Chapter 1 - § 1.1 PRE-SUIT CONSIDERATIONS

• Jurisdiction: Colorado

§ 1.1 Pre-Suit Considerations

When a client walks into a lawyer's office with a case the client wants filed, it is often the first time the two have ever met. The client sets out the facts to the lawyer, and the lawyer makes a preliminary assessment of whether the client has a viable claim, as well as whether the representation is a matter the lawyer wants, and is competent, to undertake.¹ Taking the proper steps to set up the attorney-client relationship will help ensure that the lawyer and the client both know what the representation will encompass. It will also ensure that the expectations of both the client and the lawyer are compatible. While many unanticipated issues arise during a lawsuit, taking care to establish good communication from the beginning will help to eliminate as many surprises as possible.

§ 1.1.1 Setting Up the Attorney-Client Relationship

Conflict of Interest Check

Before an attorney can agree to represent a client, the attorney must ascertain that no conflict of interest exists between the prospective client and any other client of the lawyer or the lawyer's firm.²

To perform an effective conflict of interest assessment, the lawyer must obtain the name of all persons and entities involved in or affected by the matter. For example, if the person who brought in the matter is an officer, director, or managing member of a business entity, the names of the officers, directors, managing members, and major shareholders of that entity (and people in other roles, depending on the nature of the entity and the legal matter) should also be included in checking for a potential conflict of interest because the interests of the entity and the interests of the other persons may conflict. In those cases, if the law firm or lawyer is already representing those individuals, the firm or lawyer may be precluded from representing the entity. Running a broader conflict check is safer than running a narrow conflict check, as the emergence of a conflict of interest with a person or entity not contemplated as an affected party after representation has begun can cause major problems for the lawyer and the clients.

If other parties not included in the initial conflict check are added to the case during the litigation—whether by the plaintiff amending the complaint or by the defendant bringing in another party—the lawyer should run another conflict check with regard to those additional parties.

Retainer Agreements

In Colorado, a written retainer agreement is required for the provision of legal services.

For contingent fee agreements. Chapter 23.3 of the Colorado Rules of Civil Procedure (Rules Governing Contingent Fees) sets out in detail when contingent fees are allowed, the disclosures required before entering into a contingent fee agreement, and the required contents of a contingent fee agreement. Sample forms of a disclosure statement and fee agreement are also provided in the rules.³ For copies of those forms, see Form 1-1: Disclosure Statement Regarding Contingency Fees (C.R.C.P. ch 23.3, Form 1) and Form 1-2: Contingent Fee Agreement (C.R.C.P. ch 23.3, Form 2). The rules also provide a form of a final disbursement statement, which is included as Form 1-3: Final Disbursement Statement (C.R.C.P. ch 23.3, Form 2).

Although a retainer agreement signed by the client is not required in most traditional fee arrangement engagements in Colorado, an attorney representing a new client must provide the client with a written document describing how his or her fees will be determined, either before representation is undertaken or within a reasonable time afterward.⁴ A written retainer agreement, signed by the client, is preferable because in the event of a disagreement as to the terms, it is always easier to prove what the terms were if they are set out in writing. If the retainer agreement was verbal, the parties may have different recollections of what the terms of the agreement were. The written retainer agreement should identify the name of the party or parties being represented by the lawyer. See Form 1-4, Fee Retainer Agreement—With Standard Terms of Engagement. Such a requirement may seem elementary, but it is extremely important because sometimes the people involved in the case may be confused as to who the actual client is—for example, the company rather than its president, or vice-versa, or a child rather than the parents who are paying the lawyer. The retainer agreement should also set out the scope of the legal services for which the lawyer is being retained. For example, where a lawyer represents a client in a civil suit against a former employer for wrongful termination, and the client is also a defendant in a criminal case arising out of the same employment relationship, the lawyer will want to clarify whether he or she is also representing the client in the criminal case. This kind of clarification may prove important if the client later claims that the lawyer was hired to do, but neglected to do, something outside of the representation defined in the retainer letter. It also may be helpful in managing client expectations.

In cases of joint representation (i.e., when an attorney is representing more than one party), the attorney should advise the clients in writing not only of the possible conflicts that could arise in the future, but also of the ramifications, including additional costs, if a conflict arises and new counsel needs to be retained.⁵

§ 1.1.2 Pre-Filing Factual Investigation

The Colorado Rules of Civil Procedure dictate that a lawyer, by signing a complaint, is certifying that he or she has read the complaint and that

to the best of his knowledge, information, and belief formed after reasonable inquiry, it is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law, and that it is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation.⁶

To be able to truthfully make this certification, a lawyer must investigate the facts and ascertain that the legal foundation for every claim in a complaint is sound before filing the complaint.⁷ A violation of C.R.C.P. 11 can result in sanctions, including an award of attorney fees.⁸ The attorney should also remain cognizant that the improper filing of an action or pursuit of other improper litigation tactics can, in specific circumstances, result in statutory liability to the attorney or client and possible tort claims for abuse of process or malicious prosecution.⁹

What constitutes "reasonable inquiry" before filing a complaint depends on the kind of matter and client involved. If the client and attorney have a prior relationship, the attorney may already be familiar with many of the relevant facts. In a new client relationship, or in a matter for an existing client with which the attorney has no prior familiarity, the client interview provides the attorney with the facts involving the client's case.

At a minimum, the attorney should tell the prospective client to bring—or even better, to provide ahead of the first meeting—any documentation regarding the case. Potential documents, depending on the type of case, can include correspondence, contracts, e-mails, corporate or partnership documents, medical records, employment records, damage calculations, or other documents. Getting the documents ahead of time allows the lawyer to review the documents and assess what other information and documentation the potential client may have that could be brought to the initial meeting. It also gives the lawyer the opportunity to research legal issues.

The attorney may want to have the potential client fill out a questionnaire or new client information form at the first meeting. This questionnaire can enhance an attorney's ability to assess the factual basis for the lawsuit. The questionnaire should request the information needed for a conflict check, standard contact information, a summary of the nature of the prospective client's...