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Abstract 98/99-07

Summary of Facts Provided

The attorney entered into a written contingency fee agreement with the client to represent the client in a personal injury action. The contingency fee agreement between the attorney and the client did not provide that the attorney could recover attorney fees if the client discharged the attorney prior to the conclusion of the matter. After performing some services, the client discharged the attorney without cause.

Issues and Conclusions

Can the attorney ethically assert a charging lien, pursuant to CRS § 12-5-119 (1998), for attorney fees and costs incurred in representing the client who unilaterally terminated the attorney's services without cause?

If the contingency fee agreement does not expressly provide that the attorney may recover attorney fees where the client has discharged the attorney without cause, the agreement does not substantially comply with C.R.C.P., Ch. 23.3 regarding the recovery of attorneys' fees. As such, Colo. RPC 1.5 and 8.4(d) ethically prohibit the attorney from asserting a lien to recover such fees. Colo. RPC 1.5(c) provides that a lawyer's fee may be contingent provided, inter alia, that a contingent fee shall meet all of the requirements of C.R.C.P., Ch. 23.3. Under Ch. 23.3, Rule 5(d), the contingency fee agreement must set forth "a statement of the contingency upon which the client is to be liable to pay compensation otherwise than from the amounts collected for him by the attorney." Further, Rule 6 prohibits an attorney from recovering any fees if he fails to comply substantially with all of the requirements of C.R.C.P., Ch. 23.3. In Elliott v. Joyce, 889 P.2d 43 (Colo. 1994), under similar circumstances the Supreme Court applied these rules to prohibit a recovery of attorney fees under a quantum meruit theory, as a sanction for failure to comply with C.R.C.P., Ch. 23.3.

Assuming the attorney has complied with the requirements in Colo. RPC 1.8(e) and C.R.C.P. 23.3, Rule 5(f), regarding costs incurred on the client's behalf, the attorney may ethically assert a charging lien pursuant to CRS § 12-5-119 (1998), for the reasonable, authorized costs incurred on behalf of the client. However, if the attorney does not comply with C.R.C.P., Ch. 23.3, Rule 5(f), the attorney may not ethically assert a lien to recover costs. Elliott v. Joyce, 889 P.2d at 45. Rule 5(f) requires all contingency fee agreements to include a stipulation from the client that the client, except as permitted by Colo. RPC 1.8(e), is to be liable for expenses. The stipulation must include an estimate of such expenses, authority of the attorney to incur the expenses and make disbursements, and a maximum limitation not to be exceeded without the client's written authority. Colo. RPC 1.8(e) prohibits the attorney from advancing expenses on behalf of the client unless the client remains ultimately liable for such expenses. The attorney may only forgive such expenses "if it is or becomes apparent that the client is unable to pay such expenses without suffering substantial financial hardship."