What must a Colorado lawyer's fee agreement contain, and what fee terms are prohibited?
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This page answers the general question as of 2021. Ezel answers yours: whether it's allowed on your facts, under the current rules of professional conduct in your state, with citations.
Plain-English summary
The opinion (adopted in 2021 and revised in April 2022) examines a lawyer's ethical obligations and recommended best practices for fee agreements. It draws an explicit line at the outset: ethical obligations come from the Colorado Rules, while "best practices" are practices the Committee encourages but that are not ethical obligations and do not set the standard of care. The opinion notes that the Rules do not require a fee agreement as such, but Colo. RPC 1.5(b) does require that, before or within a reasonable time after starting a new representation, the lawyer communicate in writing the basis or rate of the fee and expenses and the scope of the representation, and communicate any later changes to the basis or rate in writing.
The opinion catalogs the foundational terms of a fee agreement: client identity; scope of representation (full or limited under Colo. RPC 1.2(c)); the fee and cost structure (hourly, flat, contingent, subscription/engagement retainers, and costs); billing; communication; file retention, return, and destruction; termination; and third-party considerations such as third-party payment, succession planning, and the use of lawyers outside the firm. For each, the opinion identifies what the Rules require versus what it recommends as a best practice, such as having the client sign and date the agreement and using plain language.
On prohibitions, the opinion states that under Colo. RPC 1.5(f) fees are not earned until the lawyer confers a benefit or performs a service, and a lawyer "may not contract around this requirement," and that under Colo. RPC 1.5(g) nonrefundable fees and nonrefundable retainers are prohibited and likewise cannot be contracted around. It adds that under Colo. RPC 1.8(h) a fee agreement may not prospectively limit the lawyer's malpractice liability unless the client is independently represented in making the agreement, and may not bar a client from filing a request for investigation with the Office of Attorney Regulation Counsel.
In practice
The opinion holds that a Colorado lawyer must, under Colo. RPC 1.5(b), put the basis or rate of fees and expenses and the scope of representation in writing for a new client, and must communicate changes to the fee basis or rate in writing. Per the opinion, fee agreements may not make fees nonrefundable or earned on receipt (Colo. RPC 1.5(f), (g)), may not prospectively limit malpractice liability absent independent representation (Colo. RPC 1.8(h)), and may not prevent the client from filing a request for investigation. The opinion frames items such as obtaining the client's signature, using plain language, and addressing communication expectations as best practices it encourages rather than rule requirements.
Common questions
Q: Does Colorado require a written fee agreement?
A: The opinion says the Rules do not require a fee agreement per se, but Colo. RPC 1.5(b) requires the lawyer to communicate the basis or rate of the fee and expenses and the scope of the representation in writing for a new client, and to communicate changes in the fee basis or rate in writing.
Q: Can a Colorado lawyer charge a nonrefundable retainer or call a fee "earned on receipt"?
A: No. The opinion states that nonrefundable fees and retainers are prohibited by Colo. RPC 1.5(g) and that fees are not earned until a benefit is conferred under Colo. RPC 1.5(f), and a lawyer may not contract around either requirement.
Q: Can a fee agreement limit the lawyer's malpractice liability?
A: Per the opinion, Colo. RPC 1.8(h) forbids prospectively limiting malpractice liability to a client unless the client is independently represented when entering the agreement, and an agreement may not bar a client from filing a request for investigation.
Q: What belongs in a Colorado fee agreement besides the fee?
A: The opinion identifies foundational terms including client identity, scope, fee and cost structure, billing, communication, file retention and return, termination, and third-party payment or succession arrangements, marking which are required and which are recommended.
Background and rules framework
The opinion interprets Colorado RPC 1.5 (fees), the analogue of Model Rule 1.5, with its Colorado-specific paragraphs (f) (fees earned only on conferring a benefit) and (g) (prohibition on nonrefundable fees and retainers). It also relies on Colo. RPC 1.4 (communication), 1.2(c) (limited-scope representation), 1.16 (declining or terminating representation and returning unearned fees), 1.8(h) (limiting malpractice liability), 1.15A (trust accounts), and definitions in Colo. RPC 1.0.
Citations and references
Rules of Professional Conduct:
- Model Rule 1.5 (fees)
- Colorado RPC 1.5(b), 1.5(f), 1.5(g), 1.4, 1.2(c), 1.16, 1.8(h), 1.15A
Other opinions cited:
- CBA Formal Op. 66 (2016): imposing interest or finance charges on client accounts
- CBA Ethics Op. 114 (2010): responsibilities of respondent parents' attorneys in dependency and neglect proceedings
See also
- ABA Formal Op. 505: fees paid in advance
- ABA Formal Op. 93-379: billing for fees and expenses
- ABA Formal Op. 94-389: contingent fees
Source
- Landing page: https://www.cobar.org/ethicsopinions
- Original PDF: https://www.cobar.org/Portals/COBAR/Repository/CBA/5422/Foundations of a Fee Agreement (revised April 2022)(6648968.1).pdf
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