Even without 2013’s thrilling prospect of an ice-cold plunge over a Fiscal Cliff, New Years is a cause for celebration. On the December side it is a time for reflection and a chorus of Auld Lang Syne with friends over a bowl of Smoking Bishop. On the January side of midnight lies a clean slate, a clear calendar unburdened with the disappointments of the old year. Ahead nothing but hope, bright prospects for the New Year, and one final day of feasting and football.
|Scrooge and Bob Cratchit, John Leech (1843)|
Prospects! Prospects are the lifeblood of all businesses, including every law practice, for as my former partner, Ed O’Keefe, taught me years ago, no client is forever. Holding the promise of new retainers, and in our mid-winter dreams perhaps even gratitude for their hard-working counsel, the prospect of a new client is also something to be celebrated. As detailed below, however, it is likewise something to be wary of, and thus a fitting subject for my first blog of 2013, the first of a promised series: The 5 Most Dangerous Rules of Professional Conduct.
What qualifies a Rule as “dangerous?” In selecting my finalists I employed two criteria: the risk of inadvertent violation and the potential damage resulting therefrom. Measured against this dual axis of professional risk, Prospective Clients easily rank in the top five – perhaps as high as number two. First, notwithstanding that Colo.RPC 1.18 (Duties to Prospective Clients) became effective five New Years ago, many lawyers are oblivious to its existence. Such general unawareness pretty much pegs the scale one risk of inadvertent violation. However, it Rule 1.18’s potential for delayed collateral damage to one’s law practice, in the form of future disqualification, that places Rule 1.18 in my Top Five.
Who is a “Prospective Client”?
A person who discusses with a lawyer the possibility of forming a client-lawyer relationship with respect to a matter is a prospective client.
Colo. RPC 1.18(a) (emphasis added). At its outset, Rule 1.18 creates a new class of persons, “Prospective Clients,” comprised of virtually everyone with whom an attorney has a meeting, phone call, or e-mail exchange where the topic is, expressly or impliedly, potential legal representation.
Having drawn within its universe nearly every business prospect who is not already a client, Rule 1.18(b) next cloaks Prospective Clients with the protections for Rule 1.6 (incidentally, numero uno in my “fab five” of “most dangerous rules”):
Even when no client-lawyer relationship ensues, a lawyer who has had discussions with a prospective client shall not use or reveal information learned in the consultation, except as Rule 1.9 would permit with respect to information of a former client.
Colo. RPC 1.18(b) (emphasis added). This proscription “exists regardless of how brief the initial conference may be.” Id., Comment . Even “cocktail” and “curbside” advice qualify if the “possibility of forming a client-lawyer relationship” is present.
From the duty imposed by Rule 1.18(b), a rule of disqualification, and its evil twin, vicarious disqualification, flow as easily as eggnog from a holiday punchbowl, and with nearly equal potentially debilitating effect:
A lawyer subject to paragraph (b) shall not represent a client with interests materially adverse to those of a prospective client in the same or a substantially related matter if the lawyer received information from the prospective client that could be significantly harmful to the prospective client, except as provided in paragraph (d). If a lawyer is disqualified from representation under this paragraph, no lawyer in a firm with which that lawyer is associated may knowingly undertake or continue representation in such a matter, except as provided in paragraph (d).
Colo. RPC 1.18(c) (emphasis added).
The two exceptions afforded by Rule 1.18(d) are largely illusory. The first requires that “both the affected client and the prospective client . . . give informed consent, confirmed in writing.” Colo. RPC 1.18(d)(1) (emphasis added). In today’s legal environment the likelihood of a Prospective Client, who may by then be represented by other counsel, giving “informed consent” to allow an otherwise disqualified attorney to act adversely to the Prospective Client’s interests is only slightly greater than that of President Obama and John Boehner singing Kumbaya over legislation which materially reduces the national debt.
The second exception is of little cheer to the attorney had initial “discussions” with the prospective, but unlanded, client:
(2) the lawyer who received the information took reasonable measures to avoid exposure to more disqualifying information than was reasonably necessary to determine whether to represent the prospective client; and
(i) the disqualified lawyer is timely screened from any participation in the matter and is apportioned no part of the fee therefrom; and
(ii) written notice is promptly given to the prospective client.
Colo. RPC 1.18(d)(2) (emphasis added). To be effective, the exception of subsection (d)(2)—the invocation of which carries with it a high likelihood of being tested by a motion to disqualify in any matter involving litigation—requires a level of administrative discipline few attorneys or firms are currently practicing, namely capturing “Prospective Client” data in their conflicts databases. Given the frequency with which actual former clients are missed when checking conflicts of interest, the potential for missing a Prospective Client is considerably greater without a system for tracking and checking Prospective Clients, and the professional discipline to use it. Without such a system, how is the disqualified lawyer to be “timely screened” or written notice to be “promptly given”?
Avoiding Prospective Client Pitfalls
Although Rule 1.18 presents a formidable labyrinth to navigate, it is not a Catch-22. There are procedures and protocols attorneys and their firms can employ to avoid or greatly reduce the prospect of “Prospective Client Disqualification.”
