Opinion ID: 2515588
Heading Depth: 1
Heading Rank: 3

Heading: Fisher's Appeal

Text: In disciplinary proceedings, the Hearing Board is the finder of fact and has the authority to make determinations regarding the credibility of witnesses and conflicts in evidence. In re Haines, 177 P.3d 1239, 1244 (Colo.2008). While this court has plenary authority over matters of attorney discipline, we have established standards of review and will disturb the Hearing Board's factual findings only if they are clearly erroneous or not supported by substantial evidence in the record. Id. ; C.R.C.P. 251.27(b). We conduct a de novo review of the Hearing Board's conclusions of law. Haines, 177 P.3d at 1245.
The Hearing Board found clear and convincing evidence that Fisher violated Colo. RPC 1.1, failure to provide competent representation, when he did not research the process necessary to secure Ms. Varner's rights in Mr. Varner's OPM benefits or take any steps toward securing those rights. Fisher argues this determination must be reversed because it was not supported by clear and convincing evidence. We disagree. Colo. RPC 1.1 states a lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation. The comments provide that, when determining the level of knowledge and skill a particular matter requires, the Board should look to factors including the complexity and specialized nature of the matter, the lawyer's general experience, and the lawyer's training and experience in the field in question. Colo. RPC 1.1 cmt. Competent handling of a particular matter includes inquiry into and analysis of the factual and legal elements of the problem and use of methods and procedures meeting the standards of competent practitioners. Id. While an attorney should generally not accept employment in an area of law in which she is not qualified, she may accept such employment if she in good faith expects to become qualified through study and investigation. Id. The Hearing Board acknowledged Ms. Varner terminated the professional relationship with Fisher shortly after the permanent orders hearing and did not respond to telephone calls or written communications. However, it found that if Fisher had taken any steps to become acquainted with the procedures for securing retirement benefits through the OPM by the time the relationship was terminated, he could have, at a minimum, informed Ms. Varner of the potential injury she might suffer if she did not allow him to continue working to secure the benefits. The record supports the finding of the Hearing Board. Fisher had never handled a case involving a federal pension before. During the nine months between the time he was retained by Ms. Varner and his termination, Fisher never contacted the OPM, did not review the attorney's handbook published by the OPM, did not consult the OPM website, and did not consult with experts in the field of federal benefits. After the trial court issued the decree providing Ms. Varner should receive benefits from Mr. Varner's OPM account, Fisher failed to mail the decree to the OPM or instruct another party to do so. Thomas Hefly, an expert witness in the area of division and transfer of retirement benefits upon dissolution of marriage, testified division of retirement benefits is a specialized practice that domestic relations attorneys often refer to specialists. He stated the OPM publishes a handbook and website to provide information to attorneys on the proper handling of federal pensions. Mr. Hefly testified that it is not enough for an attorney simply to obtain a decree awarding benefits to the spouse, the attorney must provide the OPM with the order. Therefore, evidence in the record supports the Hearing Board's finding that Fisher did not provide competent representation to Ms. Varner because he failed to take action which would have aided him in securing the survivor benefits. Accordingly, the Hearing Board's finding was not clearly erroneous, and we affirm the Board on this ground.
Fisher argues the Hearing Board's determination that he neglected a legal matter in violation of Colo. RPC 1.3 must be reversed because it is not supported by clear and convincing evidence. The Hearing Board found Fisher violated this rule because he did not take any steps to secure the OPM benefits-one of Ms. Varner's primary objectives for the representation. Fisher argues he could not have neglected the matter because Ms. Varner ultimately received the benefits. We disagree with Fisher's conclusory reasoning. Colo. RPC 1.3 requires a lawyer to act with reasonable diligence and promptness in representing a client. A lawyer shall not neglect a legal matter entrusted to that lawyer. Lawyers retained on particular matters should pursue those matters on behalf of a client despite opposition, obstruction[,] or personal inconvenience to the lawyer. Colo. RPC 1.3 cmt. Unless the professional relationship is terminated by the client, a lawyer should carry through to conclusion all matters undertaken for a client. Id. Fisher's argument that he could not have neglected the matter because Ms. Varner ultimately received the benefits is unpersuasive. The Hearing Board found that, while Fisher won a judgment from the trial court in the dissolution of marriage action awarding Ms. Varner these benefits, Fisher did not take the next steps necessary to secure them. The Board considered Ms. Varner's unwillingness to return telephone calls or meet with Fisher following the permanent orders hearing. However, the Board determined that, while Ms. Varner's actions made it difficult for Fisher to communicate with her, they did not ameliorate his duty not to neglect legal matters entrusted to him. The fact that Ms. Varner ultimately received the benefits to which she was entitled does not mean that Fisher promptly and diligently performed his duties. In fact, the record supports the Board's conclusion that, during the time Fisher represented Ms. Varner, he did not act with promptness or diligence in securing the OPM benefits. In the three months between the trial court's order that Ms. Varner receive one half of Mr. Varner's OPM benefits and Fisher's termination, Fisher took no steps to secure the benefits in Ms. Varner's name. After obtaining the decree from the trial court, Fisher did not mail the order to the OPM or consult with Ms. Varner regarding the need to submit an order to the OPM for processing. Nor did he consult with opposing counsel regarding the division of the survivor benefits or request that opposing counsel make arrangements with the OPM for the benefit division. Therefore, it was not clearly erroneous for the Hearing Board to find that Fisher failed to take prompt measures to secure Ms. Varner's rights in Mr. Varner's OPM. Accordingly, we affirm the Board's finding Fisher neglected a legal matter.
