Contingency Fee Agreement - Colorado

CONTINGENCY FEE AGREEMENT (COLORADO)

Parties and Engagement

Date of Agreement: [__/__/____]

This Agreement is executed in duplicate, and the Client acknowledges receipt of a fully signed duplicate original at the time of signing (C.R.C.P. Ch. 23.3, Rule 7, Form 2).

PART A — Required Disclosure Statement (C.R.C.P. Ch. 23.3, Rule 5 / Form 1)

Types of Attorney Fee Agreements. I have been informed and understand that there are several types of attorney fee arrangements: (1) time based, (2) fixed, (3) contingent, or (4) combinations of these types. "Time based" means a fee determined by the amount of time involved, such as so much per hour, day, or week. "Fixed" means a fee based on an agreed amount regardless of the time or effort involved or the result obtained. "Contingent" means a certain agreed percentage or amount payable only upon attaining a recovery, regardless of the time or effort involved. I understand that not all attorneys offer all of these types of fee arrangements, and I acknowledge that I have the right to contact other attorneys to determine whether they may provide a different fee arrangement for my matter. After such consideration, I have elected the fee arrangement set forth in the accompanying Contingent Fee Agreement.

Specially Awarded Attorney Fees. I understand that a court or other tribunal may award attorney fees against an opposing party and in my favor. The treatment of any such specially awarded fees is addressed in the Agreement below.

Expenses. I understand that I may be responsible for expenses and disbursements incurred in pursuing my matter, as described in the Agreement below.

Potential of Costs and Attorney Fees Being Awarded to the Opposing Party. I understand that a court or other tribunal may award costs or attorney fees to an opposing party and against me.

Associated Counsel. I understand that my attorney may wish to retain another lawyer ("associated counsel") to assist, and that the requirements set forth in the Agreement below will apply.

Subrogation. I understand that other persons or entities may have a right to be paid from amounts recovered on my behalf.

Alternative Attorney Compensation. I have been informed and understand that if, after entering into a fee agreement with my attorney, I terminate the employment of my attorney or my attorney justifiably withdraws, I may nevertheless be obligated to pay my attorney for the work done on my behalf, as set forth in the Agreement below.

☐ I acknowledge that I received a complete copy of this Disclosure Statement and read it.

Client Signature: ________________________________ Date: [__/__/____]

PART B — Contingent Fee Agreement (C.R.C.P. Ch. 23.3, Rule 7 / Form 2)

1. Scope of Representation

The Client retains the Attorney to perform the following legal services, which the Attorney agrees to perform faithfully and with due diligence:

Claim / Controversy / Matter: [________________________________]

Adverse Party / Defendant(s): [________________________________]

Date of Incident / Accrual: [__/__/____]

Statute of Limitations Deadline: [__/__/____]

The representation:
☐ will include the handling of counterclaims, third-party claims to amounts recovered, and appeals
☐ will not include appeals or post-judgment proceedings (a separate agreement will be required)

2. The Contingency

The contingency upon which compensation is to be paid is the Client's recovery of funds by settlement or judgment.

3. The Contingent Fee — Percentage

The Client will pay the Attorney [____]% of the amount collected.

☐ Single percentage (above), OR ☐ Tiered by stage of resolution:

4. Fee Computed on Gross or Net Amount

The percentage in Section 3 is applied to (indicate which):

☐ Gross amount collected — the amount collected before any subtraction of expenses and disbursements.

☐ Net amount collected — the amount remaining after subtraction of expenses and disbursements. Net amount: ☐ including / ☐ not including costs or attorney fees awarded to an opposing party and against the Client.

"The amount collected" ☐ includes / ☐ does not include specially awarded attorney fees and costs awarded to the Client and against an opposing party.

