When do the Colorado Rules of Professional Conduct apply to a lawyer's separate business or law-related services?
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This page answers the general question as of 2015. Ask about yours and see what the current Colorado Rules of Professional Conduct say for your facts, with citations.
Plain-English summary
Opinion 98 began by asking whether the other business provided “law-related services,” meaning services that might reasonably be performed with and relate in substance to legal services but are not unauthorized practice when provided by a nonlawyer. Examples included title insurance, accounting, financial planning, trust services, mediation, arbitration, and consulting. A wholly unrelated business remained subject to rules that govern lawyers at all times, including the prohibition on dishonesty, but Rule 5.7 supplied the broader framework for law-related services.
The Rules applied in full when the lawyer provided law-related services in circumstances not distinct from legal services, or when a lawyer-controlled entity failed to take reasonable measures to explain that the business services were not legal services and lacked lawyer-client protections. Evidence of separation included different offices, staff, entities, advertising, websites, communications, and matters. The explanation had to precede the engagement, preferably be written, and be sufficient for the customer's sophistication. When the services were too closely entwined, no disclaimer could avoid full application of the Rules.
When the Rules applied, business customers were treated like law clients for confidentiality and conflicts. Fees had to comply with Rule 1.5, revenue could become legal fees subject to Rule 5.4's nonlawyer-sharing and ownership restrictions, and advertising and solicitation had to satisfy Rules 7.1 through 7.3. The opinion separately treated mediation and arbitration as law-related services and concluded that lawyer expert-witness work could also be law-related, while recognizing that formation of a lawyer-client relationship depended on the facts.
In practice
Under Opinion 98, the consequences of Rule 5.7 were substantial: the lawyer could be required to run combined conflict checks across the law firm and business, protect business-customer information as client information, charge fees under Rule 1.5, avoid nonlawyer ownership or fee sharing, and follow lawyer advertising rules. The analysis turned on the nature of the service, operational separation, lawyer control, and what the customer was made to understand before receiving the service.
Common questions
Q: What counts as a law-related service?
A: The opinion used Rule 5.7(b)'s definition and listed title insurance, financial planning, accounting, trust services, real estate, mediation, arbitration, and several forms of consulting as examples.
Q: Is a separate company enough to keep the Rules from applying?
A: No. The lawyer also must keep the services distinct and take reasonable measures to ensure customers understand that the services are not legal services and lack lawyer-client protections.
Q: Are mediation and arbitration law-related services?
A: Yes, under the opinion. A lawyer serving as a third-party neutral can satisfy the distinction requirement by giving the role explanation required by Rule 2.4, particularly to unrepresented parties.
Q: What happens when the Rules apply to the business?
A: The opinion states that confidentiality, conflicts, fee limits, nonlawyer fee-sharing and ownership restrictions, and advertising and solicitation rules can all apply to the law-related services.
Background and rules framework
The opinion primarily interprets Colorado RPC 5.7 and ABA Model Rule 5.7. It also applies Rules 1.5 through 1.10, Rule 2.4 for third-party neutrals, Rule 5.4 for professional independence and ownership, Rules 7.1 through 7.3 for marketing, and Rule 8.4 for misconduct that applies regardless of whether the lawyer is providing legal services.
Citations and references
Rules of Professional Conduct:
- Colo. RPC 5.7 / ABA Model Rule 5.7 (law-related services)
- Colo. RPC 1.5 through 1.10 (fees, confidentiality, conflicts, and client transactions)
- Colo. RPC 2.4 (lawyer serving as third-party neutral)
- Colo. RPC 5.4 (nonlawyer fee sharing, partnership, ownership, and control)
- Colo. RPC 7.1 through 7.3 (advertising and solicitation)
Cases:
- In re Rost, 211 P.3d 145 (Kan. 2009), law-related consulting services and customer understanding
- In re Roth, 577 A.2d 490 (N.J. 1990), lawyer and broker roles in one transaction
- People v. Rishel, 50 P.3d 938 (Colo. P.D.J. 2002), misconduct in a business unrelated to legal services
Other opinions cited:
- ABA Formal Opinion 97-407: lawyer as expert witness or consultant
- ABA Formal Opinion 328 (1972): lawyer provision of business services
- CBA Formal Opinion 106: referral fees and networking organizations
See also
- ABA Formal Op. 97-407: Lawyer as Expert Witness or Consultant
- NYSBA Op. 1031: Specialist Title in a Nonlawyer Job
- CBA Formal Op. 87: Nonlawyer Estate-Planning Ventures
Source
- Landing page: https://www.cobar.org/ethicsopinions
- Original PDF: Colorado Formal Ethics Opinion 98
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