On summary judgment, the Presiding Disciplinary Judge (PDJ) found Fisher obtained an interest adverse to his client's without complying with the requirements of Rule 1.8(a) when he took the deed of trust in the Varner residence. Fisher argues this determination was legal error which we should review de novo. However, we view this as a challenge to the PDJ's factual finding, and will reverse only if the decision was clearly erroneous. Colo. RPC 1.8(a) provides that an attorney shall not enter into a business transaction with a client or knowingly acquire an ownership, possessory, security or other pecuniary interest adverse to a client unless: (1) the transaction and terms on which the lawyer acquires the interest are fair and reasonable to the client and are fully disclosed and writing to the client in a manner reasonably understood by the client; (2) the client is informed that use of counsel may be advisable and is given a opportunity to seek the advice of such counsel in the transaction; and (3) the client consents in writing thereto. Therefore, an attorney may obtain an interest adverse to a client's, but the transaction must be fair to the client, the client must be advised of the desirability of obtaining independent counsel and given the opportunity to do so, and must consent to the transaction in writing. [2] Fisher argues it was not improper to take the deed of trust because it was not adverse to Ms. Varner's interests. He states there was no adversity because he and Ms. Varner's objectives regarding the residence were aligned and his interest did not negatively impact Ms. Varner. He therefore asserts the Rule requiring consent and independent counsel when an attorney and a client's interests are adverse is inapplicable. We disagree. In a Formal Ethics Opinion, the American Bar Association (ABA) takes the position it is not per se improper for an attorney to secure a fee through taking a security interest; however, when doing so, the attorney must abide by the mandates of Rule 1.8(a). ABA Formal Opinion 02-427. A similar Colorado Bar Association Ethics Opinion states if a lawyer takes a security interest in a client's property for payment of fees, he must comply with Colo. RPC 1.8(a). CBA Ethics Opinion 110: Assertion of Attorney's Charging Lien/Security Interest in Property, Mod. May 19, 2001. A deed of trust is a security interest. Herstam v. Bd. of Dir. Silvercreek Water and Sanitation Dist., 895 P.2d 1131, 1138 (Colo.App. 1995); § 38-35-117, C.R.S. (2008) (Mortgages, deeds of trust, or other instruments intended to secure the payment of an obligation shall be deemed a lien.). Black's Law Dictionary defines adverse as against or opposed to, and having a contrary interest, concern, or position. Black's Law Dictionary 252 (8th ed. 2004). Here, Fisher entered into a prohibited transaction with Ms. Varner when he acquired an ownership interest in the residence. In the context of Rule 1.8(a), an attorney and a client's interests are adverse if their pecuniary interests are opposed to one another. The simple fact that a client and an attorney's interests are opposed establishes adversity for purposes of Rule 1.8(a). It is therefore not necessary to inquire into whether that adversity negatively impacts the client because the protective measures outlined by Rule 1.8(a) must be followed any time a lawyer's pecuniary interest are opposed to the client's. [3] Accordingly, in the context of Rule 1.8(a), Fisher's argument that there was no adversity between himself and Ms. Varner is flawed. Here, by acquiring the promissory note and deed of trust, Fisher streamlined his ability to collect his fees and reduced the amount of equity Ms. Varner had in the property. Therefore, Fisher's pecuniary interest in the residence was opposed to Ms. Varner's, and their interests were adverse. It is of no consequence that Ms. Varner was not ultimately negatively impacted because of this adversity. Because Fisher entered into a business transaction with Ms. Varner in which their pecuniary interests were adverse, he should have complied with Rule 1.8(a)'s independent counsel and consent requirements. Therefore, the Hearing Board's determination that Fisher violated Rule 1.8(a) is not clearly erroneous, and we affirm the Board.
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.
