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TCL > May 2003 Issue > A Message From This Legislative Session

The Colorado Lawyer
May 2003
Vol. 32, No. 5 [Page  33]

© 2003 The Colorado Lawyer and Colorado Bar Association. All Rights Reserved.

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Features
CBA President's Message to Members

A Message From This Legislative Session
by John E. Moye

 

 

 

 


John E. Moye

This year’s legislative session is nearing its end. It has been a prolific year for new legislation directed at the legal profession, and the Colorado Bar Association ("CBA") Legislative Policy Committee ("Committee") and CBA staff have been successful in working with the legislators to help them understand the consequences of some of the measures. However, there are some important lessons to be learned from this year’s crop of bills.

The Committee1 has been meeting weekly throughout the session to review all pending legislation that affects substantive areas of interest to the various CBA Sections and to monitor new statutes that attempt to regulate conduct of attorneys or impose restrictions on litigation. Michael Valdez, CBA Director of Legislative Relations, is our representative at the State Capitol and actively lobbies on behalf of the CBA on the bills on which we have a position. This year, we expanded our presence in the legislature by engaging the excellent services of Mary Kay Hogan and Ruth Aponté, both experienced lobbyists, who have also represented the CBA well in this session. Michael Valdez notifies the Committee whenever any bill addresses a particular substantive area or imposes requirements on lawyers and their activities.

The Committee and CBA staff review all the legislation that is introduced and have taken an active role in reviewing more than twenty-five bills and numerous budgetary issues during this legislative session; however, several bills have attracted the attention of the members of the CBA Sections who asked the Bar Association to oppose or support the measures. Some of the trends that we saw in the legislation have caused the Committee concern about the impression of the legal profession in the minds of our legislators.

Legislative Concerns and Reactions

It is apparent the legislature is concerned about how lawyers disclose the economic consequences of their representation to their clients. Similarly, our lawmakers are anxious to address frivolous and unsupportable claims and the costs of litigation. While the objectives of such legislation may be laudable, the regulation of the legal profession through legislation is a peril facing our profession.

The Colorado Supreme Court has the constitutional duty to oversee our profession. The Court and attorneys have for centuries performed this function, and it is important that the profession retain jurisdiction and control over its activities. It is not so much that we always do a good job of it, but we have the tools and the structure to correct the problems, and we can and should be responsible to conduct our profession so that the legislators do not perceive it to be a social problem that requires their attention. Here are some examples of the bills that the CBA Legislative Policy Committee considered.

Contingent Fee Representation

Senate Bill ("S.B.") 03-081 was introduced by Senator David Owen and was called the "Colorado Legal Consumer’s Bill of Rights Act." In cases involving a wrongful death, personal injury, or property damage or loss, the bill required attorneys who enter into contingent fee agreements with clients to deliver a written statement to the client at their initial meeting that discloses:

• the estimated number of hours that the attorney will spend handling the case

• the contingent fee arrangement, including any conditions, restrictions, or other qualifications on the contingent fee

• that there will be costs the client has to pay

• all other fee agreements made concerning the case, such as co-counsel fees.

The lawyer is then required to keep accurate records of the time spent on the case and provide written monthly reports of the time spent, work performed, and progress on the case. At the end of the case, the attorney must disclose the actual hours spent, total amount of the contingent fee, and per-hour charge (dividing the contingent fee by the number of hours). The client has a right to have an objective review by a bar association or another attorney to be sure the fee is reasonable and fair under the circumstances. An attorney who violates the provisions of the statute is liable to the client in a civil action for compensatory damages.

The bill did recognize that this conduct is regulated by a Supreme Court rule, and subordinated the provisions of the statute to the applicable rule. Supreme Court Rule 23.3 describes exactly what attorneys must disclose to potential clients in written contingent fee agreements.2

Although S.B. 03-081 failed, several members of the House of Representatives introduced House Bill ("H.B.") 03-1261, entitled "Concerning Attorney Representation of Clients in Medical Malpractice Actions." This bill would have provided essentially the same disclosure requirements in contingent fee cases, but further would have provided that the client could elect, at the conclusion of the representation, to compensate the attorney based on hourly rates for the time spent or the contingent fee arrangement. The bill also would have required specified disclosures of settlement offers, including:

• an estimate of the likelihood of achieving a resolution different than the result by accepting the settlement offer

• an estimate of when such different resolution may be reached

• the attorney fees and expenses that are required to achieve such a resolution.

Again, an attorney who failed to comply with this statute would have been subject to a civil action for damages. The bill was withdrawn by its sponsor for unknown reasons.

A final measure, S.B. 03-086, will regulate contingent fee contracts between a governmental entity and a private attorney. If the state of Colorado or any of its departments or agencies (including institutions of higher education) enters into a contingent fee arrangement, it will be entitled to the written disclosure similar to the above-described requirements, and the governmental entity could elect to pay an hourly rate (specified at the beginning of the representation and not to exceed $1,000 per hour) in lieu of the contingent fee arrangement. This bill was sent to the Governor on April 1, 2003, for his signature.

It is obvious that the foregoing legislative efforts are directed at a perceived abuse of contingent fee arrangements and perceived deficiencies in the communications between lawyers and their clients. We all support improved communication with the client of the characteristics of contingent fee arrangements and how they compare with hourly-rate engagements. Similarly, the client should be fully informed about the consequences of any settlement offers to compare them to other potential outcomes. However, the economics of a contingent fee practice also must be considered.

