The Colorado Bar Association Ethics Committee issued Formal Ethics Opinion 143, Foundations of a Fee Agreement in 2021 (revised in 2022).  This article summarizes the Opinion and explores the best practices concerning fee agreements for lawyers.

Introduction

Colo. RPC 1.5(b) requires that when the lawyer has not regularly represented the client, the basis or rate of the fee should be communicated in writing within a reasonable time after the representation begins. Lawyers are encouraged to use an agreement to establish clear client expectations and avoid misunderstandings.  The agreement should be drafted in plain language to ensure accurate understanding by the client. It is recommended that client sign and date the agreement.

Terms of a Fee Agreement

• Client Identity and Communication: The agreement should identify the client, and if different, the person paying for the representation. Additionally, the agreement should outline the mode and frequency of communication to ensure effective collaboration throughout the case.
• Scope and Purpose:Full Scope/Limited Scope Representation: The agreement should define the services (full or limited) the lawyer will provide and those services that will not be included. It is recommended that clients initial relevant sections to reinforce their understanding. It is also important to identify the services not included.
• Fees and Costs:
  1. Hourly Fee: Lawyers must communicate the hourly rate or basis to the client in writing. An initial retainer that the client replenishes as used is recommended for safeguarding the lawyer’s interests. The fee agreement should address the terms of the initial retainer including amount, amount to replenish, and when the amount is due.
  2. Flat Fee: For flat fee agreements, the agreement should include a description of services, payment amount, payment process and timing, and how fees will be calculated in case of early termination.  Flat fee agreements must be in writing.
  3. Contingent Fee: Complying with Colo. RPC 1.5(c), the agreement must be signed by both parties, and the lawyer should retain a copy for seven years after case resolution. Substantial compliance with all provisions of the rule is necessary for enforceability.
  4. Subscription Billing and Engagement Retainers: Clearly distinguish between subscription fees and engagement retainers and ensure compliance with relevant rules to prevent mismanagement of funds.
  5. Costs: The agreement should specify the type of costs and outline procedures for handling costs that may not be known upfront.
  6. Billing: The agreement should clarify the frequency of invoices, client payment obligations, and the lawyer’s right to charge interest for unpaid fees and expenses. If you intend to charge interest, disclosure in the fee agreement that the interest will be charged, the percentage charged, and the period for which interest will be imposed.
  7. Prohibitions: Certain provisions are prohibited, including nonrefundable fees and limiting liability for malpractice. Also, the fee agreement cannot bar the client from filing a request for investigation with the Office of the Attorney Regulation Counsel.
• File Retention, Return, and Destruction: The agreement should address how the lawyer will maintain the client’s file during representation and the process for returning the file after representation ends.  See Rule 1.16A).
• Termination: Inform the client of their right to terminate the lawyer-client relationship at any time without penalty. Similarly, the lawyer should explain under what circumstances they may terminate the representation.
• Third Party Considerations: Address scenarios involving third parties, including third-party payment, succession planning and co-counseling arrangements. For newer lawyers, include in the fee agreement the possibility of seeking advice from other counsel to provide competent representation. Ensure communication regarding billing is directly with the client, regardless of the payment source.

Conclusion: Building Trust and Transparency

A well-drafted fee agreement serves as a critical tool in establishing a strong lawyer-client relationship. By following best practices, lawyers can promote transparency, mutual understanding, and compliance with ethical rules, fostering trust and satisfaction in their professional engagements with clients.

Nicole Marie Black named as a 2022 Colorado Super Lawyer for Colorado SuperLawyers magazine. View Nicole’s attorney profile.

Nancy L. Cohen named as a 2022 Colorado Super Lawyer for Colorado SuperLawyers magazine. View Nancy’s attorney profile.

CNA’s series: In Practice recently published an article by Nancy Cohen titled: Lawyers’ Duties Regarding Legal Files After a Client’s Death. In the article, Nancy covers details regarding recent changes in the law, including the survival of attorney-client privilege after death.

Nancy L. Cohen named as a 2021 Colorado Super Lawyer for Colorado SuperLawyers magazine. View Nancy’s attorney profile.

Nicole Marie Black named to Colorado Rising Stars for Colorado SuperLawyers magazine. View Nicole’s attorney profile.