1. Always Clear Conflicts First.
While Ed O’Keefe was correct that no client is forever, ironically a Prospective Client is – at least with regard to the subject matter of “discussions” held regarding the possibility of providing legal representation. Accordingly, what has always been best practice now becomes a business imperative under the Prospective Client Rule: Always Clear Conflicts Before Discussing Substance.
Most persons with legal issues are naturally anxious. Whether or not they would ever actually consider paying for legal advice, given the opportunity to have the ear of a lawyer, disqualifying facts positively issue forth from Prospective Clients, like the “long-expected gush of stuffing” from Bob Cratchit’s family’s Christmas goose. The lawyer who does not anticipate this situation, and pivot quickly and decisively to stanch the flood of disqualifying information, is likely to have his own goose cooked.
Fortunately, save the cocktail and curbside situations where disqualifying information may be unexpectedly thrust upon us, most situations where the Prospective Client Rule applies announce themselves, e.g., “Ms. Jones, you have a call from [someone Ms. Jones has never heard of].” Or an e‑mail message from an unknown person arrives in your in-box. In such instances, an attorney has time gather and steel herself against prospective disqualification.
In the case of a phone call, an attorney must be prepared to politely, but firmly, cut off the would-be Prospective Client before s/he can unburden him or herself of disqualifying information. “Please let me stop you a moment,” is usually effective to create a conversational firewall, allowing the attorney to explain that, “before discussing your situation, I need to make sure that our firm does not already represent someone else that would prevent us from representing you.” This tact, which plants in the would-be Prospective Client’s mind the possibility that s/he might be about to divulge confidences to someone s/he might not want to, usually stems the flood of facts long enough for the lawyer to further admonish, “Please don’t tell me any information about your situation now, other than the names of the persons who are, or may become, involved. I’ll run these names through our conflicts system and make sure we would not have a problem representing you, and will call you back as soon as that is done.”
Some attorneys are hesitant to do take the “clear conflicts first” approach, believing they must “close the deal” in the first call. Such concerns are misplaced for several reasons. First, a good connection can be made in a first call by drawing out from the would-be client potential adverse and interested parties, demonstrating appropriate interest and concern for the would-be client’s situation, and expressing willingness to promptly clear conflicts and call back. Second, a lawyer is free discuss his or her general experience in the general area of the client’s problem in this first call, since disqualifying information flows only from the would-be Prospective Client. Finally, the information harvested to clear conflicts provides the attorney something the putative client might otherwise not provide in a cold-call: their own complete contact information.
A would-be client who does not appreciate and respect your courteous request to clear conflicts before discussing substance is probably a client you don’t want. Moreover, before the phone ever rings, an attorney has a preexisting duty to current clients, and to his or her own financial well-being, not to jeopardize ongoing relationships by inviting a thrust-upon conflict. That, after all, is the raison d'être for conflict clearance.
For the Prospective Client who arrives via e-mail, many attorney websites prudently employ a pop-up warning that (i) would-be clients should not to divulge confidential information, and (ii) that communicating information in disregard of the warning will not result in the creation of an attorney-client relationship. These intercepting alerts require the would-be client’s consent, in the form of a mouse-click, before an attorney’s e-mail address is provided. Comment  to Rule 1.18 supports this practice, providing:
Not all persons who communicate information to a lawyer are entitled to protection under this Rule. A person who communicates information unilaterally to a lawyer, without any reasonable expectation that the lawyer is willing to discuss the possibility of forming a client-lawyer relationship, is not a "prospective client" within the meaning of paragraph (a).
Even with such inoculating measures in place, a cautious attorney should be mindful that an information-laden e-mail may have circumvented the website’s gauntlet. For this reason, I have adopted a protocol of promptly answering such e-mail messages with a response which (1) thanks the sender for contacting me, (2) acknowledges that it appears they have a legal problem, (3) invites the sender to contact me by telephone or to schedule an appointment to discuss it, (4) advises the sender that, for their protection, I immediately and permanently deleted their message without reading it as soon as I recognized they might be disclosing confidential information without my having first cleared potential conflicts of interest, and (5) advises the sender that no attorney-client relationship has, or will be, formed without a formal engagement agreement and payment of an appropriate retainer.
For attorneys concerned that such a practice will irretrievably ruin an opportunity to land a would-be client, I offer this observation: real prospects schedule appointments; persons seeking free legal advice send e-mail.
2. Never Settle for Second Place in a Beauty Contest.
Comment  to Rule 1.18 seems tailor-made for “beauty contests,” i.e., an interview in which an attorney is aware s/he is being auditioned, along with several other lawyers, for possible representation:
A lawyer may condition conversations with a prospective client on the person's informed consent that no information disclosed during the consultation will prohibit the lawyer from representing a different client in the matter. See Rule 1.0(e) for the definition of informed consent. If the agreement expressly so provides, the prospective client may also consent to the lawyer's subsequent use of information received from the prospective client.