Contingent fee lawyers do not win every contingent fee case. The economics of that practice depends on the success in winning some cases to support the unsuccessful ones. As for settlement offer disclosure, those of us who have been in the middle of litigation when an offer to settle is presented know how difficult it is to predict accurately the time, effort, and cost to produce some other reasonable outcome. Certainly, the client and the lawyer should discuss and evaluate such information, however speculative, but the law should not create an adversarial relationship between the lawyer and the client concerning the content of those discussions.

Mandatory Award of Attorney Fees

Other legislative efforts that reflect public frustration with the filing of spurious or questionable litigation and the costs to litigants to pursue or defend such claims are H.B. 03-1121—"Offer of Settlement"—and H.B. 03-1198—"Award Attorney Fees to Prevailing Party." Both measures included provisions relating to settlement offers and the mandatory award of attorney fees based on the offer. This approach to litigation, frequently called the "English Rule,"3 has been raised in other legislative sessions. The CBA has actively opposed such bills, primarily because of: (1) the burdens that would be imposed on the courts to determine the reasonableness and propriety of awarding attorney fees; and (2) the potential to manipulate the award of attorney fees by use of trial procedures, such as offers of judgment or settlement. The CBA was joined by State Farm Insurance and the Colorado Trial Lawyers Association in opposing these measures.

H.B. 03-1121 would amend CRS § 13-17-202. The bill would provide that if a party serves an offer of settlement in writing more than fourteen days before the commencement of the trial, and the other party does not accept it, attorney fees and costs must be awarded to the offering party when the rejecting party receives a judgment less favorable than the settlement offer. The legislation, as introduced, also would permit settlement offers to be in monetary and non-monetary terms. The attorney fees and costs must be reasonable, which most often would require a separate court hearing for determination. The CBA opposed the bill for the reasons stated above. At the time of this writing, this bill is pending.

H.B. 03-1198 would have amended CRS §§ 13-17-101 through -103 to provide that a court shall award reasonable attorney fees to a prevailing party in all civil cases, but not if a prevailing party rejects a settlement offer and later recovers a judgment that is less than the offer by at least 10 percent. The court is instructed to award attorney fees in the amount of the "fair market value of the legal services rendered."4 The CBA testified in opposition to the bill, citing a chilling effect on access to the courts as its primary concern. This bill was defeated in the House Business Affairs and Labor Committee on February 19, 2003.

The statutes that these measures would have amended already provide for the award of attorney fees for any claim or defense that the court determines lacks substantial justification.5 Parties and their attorneys are required to be assessed attorney fees if the court finds the action to be substantially frivolous, substantially groundless, or substantially vexatious.6 The law currently allows for the results the drafters were trying to achieve, but it is up to the courts and lawyers to insist on the application of the existing law in frivolous cases. The legislature is sending a message that the public wants rules that encourage early settlements, discourage questionable claims and defenses, and guarantee sanctions when a lawyer and client abuse those principles. More vigorous enforcement of the existing statutes in appropriate cases will produce those results.

The Lessons of the Session

While the CBA has been successful in opposing the proposed legislation regulating attorney disclosure and mandatory awards of attorney fees in this current session, we should recognize that these restrictions on our practice have some public support and deserve to be addressed. It is up to us to prove that the profession itself is the best source of sensible and enforceable rules to manage these issues. We all should be vigilant in observing the Colorado Rules of Professional Conduct that regulate these activities. Perhaps it is appropriate for the legal profession to recommend other Rules of Professional Conduct to the Supreme Court that acknowledge these public concerns, but such rules will need to recognize the economics and the business of the practice of law, as well as the freedom of contract between clients and their attorneys.

The CBA Legislative Policy Committee has agreed to continue working beyond the close of the current legislative session to analyze the various points of view about these topics. The Committee plans to meet with Section leaders to encourage improvements in the statutes in areas of their substantive expertise and to meet with other associations, such as the Colorado Trial Lawyers Association and Colorado Defense Bar Association, to understand their members’ points of view and concerns. It is necessary to develop and coordinate the positions of our associations and to develop and communicate a unified resolve to self-regulate our profession at the highest level of conduct so that legislative attention in that regard will not be attracted in the future.

NOTES

1. The members of the CBA Legislative Policy Committee are John E. Moye, Chair; Stacy A. Carpenter; Michael F. DiManna; H. Patrick Furman; Thomas L. Kanan, Jr.; Richard H. Krohn; Laird T. Milburn; Wayne E. Vaden; Robert J. Truhlar; Anthony C. van Westrum; and Michael Valdez and Chuck Turner, CBA staff.

2. See C.R.C.P. Chap. 23.3, at http://198.187.128.12/colorado/lpext.dll?f=templates&fn=fs-main.htm&2.0.

3. The term "English Rule" refers to the Procedure of the Queen’s Bench requiring the award of a barrister’s fee to the prevailing party.

4. H.B. 03-1198, Section 3.

5. CRS § 13-17-102(2).

6. CRS § 13-17-102(4).

© 2003 The Colorado Lawyer and Colorado Bar Association. All Rights Reserved. Material from The Colorado Lawyer provided via this World Wide Web server is protected by the copyright laws of the United States and may not be reproduced in any way or medium without permission. This material also is subject to the disclaimers at http://www.cobar.org/tcl/disclaimer.cfm?year=2003.


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