On November 2, 2020, the Colorado Supreme Court issued is ruling in In re Estate of Louis Rabin, No. 19SC86, 2020 CO 77, and reversed a division of the Colorado Court of Appeals’ which had held that a personal representative was entitled to take possession of client files of the decedent as “property” under Colorado’s Probate Code, C.R.S. § 15-12-709, because the personal representative steps into the shoes of the decedent for purposes of attorney-client privilege. Cohen|Black Law LLC attorneys represented the Petitioner, the longtime attorney for the now deceased-client (“decedent”) who had been subpoenaed by the personal representative to produce all legal files in his possession. In granting reversal, the Colorado Supreme Court sided with Cohen|Black Law attorneys on all three issues: addressing property rights in client files, whether the attorney-client privilege automatically passes to the personal representative upon a decedent-client’s death, and the circumstances under which the Colorado Rules of Professional Conduct would allow a lawyer to reveal information relating to the representation of a deceased client to the personal representative. The decision closes several loopholes through which attorneys in Colorado were subject to subpoenas, litigation, and ambiguity as to the interplay between the Probate Code and attorney professional ethics. Below is an explanation of the key holdings by the Colorado Supreme Court.

The Court was first asked to determine whether a decedent’s legal files are property within the meaning of C.R.S. § 15-12-709. It concluded they are not.

On the first question, the decedent’s personal representative argued the decedent had a property right to their full legal files and that by operation of C.R.S. section 15-12-709 of the Probate Code, a personal representative takes possession or control of all decedent’s files upon death of the decedent. The Court rejected this theory. While it recognized “property”, under C.R.S. §15-12-709 includes tangible and intangible property rights, it did not include a vested property right in a client’s legal files. The Court confirmed that an attorney’s duty to provide “papers and property to which the client is entitled” is not rooted in property law, but rather is grounded in Colorado Rule of Professional Conduct 1.16(d). The Court recognized that Rule 1.16(d)’s reference to “paper’s and property” creates a distinction between a client’s property and “[a] client’s files . . . relating to a matter that the lawyer would usually maintain in the ordinary course of practice.” Keeping with the Rule’s distinction between a lawyers papers and client property, the Court concluded that following death of the client, legal files belong to the lawyer except for documents having intrinsic value or directly affecting valuable rights of the former client. In short, the client file is not property under the Probate Code.

The Court was next asked to determine whether a personal representative becomes the holder of the attorney-client privilege upon decedent’s death. The Court held she does not.

On the second question, the Cohen|Black attorneys argued on behalf of the Petitioner that the attorney-client privilege does not pass to a personal representative upon decedent’s death because concluding such would obviate the well-founded legal principle that the attorney-client privilege survives the death of the client and would overturn important legal precedent in Colorado, including Wesp v. Everson,. The Court agreed with Petitioner and reasoned that both the attorney-client privilege and Colorado Rule of Professional Conduct 1.6 require that attorneys maintain confidentiality unless certain exceptions apply, including waiver by the client. The Court concluded the decedent continues to hold the attorney-client privilege after death, not the personal representative.

The Court was next asked to determine whether the Colorado Rules of Professional Conduct permit a lawyer to reveal a deceased client’s protected information to a personal representative. The Court held that is a fact-specific inquire based on the circumstances.

Finally, the Court considered whether the act of appointing a personal representative to administer the estate of a decedent impliedly waives both the attorney-client privilege and Rule 1.6’s duty of confidentiality. The Court answered this question in the affirmative but found that the waiver is limited for the administration of the probate estate. In so holding, the Court determined that nominating a personal representative impliedly waives any claim of attorney-client privilege with respect to communications necessary for estate administration, unless the client expressly manifested the intent to maintain the privilege. Practically speaking, the Court recognized that a decedent’s former attorney may provide the personal representative with confidential information necessary to settle the estate but that he must hold any information and communications not necessary to settle the estate as confidential and privileged. In sum, the attorney cannot provide a decedent’s complete legal files to the personal representative unless the decedent gave informed consent for this broader disclosure.

Colorado Women’s Bar Association recently profiled Cohen|Black Law, LLC, and its attorneys. Ms. Cohen and Ms. Black are active members in the Women’ Bar Association and are excited to be recognized in their Professional Spotlight column. The full Colorado Women’s Bar Association blog post can be found here.

Nicole Marie Black named to Colorado Rising Stars for Colorado SuperLawyers magazine. View Nicole’s attorney profile.

Nancy L. Cohen named as a 2020 Colorado Super Lawyer for Colorado SuperLawyers magazine. View Nancy’s attorney profile.