5. Client Not Liable Except From Amounts Collected — Alternative Compensation

The Client is not to be liable to pay compensation otherwise than from amounts collected for the Client by the Attorney, except as follows: In the event the Client terminates this Agreement without wrongful conduct by the Attorney that would cause the Attorney to forfeit any fee, or if the Attorney justifiably withdraws from the representation, the Attorney may ask the court or other tribunal to order that the Attorney be paid a fee based upon the reasonable value of the services provided (quantum meruit). If the Attorney and the Client cannot agree how the Attorney is to be compensated in this circumstance, the Attorney will request the court or other tribunal to determine: (1) whether the Client has been unfairly or unjustly enriched if the Client does not pay a fee; and, if so, (2) the amount of the fee owed, taking into account the nature and complexity of the matter, the time and skill devoted, and the benefit obtained by the Client. Any such fee shall be payable only out of the gross recovery obtained by or on behalf of the Client, and shall not be greater than the fee that would have been earned had the contingency described in this Agreement occurred.

6. Costs Awarded Against the Client

A court or other tribunal may award costs or attorney fees to an opposing party and against the Client.

7. Expenses and Disbursements

The Client will be liable to the Attorney for reasonable expenses and disbursements. Such expenses and disbursements are estimated to be $[____]. The Client authorizes the Attorney to incur expenses and make disbursements up to a maximum of $[____]. The Attorney will not exceed this limitation without the Client's further written authority.

Categories of expenses may include:
☐ Court filing fees ☐ Service of process ☐ Deposition / transcript costs ☐ Expert witness fees ☐ Medical record retrieval ☐ Investigation ☐ Mediation / arbitration fees ☐ Document reproduction ☐ Other: [________________]

The Client will reimburse the Attorney for such expenditures:
☐ upon receipt of a billing ☐ in specified installments ☐ upon final resolution ☐ other: [________________]

8. Associated Counsel (Colo. RPC 1.5(d); Ch. 23.3 Form 2)

If the Attorney wishes to hire a lawyer in another firm to assist (an "associated counsel"), the Attorney will promptly inform the Client in writing of the identity of the associated counsel and that the hiring of associated counsel will not increase the contingent fee unless the Client otherwise agrees in writing. The Client has the right to disapprove the hiring of associated counsel and to terminate the employment of associated counsel for any reason. Any division of fee between lawyers not in the same firm must satisfy Colo. RPC 1.5(d): the division is in proportion to services performed and responsibility assumed; the Client consents after full disclosure of the division; the total fee is reasonable; and the division is set forth in writing signed by the lawyers and by the Client with informed consent. Referral fees are prohibited in Colorado.

9. Third-Party Claims, Liens, and Subrogation

Other persons or entities may have a right to be paid from amounts recovered on the Client's behalf. The Client:
☐ authorizes / ☐ does not authorize the Attorney to pay from the amount collected the following: physicians, hospitals, health insurers, subrogation claims and liens, Medicare/Medicaid (42 U.S.C. § 1395y(b)), workers' compensation liens, and other valid claims: [________________].

The Attorney may be legally required to pay the claims of third parties out of monies collected and not to disburse them to the Client. If the Client disputes the amount or validity of a third-party claim, the Attorney may deposit the funds into the registry of an appropriate court for determination. Any amounts paid to third parties ☐ will / ☐ will not be subtracted from the amount collected before computing the contingent fee.

10. Excluded / Prohibited Contingent Fee Matters (Colo. RPC 1.5(d) per ABA Model; Ch. 23.3 Rule 1)

A contingent fee may not be charged where prohibited by law. This Agreement confirms:
☐ This matter is not a domestic relations matter in which the fee is contingent upon securing a divorce or upon the amount of alimony, support, or property settlement in lieu thereof.
☐ This matter is not the defense of a criminal case.

11. Settlement Authority

The Attorney shall not settle the Client's claim without the Client's prior approval. The Attorney will communicate all settlement offers, and the decision to accept or reject any settlement belongs solely to the Client (Colo. RPC 1.2(a)).

12. Client's Right to Terminate

The Client may terminate this Agreement and discharge the Attorney at any time. Nonrefundable fees and any provision that unreasonably restricts the Client's right to terminate are prohibited (Colo. RPC 1.5(g)). Upon termination, the Attorney's compensation, if any, is governed by Section 5 above.

