Opinion ID: 2545863
Heading Depth: 2
Heading Rank: 1

Heading: Presumptive Level of Discipline

Text: Cimino first asserts that his conduct caused no actual harm to the corporation. Second, he claims that his state of mind at the time of the misconduct was negligent rather than intentional, as he did not realize that an attorney-client relationship had arisen between the corporation and him, and did not perceive the conflict of interest until almost the very end of the relationship. The presence or absence of injury and the lawyer's mental state are important factors for determining the proper level of discipline. Under the ABA Standards for Imposing Lawyer Sanctions (1991 & Supp.1992), in the absence of aggravating or mitigating factors, [s]uspension is generally appropriate when a lawyer knows of a conflict of interest and does not fully disclose to a client the possible effect of that conflict, and causes injury or potential injury to a client. ABA Standards, supra, at 4.32 (emphasis added); see also In re Cohen, No. 97SA211, ___ P.3d ___, ___ __ ___, 1999 WL 711853, at -7 (Colo. Sept. 13, 1999) (suspending lawyer for ninety days for representing conflicting interests); In re Quiat, 979 P.2d 1029, 1042 (Colo.1999) (knowingly representing adverse interests in bankruptcy case warranted three-month suspension from the practice of law). On the other hand, a public censure is the presumed sanction if the lawyer is at most negligent in determining whether the representation of a client may be materially affected by the lawyer's own interests, or whether the representation will adversely affect another client, and causes injury or potential injury to a client. ABA Standards, supra, at 4.33; see also People v. Fritze, 926 P.2d 574, 576 (Colo.1996) (representing conflicting interests through negligence warrants public censure). We need not reach the issue of whether the hearing board's findings of actual injury are correct for the purpose of analyzing the level of discipline, however. The absence of injury does not negate the violations of Colo. RPC 1.7(b) or 1.8(a). Cimino alleges that under the specific facts of this case the corporation sustained no actual injury as a result of his misconduct. He does not claim, nor could he, that his status as corporate counsel while at the same time being a creditor of the corporation, did not present at least the potential for injury. For example, the complainant's expert testified that for Mr. Cimino to have put the corporation in a position by the initial structure by which it had to commence repayment of the capital at an early stage, faster than it would provide for, caused harm to the corporation. In other words, while it might well be in the best interest of the corporation for Cimino's and the other shareholder-lenders' $25,000 to have been considered equity in the corporation, rather than mainly debt that had to be repaid within three years, it was in Cimino's interest to be a creditor of the corporation whose loan would be repaid as soon as possible. Thus, had they been advised of the conflict, it would have been prudent for the other shareholders to consult independent counsel regarding the capital structure of the corporation. The potential for injury was therefore present. Cimino also alleges that he did not realize that an attorney-client relationship had arisen between him and the corporation, and did not perceive the conflict of interest until almost the very end of the relationship. The hearing board rejected Cimino's contention that his conduct was merely negligent because he did not realize that the corporation was his client. As the record demonstrates, and as Cimino testified, his contribution to the corporation was his legal services; he sent bills to the corporation for professional services, beginning as early as March 22, 1994. The hearing board correctly recognized that whether Cimino expected to be paid or not was not significant to the issue of whether an attorney-client relationship existed. Cimino also claims that he did not actually perceive the conflict of interest between the corporation and himself until he began to prepare the documentation for the loans in 1995. However, the board was entitled to reject Cimino's testimony to that effect. As the trier of fact, the hearing board had the duty to assess the credibility of the witnesses and evidence. See People v. Robnett, 859 P.2d 872, 877 (Colo.1993). The board could reasonably conclude that the conflict presented by attempting to legally represent a debtor interests, while at the same time being one of the debtor's creditors, was so obvious that Cimino's testimony to the contrary was not credible. The board's conclusion that Cimino's mental state was not merely negligent is supported by the record and we will not overturn it. See id. We therefore hold that the record supports the board's determination that the presumed sanction in this case is at least a short period of suspension. See ABA Standards, supra, at 4.32.