Colorado Lawyers Threatening Criminal Prosecution to Gain an Advantage in a Civil Matter

December 16, 2012  


by Colorado Criminal Defense Lawyer - Attorney - H. Michael Steinberg

Colorado lawyers who threaten to report a crime to the police unless they are paid money MAY BE violating the criminal and ethical laws of the state.

This article addresses the ethical rules governing the conduct of lawyers and the laws governing the Colorado crime of compounding.

The Criminal Side of Threatening Criminal Prosecution

Here is the actual Colorado criminal law on the subject of the crime of compounding


18-8-108. Compounding
.

(1) A person commits compounding if he accepts or agrees to accept any pecuniary benefit as consideration for:

(a) Refraining from seeking prosecution of an offender; or

(b) Refraining from reporting to law enforcement authorities the commission or suspected commission of any crime or information relating to a crime.

(2) It is an affirmative defense to prosecution under this section that the benefit received by the defendant did not exceed an amount which the defendant reasonably believed to be due as restitution or indemnification for harm caused by the crime.

(3) Compounding is a class 3 misdemeanor.



Ethical Issues Binding Lawyers

The Civil Side of Settling Civil Cases of Theft or Embezzlement Using The Threat of Prosecution

Every state has it's own version of the Rules Of Professional Conduct (RPC). Colorado is no exception.

Regarding Civil Settlements - several Colorado RPC's govern an attorney's permissible conduct in negotiating settlements on a client's behalf.

One is Rule 4.4

"In representing a client, a lawyer shall not use means that have no substantial purpose other than to embarrass, delay or burden a third person, or use methods of obtaining evidence that violate the legal rights of such a person." Rule 4.4, RPC.
Another is Rule 4.1(a)

"In the course of representing a client a lawyer shall not knowingly: . . . Make a false statement of material fact or law to a third person." Rule 4.1(a), RPC. They also provide that "A lawyer shall not . . . offer an inducement to a witness that is prohibited by law."

Rule 3.4(b), RPC.

... "[a] lawyer shall not bring or defend a proceeding, or assert or controvert an issue therein, unless there is a basis for doing so that is not frivolous, . . ."

Rule 3.1, RPC. States

"It is professional misconduct for a lawyer to: . . . Commit a criminal act that reflects adversely on the lawyer's honesty, trustworthiness or fitness as alawyer in other respects" or to "engage in conduct that is prejudicial to the administration of justice."

Lawyers must be honest and fair play in their dealings with people other than their clients.

These rules also ... collectively prohibit threatening criminal prosecution solely for the
purpose of negotiating a favorable settlement in a civil action - something on the order of theft by extortion within the meaning of the criminal code.

The rules overlap in their application and must be read carefully.

But this does NOT mea the mere mention of the possibility of criminal charges being brought is off-limits? The answer is no.

The ABA Ethics Committee has also issued an opinion holding that an attorney may use the possibility of bringing criminal charges against an opposing party in a private civil matter as long as the civil matter and the criminal matter are related and warranted by law and fact, provided that the attorney does not try to influence the criminal process. ABA Op. 92-363 (1992).

For lawyers - any wrongful conduct, including criminal conduct, dishonesty, and deceit are clearly forbidden. The rules allow lawyers to make truthful observations - it's permissible, for example, to point out that the opposing party's actions could be subject to criminal prosecution - but not to participate in extorting money from the other side.

Also making idle or dishonest or frivolous threats is inconsistent with every lawyer's obligations under the RPC. BUT the lawyer CAN - in settlement negotiations - discus the criminal implications of a party's conduct.

One Example - An Employee Steals From A Business

A lawyer representing an employee who has committed a criminal theft attempts to negotiate a resolution with the employer business or its clients, might ask that the employer refrain from reporting the matter for criminal prosecution in exchange for repayment of the money.

What is not permissible is for a lawyer representing the employer to demand huge sums
of money - well beyond the amount stolen - in exchange for not reporting the theft to the police.

In addition - if the lawyer knows that a client would never under any circumstances refer a matter for criminal prosecution, it is wrong to threaten such an action.

DR7-105(A) of the predecessor Model Rules barred lawyers from presenting, participating
in presenting, or threatening to present criminal charges "solely to obtain an advantage in a civil matter."

The latest version of the Model Rules and the Colorado equivalent - eliminated this provision.

Threatening Criminal or Administrative Prosecution in a Civil Case - The Key Factor

A well known and well respected Denver lawyer has written on this subject - and attribution is made to Charles Luce - Of Moye Giles for the following:

...[T]he distinction between advising opposing counsel that her, or her client's, conduct has more than civilly actionable consequences, and threatening that you may do something about it, is that the latter violates the Colorado Rules of Professional Conduct ("Colo. RPC"), while the former usually does not."

