Opinion ID: 2515588
Heading Depth: 2
Heading Rank: 5

Heading: Colo. RPC 1.8(j)

Text: On summary judgment, the PDJ also determined Fisher violated Colo. RPC 1.8(j), [4] which prohibits attorneys from obtaining proprietary interests in the subject matter of the representation, when he took the deed of trust in the Varner residence. Fisher argues this finding was legal error; we view this claim as a challenge to the sufficiency of the evidence to support the PDJ's conclusion, and we will reverse only if we find the decision was clearly erroneous. Colo. RPC 1.8(j) disallows a lawyer from acquiring a proprietary interest in the cause of action or subject matter of litigation the lawyer is conducting for a client. However, the lawyer may acquire a lien granted by law to secure the lawyer's fees and contract with a client for a reasonable contingent fee in a civil case. Id. In amended Rule 1.8(j), now appearing as Rule 1.8(i), the language was changed to allow a lawyer to acquire a lien authorized by law. We view this change in language as not affecting the substance of the rule. Fisher argues he did not violate the rule prohibiting attorneys from acquiring proprietary interests in the subject matter of the representation because a deed of trust is a lien granted by law to secure a lawyer's fees. He states the 2008 revision to Rule 1.8(j) makes clear that deeds of trust are not prohibited under this rule. However, Fisher is again mistaken. The exception for liens granted by law refers to an attorney's retaining or charging lien, authorized by sections 12-5-119, -120, C.R.S. (2008). See People v. Smith, 830 P.2d 1003, 1005 (Colo.1992). Fisher argues the deed of trust qualifies as a lien granted by law because it operated in the same manner as an attorney's charging lien, and the revised rule includes deeds of trust in the exception. Attorney's charging liens are statutory creations under which attorneys have liens on money, property, claims, or judgments they have obtained or assisted in obtaining. § 12-5-119. The lien begins to accrue from the moment of commencement of services. In re Marriage of Berkland, 762 P.2d 779 (Colo.App.1988). An attorney's charging lien places third parties on notice that the attorney has an interest in the funds subject to the lien. Id. In order to collect under the lien, the attorney must reduce it to a judgment. The comments to the revised version of the rule state the law of each jurisdiction determines which liens authorized by law are excepted from the rule's prohibition on attorneys acquiring proprietary interests in the subject matter of the representation. Colo. RPC 1.8 cmt. The comment suggests these may include liens granted by statute, liens originating in common law, and liens acquired by contract with the client. Id. Fisher argues that, because the comments specifically allow liens originating in common law and those acquired by contract, his deed of trust was proper. However, the comments state the law of each jurisdiction determines what liens are excepted from the rule. In Colorado, attorney's charging liens are the only liens authorized by law, and as such, they are the only liens excepted from the prohibition against attorneys obtaining proprietary interests in the subject matter of the litigation. In contrast to attorney's charging liens, the promissory note and deed of trust were not authorized by law. While attorney's charging liens arise by operation of law, promissory notes and deeds of trust do notthey arise when granted by an individual. The deed of trust allowed Fisher to collect on his promissory note immediately without reducing his claim to a judgment. While attorney's charging liens roughly accomplish the same purpose Fisher pursued when he had Ms. Varner sign the deed of trustsecurity for the payment of feesFisher cannot merely substitute one for the other. Attorney's charging liens are specifically provided for by statute and are excepted from the prohibition on attorneys obtaining proprietary interests in the subject matter of the representation. Deeds of trust are not. Therefore, when Fisher secured the promissory note with the deed of trust in the Varner residence he acquired a proprietary interest in the subject matter of the litigation in violation of the Rules of Professional Conduct. Accordingly, we affirm the PDJ because the determination Fisher violated Rule 1.8(j) was not clearly erroneous.