13. Final Disbursement Statement (C.R.C.P. Ch. 23.3, Rule 7)

Upon recovery and at the conclusion of the representation, the Attorney will prepare and provide to the Client a Final Disbursement Statement itemizing the gross recovery, all expenses incurred, the net recovery, the computation of the contingent fee, and the disbursement to the Client. The statement will be signed by the Attorney and the Client.

14. No Recovery — No Fee

If there is no recovery, the Client owes no attorney fee.
☐ The Client remains responsible for expenses and disbursements advanced, OR
☐ The Attorney absorbs all advanced expenses if there is no recovery.

15. Acknowledgment and Signatures

WE HAVE EACH READ THE ABOVE AGREEMENT BEFORE SIGNING IT. This Agreement is executed in duplicate, and the Client has received a signed duplicate original.

Client Signature: ________________________________ Date: [__/__/____]

Client Printed Name: [________________________________]

Attorney Signature: ________________________________ Date: [__/__/____]

Attorney Printed Name & Reg. No.: [________________________________]

Colorado Practice Notes

• Chapter 23.3 controls. Colo. RPC 1.5(c) provides that "[a] contingent fee shall meet all of the requirements of Chapter 23.3 of the Colorado Rules of Civil Procedure, 'Rules Governing Contingent Fees.'" Colo. RPC 1.5(b) further requires that contingent fee agreements be in a writing signed by the client. Chapter 23.3 then layers on the mandatory Disclosure Statement (Form 1), the form Contingent Fee Agreement (Form 2) with its required provisions, and the Final Disbursement Statement.
• Unenforceability sanction. Under C.R.C.P. Ch. 23.3, Rule 6, no contingent fee agreement is enforceable by the involved attorney unless there has been substantial compliance with all provisions of Chapter 23.3. Defects (e.g., failure to provide the Disclosure Statement, failure to execute in duplicate, missing required provisions) can render the fee unenforceable and relegate the lawyer to quantum meruit. See, e.g., Mullens v. Hansel-Henderson, 65 P.3d 992 (Colo. 2002).
• No general percentage cap. Colorado imposes no statutory percentage cap on contingent fees in ordinary personal injury/tort matters (subject always to the RPC 1.5(a) reasonableness standard). The percentage is negotiable.
• Prohibited matters. Colorado follows the ABA Model Rule prohibitions against contingent fees in (1) domestic relations matters contingent on divorce or on the amount of alimony/support/property settlement, and (2) criminal defense.
• Fee division / referral fees. Colo. RPC 1.5(d) permits fee division between lawyers in different firms only if proportional to services/responsibility, disclosed, reasonable in total, and set forth in a writing signed by the lawyers and the client with informed consent. Referral fees are expressly prohibited.
• Nonrefundable fees prohibited. Colo. RPC 1.5 prohibits nonrefundable fees and nonrefundable retainers and any agreement that unreasonably restricts the client's right to a refund of unearned or unreasonable fees.
• Workers' compensation. Attorney fees in Colorado workers' compensation matters are subject to approval by the Director or an administrative law judge under C.R.S. § 8-43-403 and Division of Workers' Compensation rules; the commonly applied guideline caps fees at roughly 20% of contested amounts.
• Unsettled / verify: Confirm the current text of Chapter 23.3 Forms 1 and 2 (last substantively amended effective Jan. 1, 2021) and the OARC/COBA form Contingent Fee Agreement; confirm current workers' comp fee rules with the Division.

Sources and References

• Colo. RPC 1.5 (Colorado Bar Association)
• C.R.C.P. Chapter 23.3 — Rules Governing Contingent Fees (Rule Change 2001(11))
• Colorado Office of Attorney Regulation Counsel — Fee Agreement Rules & Best Practices (Form Contingent Fee Agreement; Formal Ethics Op. 143)
• Form Contingent Fee Agreement (Colorado Legal Regulation)
• Colorado Rules of Civil Procedure (full, leg.colorado.gov)
• C.R.S. § 8-43-403 (Workers' Compensation attorney fees)