Attorney Referral Fees in Colorado - A Complete Guide

How to Ethically Share Fees With Other Colorado Attorneys

Colorado is similar to the ABA Model Rules regarding divisions of fees. Attorneys may divide fees based on services provides or with the assumption of joint responsibility.

Colorado Rule

Colorado Rules of Professional Conduct Rule 1.5 (d) and (e) provide the requirements for any division. They state:

(d) Other than in connection with the sale of a law practice pursuant to Rule 1.17, a division of a fee between lawyers who are not in the same firm may be made only if:

• (1) the division is in proportion to the services performed by each lawyer or each lawyer assumes joint responsibility for the representation;
• (2) the client agrees to the arrangement, including the basis upon which the division of fees shall be made, and the client’s agreement is confirmed in writing; and
• (3) the total fee is reasonable.

(e) Referral fees are prohibited.

Colorado has adopted the ABA Model Rules with the addition of explicitly excluding the sale of a law practice from Rule 1.5(e). In addition, Colorado explicitly bans the use of pure referral fees.

Reasonable Fees

A division between attorneys maintains the requirement of reasonable fees. WRPC Rule 1.5(a) provides:

A lawyer shall not make an agreement for, charge, or collect an unreasonable fee or an unreasonable amount for expenses. The factors to be considered in determining the reasonableness of a fee include the following:

• (1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;
• (2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;
• (3) the fee customarily charged in the locality for similar legal services;
• (4) the amount involved and the results obtained;
• (5) the time limitations imposed by the client or by the circumstances;
• (6) the nature and length of the professional relationship with the client;
• (7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and
• (8) whether the fee is fixed or contingent.

Colorado has adopted the ABA Model Rule regarding reasonable fees. These factors are not exclusive, and may or may not be relevant in any matter. Reasonableness should be a case-by-case determination.

Competency

The Rule 1.5 Comment includes a competency requirement for any division and cites CRPC Rule 1.1. That rule states:

“A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.”

No single factor determines competency. Attorneys must maintain competency throughout representation.

Similar to a fee’s reasonableness, competency should be determined on a case-by-case basis. When referring a client to another attorney, some of the factors to consider include:

• The relevant circumstances
• The nonfirm attorney’s education, experience, and reputation
• The expected services the nonfirm attorney will provide
• Any relevant ethical rules

Ethics Opinions

The following ethics opinions provide additional guidance and clarity on divisions of fees in Colorado.

Opinion 38 reaffirms that any division must be based on either work performed or with the assumption of joint responsibility. Attorneys in Colorado cannot use pure referral fees.

Opinion 121, issued in 2009 and supplanting Opinion 105, looks at when attorneys from other jurisdictions, either in the U.S. or foreign, fall under Rule 1.5(d). The opinion included several steps when working with attorneys not barred in Colorado.

First, to comply with CRPC Rule 1.1, attorneys must determine whether the other attorney is competent to handle representation. This can be done by confirming that the non-Colorado attorney is licensed and in good standing in at least one other jurisdiction and have reason to believe the attorney is competent to handle representation. Colorado attorneys must also ensure that they will not be assisting in any unauthorized practice of law within the state.

CRPC Rule 1.5(d) will not apply if the foreign or domestic lawyer would be paid regardless of a case’s outcome or if the client paid the firm. Similarly, Rule 1.5(d) is unlikely to apply if compensation is not based on a percentage or otherwise tied to client payment.

If CRPC Rule 1.5(d) would apply, the Colorado attorney must ensure they follow all of the requirements of the rule. The Committee restates that Rule 1.5(d) applies only when the Colorado attorney determines the other individual is an active member of another bar, either foreign or domestic, and in good standing.

Conclusion

Colorado requires attorneys to base any division of fees on services performed or with the assumption of joint responsibility. The state does not allow any pure referral fees. All attorneys must be competent.