"The determination of whether a communication is a friendly "notice" or an anctionable "threat" must still be made on an ad hoc basis. It is foreseeable that one communicating attorney's "notice" will be perceived as another receiving ttorney's "threat." Still, subsection (b) does, for the first time, give express comfort and a safe harbor to attorney good Samaritans. As importantly, counsel need no longer feel compelled to stew silently while opposing counsel systematically violates the Rules of Professional Conduct, for fear that if she calls "a spade a spade" the most likely disciplinary action to result will be against her for threatening disciplinary charges

The line between "threat" and "notification," is found in the Official Comment to Colorado Rule 4.5 offers this guidance:

[F]actors that should be considered to differentiate threats from notifications in difficult cases include (A) an absence of any suggestion by the notifying lawyer that he or she could exert any improper influence over the criminal, administrative or disciplinary process, (B) consideration of whether any monetary recovery or other relief sought by the notifying lawyer is reasonably related to the harm suffered by the lawyer's clients.

Where no such reasonable relation exists, the communication likely will constitute a proscribed threat. For example, a lawyer violates Rule 4.5 if the lawyer threatens to file a charge or complaint of tax fraud against another party where issues of tax fraud have nothing to do with the dispute. It is not a violation of Rule 4.5 for a lawyer to notify another party that the other person's writing of an insufficient funds check may have criminal as well as civil ramifications in a civil action for collection of the bad check.

Here is a Reprint of the Entire Rule and Commentary on the Matter... Rule 4.5.

Rule 4.5. Threatening Prosecution

(a) A lawyer shall not threaten criminal, administrative or disciplinary charges to obtain an advantage in a civil matter nor shall a lawyer present or participate in presenting criminal, administrative or disciplinary charges solely to obtain an advantage in a civil matter.
(b) It shall not be a violation of Rule 4.5 for a lawyer to notify another person in a civil matter that the lawyer reasonably believes that the other's conduct may violate criminal, administrative or disciplinary rules or statutes.

Commentary on This Rule

1.The civil adjudicative process is primarily designed for the settlement of disputes between parties, while the criminal, disciplinary and some administrative processes are designed for the protection of society as a whole. For purposes of this Rule, a civil matter is a controversy or potential controversy over rights and duties of two or more persons under the law whether or not an action has been commenced.

2.Threatening to use, or using the criminal, administrative or disciplinary process to coerce adjustment of private civil matters is a subversion of that process; further, the person against whom the criminal, administrative or disciplinary process is so misused may be deterred from asserting valid legal rights and thus the usefulness of the civil process in settling private disputes is impaired. As in all cases of abuse of judicial process, the improper use of criminal, administrative or disciplinary process tends to diminish public confidence in our legal system.

3.The Rule distinguishes between threats to bring criminal, administrative or disciplinary charges and the actual filing or presentation of such charges. Threats to file such charges are prohibited if a purpose is to obtain any advantage in a civil matter while the actual presentation of such charges is proscribed by this Rule only if the sole purpose for presenting the charges is to obtain an advantage in a civil matter.

4. This distinction is appropriate because the abuse of the judicial process is at its greatest when a threat of filing charges is used as a lever to obtain an advantage in a collateral, civil proceeding. This leverage is either eliminated or greatly reduced when the charge actually is presented.

5. Moreover, this Rule does not prohibit a lawyer from notifying another person involved in a civil matter that such person's conduct may violate criminal, administrative or disciplinary rules or statutes where the notifying lawyer reasonably believes that such a violation has taken place.

6. While it may be difficult in certain circumstances to distinguish between a notification and a threat, public policy is served by allowing a lawyer to notify another person of a perceived violation without subjecting the notifying lawyer to discipline. Many minor violations can be eliminated, rectified or minimized if there is frank dialogue among participants to a dispute.

7. Rule 4.5(b) provides a safe harbor for notifications of this type. Other factors that should be considered to differentiate threats from notifications in difficult cases include:

(a) an absence of any suggestion by the notifying lawyer that he or she could exert any improper influence over the criminal, administrative or disciplinary process,

(b) consideration of whether any monetary recovery or other relief sought by the notifying lawyer is reasonably related to the harm suffered by the lawyer's clients. Where no such reasonable relation exists, the communication likely constitutes a proscribed threat.

For example, a lawyer violates Rule 4.5 if the lawyer threatens to file a charge or complaint of tax fraud against another party where issues of tax fraud have nothing to do with the dispute. It is not a violation of Rule 4.5 for a lawyer to notify another party that the other person's writing of an insufficient funds check may have criminal as well as civil ramifications in a civil action for collection of the bad check.

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Colorado Lawyers Threatening Criminal Prosecution to Gain an Advantage in a Civil Matter

H. Michael Steinberg has been a Colorado criminal law specialist attorney for 30 years (as of 2012). For the First 13 years of his career, he was an Arapahoe - Douglas County District Attorney Senior prosecutor. In 1999 he formed his own law firm for the defense of Colorado criminal cases.

In addition to handling tens of thousands of cases in the trial courts of Colorado, he has written hundreds of articles regarding the practice of Colorado criminal law and frequently provides legal analysis on radio and television, appearing on the Fox News Channel, CNN and Various National and Local Newspapers and Radio Stations. Please call him at your convenience at 720-220-2277

In the Denver metropolitan area and throughout Colorado, attorney H. Michael Steinberg provides quality legal representation to those charged in Colorado adult and juvenile criminal matters.