Fisher argues that even if his actions violated Rules 1.8(a) and (j), he cannot now be punished because he did not know the conduct was wrong at the time it was committed. This argument presents a legal question, and we therefore apply a de novo standard of review. As discussed above, there is ample legal authority in Colorado establishing that attorneys must abide by Rules 1.8(a) and (j) when taking a security interest in the subject matter of representation. In Colorado, the only liens granted by law [5] excepted from the prohibition on lawyers acquiring proprietary interests in the subject matter of the representation are attorney's liens. Accordingly, Rule 1.8(j) applies to deeds of trust, and Fisher violated it when he took the deed of trust in the Varner residence. Similarly, when an attorney takes a security interest in his client's property, this is a business transaction and he must comply with the consent and independent counsel requirements of Rule 1.8(a). All Colorado attorneys are presumed to be aware of the Rules of Professional Conduct and their impact. See In re Attorney C., 47 P.3d 1167, 1173 (Colo.2002). An attorney's awareness that his conduct will violate an ethical proscription is not itself material. In re Attorney D., 57 P.3d 395, 400 (Colo.2002). Therefore, Fisher's conduct warrants punishment whether or not he knew the conduct was improper. Accordingly, we decline to set aside the PDJ's determination that Fisher violated Colo. RPC 1.8(a) and (j).
Fisher argues the Hearing Board lost jurisdiction over the matter because it issued the Opinion and Order Imposing Sanctions 96 days after the hearing. This is a matter of law which we review de novo. C.R.C.P. 251.19 provides that within sixty days after the hearing the Hearing Board shall prepare an order setting forth its findings of facts and its decision. However, nothing in this rule, or any other rule, states the Hearing Board loses jurisdiction to rule on a matter if the opinion is not issued within sixty days after the hearing. In light of C.R.C.P. 1(a), which states the Rules of Civil Procedure shall be liberally construed to secure the just, speedy and inexpensive determination of every action, we hold the failure to issue a decision within 60 days does not result in the Hearing Board losing jurisdiction over the matter. We do not suggest there should never be consequences for the Hearing Board's failure to issue a timely decision, however we find the 60 day time period to be largely aspirational. In determining whether consequences should result if the Board fails to render a timely decision, we will consider the extent of the delay, the reasons for the delay, and any prejudice that occurred as a result of the delay. Here, while the decision was issued 96 days after the hearing, Fisher can point to no prejudice that occurred as a result of the delay. The Hearing Board did not state the reasons for the delay, but we note this was a case involving numerous charges and a significant amount of evidence. Because Fisher was not prejudiced in any way, and Fisher's proposed remedy of remanding the case and trying the matter anew would merely prolong the case at significant cost for all parties, we decline to impose any consequences for the Board's failure to issue the opinion within 60 days. Accordingly, we find no action is required for this minor violation of the 60 day requirement; however, the Hearing Board shall make every attempt to comply with this timeframe in the future.
Fisher argues it was error for the Hearing Board to deny his motion for a new trial based on Regulation Counsel's failure to disclose their expert's assessment of the case. Regulation Counsel consulted with an expert in the field of OPM benefits when preparing for the hearing. Fisher argues this consultation resulted in Regulation Counsel's expert opining that Fisher did not violate the rules requiring competent representation and prohibiting neglect of a legal matter. Fisher asserts this is exculpatory evidence which must be disclosed to him because attorney discipline proceedings are of a quasi-criminal nature. See In re Ruffalo, 390 U.S. 544, 551, 88 S.Ct. 1222, 20 L.Ed.2d 117 (1968). Fisher argues because of the quasi-criminal nature of discipline proceedings, due process protections afforded to criminal defendants must be provided to attorneys in discipline proceedings. We review this claim de novo. The simple fact that attorney discipline proceedings are quasi-criminal in nature does not mean the full panoply of criminal protections apply, or that the Rules of Criminal Procedure should govern disciplinary proceedings. On the contrary, disciplinary proceedings are conducted pursuant to the Colorado Rules of Civil Procedure. C.R.C.P. 251.18(d). In contrast to criminal matters, the Rules of Civil Procedure allow litigants to work with consulting experts without disclosing the identity or opinions of that expert if she is not called as a witness. Phillips v. Dist. Court, 194 Colo. 455, 573 P.2d 553 (1978); C.R.C.P. 26(b)(4)(B) (stating a party may discover facts known or opinions held by an expert retained by opposing counsel who is not expected to be called as a witness at trial only as provided by C.R.C.P. 35(b) or upon a showing of exceptional circumstances under which it is impracticable for the party seeking discovery to obtain facts or opinions on the same subject by other means). Here, Regulation Counsel's expert did not testify, and there is no indication his opinions were used in any way. Accordingly, in this instance, the Rules of Civil Procedure adequately protect Fisher's due process rights.