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
(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 a lawyer 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 actionable “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 attorney’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.