney, the Colorado Court of Appeals held that a pending contingent fee case is a type of executory contract or "unfinished business" owned by a law firm.18 Therefore, upon the firm's dissolution, the right to receive the fee at the conclusion of the matter remains an asset of the dissolved firm.19

In LaFond, the firm was organized as a limited...

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