Monday, April 27, 2009

Different view on what constitutes business transaction with client

Model Rule 1.8 (and its state equivalents) do not ban a lawyer from engaging in business transactions with clients. However, it is clear this is allowed subject to many limitations. Today, a disciplinary Board in Colorado has decided that a lawyer is subject to sanctions because he wife was involved with a business transaction with one of the lawyer's clients. The Presiding Disciplinary Judge held that the lawyer negligently failed to terminate an attorney-client relationship when he learned about his wife's business transaction with the client. The Judge concluded this meant the lawyer effectively entered into a business transaction with his client without the appropriate disclosures in violation of Colo. RPCs 1.16(a), 1.8(a) and 5.3(b). The case is called People v. Montoya.

Thanks to Mike Frisch of The Legal Profession Blog for the information.

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