Where applicable, this is an extremely powerful vaccination against disqualification. Note that although this exclusion appears in a Comment to Rule 1.18 and not the Rule itself, paragraph 3 of the Scope of the Colorado Rules of Professional Conduct sanctions it, providing that “in some instances, [the Comments) provide examples of permitted or prohibited conduct.”
The requirement of first obtaining “informed consent” however, is no mean feat. Rule 1.0 generally, and the now liberally sprinkled standard of “informed consent” specifically, is another of my 5 Most Dangerous Rules of Professional Conduct. Still, Comment  is a welcome antitoxin for those attorneys willing and able to meet its rigors.
3. Disqualification by Ambush.
Though rare, reports of one spouse meeting with every high-powered divorce attorney in town for the purpose of disqualifying them all from representing their soon-to-be ex-significant other are not mere apocryphal tales. The tactic even has a name: “taint shopping.” On its face, Rule 1.18 seems to enable, or even encourage, such misconduct.
An unfortunate attorney having been used in this manner can argue that discussions were never held with a bona fide “possibility of forming a client-lawyer relationship.” This may be a difficult defense to disqualification, however, since there is nothing per se sinister in interviewing several attorneys for representation. See Illinois State Bar Advisory Op. 12-18 (July 2012) (relying on Comment  to find no disqualification, but recognizing that “[u]nfortunately, proving such circumstances may be difficult.”).
Recognizing Rule 1.18’s potential for exploitation by would-be Potential Clients, some other jurisdictions (but not Colorado) have expressly repudiated such chicanery as falling within their enactments of Rule 1.18. The penultimate paragraph of the comment to Florida’s Rule 4-1.18, for example, states:
The duties under this rule presume that the prospective client consults the lawyer in good faith. A person who consults a lawyer simply with the intent of disqualifying the lawyer from the matter, with no intent of possibly hiring the lawyer, has engaged in a sham and should not be able to invoke this rule to create a disqualification.
(Emphasis added.) Nevada’s version of Rule 1.18 similarly provides a requirement of good faith by persons seeking Prospective Client status:
A person who communicates information to a lawyer without any reasonable expectation that the lawyer is willing to discuss the possibility of forming a client-lawyer relationship, or for purposes which do not include a good faith intention to retain the lawyer in the subject matter of the consultation, is not a “prospective client” within the meaning of this Rule.
Nev. RPC 1.18(e) (emphasis added). Accord Vermont RPC 1.18(a) (adding that persons seeking the protection of Rule 1.18 must have consulted with an attorney “in good faith”); N.Y.RPC 1.18(e)(2) (“A person who communicates with a lawyer for the purpose of disqualifying the lawyer from handling a materially adverse representation on the same or a substantially related matter, is not a prospective client within the meaning of paragraph (a)”).
The ABA’s Commission on Ethics 20/20 has itself proposed amending Rule 1.18 by, inter alia, “add[ing] a sentence at the end of Comment  to make clear that a person is not owed any duties under Model Rule 1.18 if that person contacts a lawyer for the purpose of disqualifying the lawyer from representing an opponent.” The Colorado Supreme Court should consider doing the same. Until such time, Colorado lawyers will have to rely on Comment , opinions from other jurisdictions, such as Montana Bar Ethics Op. 010830 (2000), N.Y.C.Bar Ass’n Comm. on Prof’l and Judicial Ethics, Formal Op. 2006-02 (2006) (issued before the adoption of N.Y. RPC 1.18(e)(2)), and Va. State Bar Ethics Op. 1794 (2004), and trust the ability of courts to see through such ruses and to recognize that justice has never been as simple as a rule book.
4. Add Prospective Clients to Your Conflicts Database.
If, wittingly or not, the threshold is passed where a would-be client is elevated to the status of Prospective Client, it is important for attorneys to track Prospective Client data as a category in their conflicts databases.
While an exception to disqualification may be available—e.g., information imparted is not “significantly harmful to the prospective client”; the subsequent client’s interests are not “materially adverse” to the Prospective Client’s; the later mater is not “substantially related”; “informed consent” confirmed in writing by both the Prospective Client and the affected client, is given; or an effective ethics screen can be erected—without capturing and checking data for this new class of potentially disqualifying persons, the derelict attorney and/or firm will, at a minimum, be embarrassed when a qualifying conflict arises without their awareness.
Yes, prospective clients are to be celebrated; but Prospective Clients must be managed and tracked. Resolve to do that this year, and your prospects may all be happy and bright.
Happily, for Colorado lawyers, in April 2016 Colo. RPC 1.18 was amended, adopting ABA Commission on Ethics 20/20 Resolution 105B (Aug. 6, 2012), now embodied in ABA Model Rule 1.18. Mere "discussions" are no longer to create disqualification – consultation is required. Comment  also adopts the ABA’s position that “Moreover, a person who communicates with a lawyer for the purpose of disqualifying the lawyer is not a ‘prospective client.’”