Could a Colorado lender recover attorney fees for collection or foreclosure work performed by salaried in-house counsel?
Apply this to your situation
This page answers the general question as of 1986. Ask about yours and see what the current Colorado Rules of Professional Conduct say for your facts, with citations.
Plain-English summary
Opinion 72 considered contractual attorney-fee provisions in promissory notes and deeds of trust when the lender used full-time salaried counsel. It concluded that the lender could seek reimbursement for a reasonable pro rata portion of the salary and benefits actually attributable to the foreclosure or collection matter.
The fee had to represent a direct cost incurred because of the particular matter, preferably supported by accurate time records. General overhead and support-personnel costs were excluded because they were not amounts paid to the attorney for that matter. Recovery above salary and benefits would have produced an excessive fee and shared legal-fee revenue with the nonlawyer lender.
The opinion limited itself to contract-based recovery and did not decide statutory or court-rule fee awards or whether a particular arrangement involved unauthorized practice. Its 1995 addendum identified Rules 1.5(a) and 5.4(a) as the corresponding current-rule provisions.
Currency note
This opinion was issued in 1986, revised in 1991, and received a 1995 addendum, all before Colorado's 2008 revisions to the Rules of Professional Conduct. Later fee law, foreclosure procedure, in-house counsel opinions, and rule amendments may have changed the analysis. Treat this page as historical context and verify current authority before relying on a fee calculation.
Common questions
Q: Could the lender recover a market-rate attorney fee for salaried counsel?
A: No, under the opinion. Recovery was limited to the reasonable pro rata salary and benefits actually paid and attributable to the matter.
Q: Could overhead or support-staff costs be included?
A: No. The opinion excluded those general business costs from the recoverable attorney fee.
Q: What records supported the permitted recovery?
A: The opinion preferred accurate time records showing the portion of salary and benefits allocated to the specific foreclosure or collection matter.
Background and rules framework
The opinion was written under former rules barring excessive fees and fee sharing with nonlawyers. Its 1995 addendum identified Colorado RPC 1.5(a), requiring reasonable fees, and Rule 5.4(a), prohibiting nonlawyer fee sharing, as the continuing framework.
Citations and references
Rules of Professional Conduct:
- Colo. RPC 1.5(a) (reasonable fees)
- Colo. RPC 5.4(a) (fee sharing with nonlawyers)
Cases:
- Waterman v. Silverman, 397 P.2d 739 (Colo. 1964), reasonable and incurred collection fees
- Rockwell Insulating Co. v. Huston, 346 P.2d 576 (Colo. 1959), proof of attorney fees
- Metro National Bank v. Roe, 675 P.2d 331 (Colo. App. 1983), note holder's burden of proof
- In re Chemical Bank, 84 Misc. 2d 721 (N.Y. Sup. Ct. 1975), scheduled fee unrelated to in-house work
Other opinions cited:
- CBA Formal Opinion 54: attorney fees in foreclosure proceedings
- ABA Formal Opinion 157 and Informal Decision 544: in-house fee recovery and fee sharing
- Illinois Opinion 768 and Tennessee Opinion 84-F-67: salaried in-house counsel fees
See also
- Illinois Ethics Op. 768: In-House Lawyer Salary as Foreclosure Fee
- NYSBA Op. 1121: In-House Counsel Fee Award
- CBA Formal Op. 54: Foreclosure and Redemption Fees
Source
- Landing page: https://www.cobar.org/ethicsopinions
- Original PDF: Colorado Formal Ethics Opinion 72
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