Lawyers for the medical marijuana industry have been the subject of ethics opinions (e.g., Ariz. Ethics Op. 11-01) and even an ethics rule change (Colo. R. Prof’l Conduct R. 1.2 cmt. 14). Now, they are the subject of disqualification. The firm at issue had represented two marijuana dispensaries and a principal in a department of revenue investigation. When the state later brought criminal charges against the dispensaries and the principal based in part on the conduct involved in the department of revenue investigation, the firm agreed to represent one of the dispensaries and the principal. The other dispensary retained separate counsel. The state moved to disqualify the firm because (1) the dispensary was now a former client in a substantially related matter, which was largely undisputed, and (2) the dispensary’s interests were materially adverse to the current clients. The state claimed that adverse interests existed both because the principal would likely attempt to shift the blame for the criminal conduct to the former client dispensary and its employees and because the firm might have to cross-examine some (unnamed) constituents of its former client. The trial court agreed and disqualified the firm.
The Colorado Supreme Court’s majority opinion reversed the disqualification, and dueling standards of review partly explain the reversal and the dissent. The majority placed weight on the right to counsel of choice, particularly in a criminal case. It also noted repeatedly that disqualification is an “extreme” remedy that should be used only when less drastic remedies would be ineffective and that courts are “highly cynical” of motions to disqualify because litigants can use them for dilatory or tactical purposes. After noting further that the burden is on the moving party, the majority announced (in a Colorado-specific twist) “that burden is met only where the motion to disqualify sets forth specific facts showing a ‘clear danger that prejudice to a client or adversary would result from continued representation, . . . [and t]he required showing of prejudice cannot be based on mere speculation or conjecture.'” After that windup, it is perhaps not surprising that the court rejected the attempt to disqualify the firm. The court stated that the prejudice to the former client was “speculative,” and indeed all of the parties seemed aligned in their interest to have the dispensaries survive the criminal prosecution. Moreover, to the extent the firm might, speculatively, have to cross-examine constituents of a former client or rely on confidential information from its former representation, any prejudice could be alleviated by the severance and order of the trials.
The dissent, however, took a different and arguably more conventional view of the standard of review. Most appellate courts review a trial court’s disqualification decision for an abuse of discretion. In Colorado (and in essence several states), that standard asks whether the “trial court’s decision is manifestly arbitrary, unreasonable, or unfair.” Furthermore, “[a]lthough a criminal defendant’s choice of a particular attorney is afforded great deference, . . . the ‘essential aim’ of the Sixth Amendment ‘is to guarantee an effective advocate for each criminal defendant’ within the adversarial process—not ‘to ensure that a defendant will inexorably be represented by the lawyer whom he prefers.'” Wheat v. United States, 486 U.S. 153, 159 (1988). Applying these more deferential standards, the dissent reasoned: “It was not manifestly arbitrary, unreasonable, or unfair for the trial court to conclude that one of [the principal]’s best defense strategies would be to shift blame away from himself and onto [the other dispensary’s two co-indicted store managers] . . . by claiming that they acted at their own behest in committing any alleged crimes rather than at his direction.” Furthermore, the firm might need to cross-examine these employees using confidential information it had obtained from its former representation. Summing up the differing approaches, the dissent concluded: “Although it purports to apply an abuse of discretion standard in reviewing the trial court’s decision, the majority actually applies a far more stringent standard and fails to recognize the substantial latitude and broad discretion afforded trial courts in making the difficult decision to disqualify counsel.”
Click here for both the majority and dissenting opinions in People v. Hoskins.