Vol. 29, No. 6
Confirm Attorney Fees in Writing: Court Changes Colo.RPC 1.4, 1.5
by John Lebsack
Beginning July 1, 2000, Colorado lawyers must advise new clients of the basis or rate of the fee in writing, and must respond, preferably in writing, to reasonable requests from all clients about the amount of fees and costs incurred. The Colorado Supreme Court adopted changes to Rules 1.4 and 1.5 of the Colorado Rules of Professional Conduct ("Colo.RPC" or "Rule"), which appear in this issue's "Court Business" section (page 113). The Proposed Rules and Comments were published in the March 2000 issue of The Colorado Lawyer,1 and after a period of public comment and a public hearing held on April 13, 2000, the Court adopted these changes on April 20, 2000, to become effective July 1, 2000.
New Rule Requires Fees Confirmed in Writing
Colo.RPC 1.5 used to say that the basis of the fee should be communicated "preferably" in writing. The new Rule 1.5 simply drops the word "preferably." These amendments were adopted by the Court at the recommendation of the Supreme Court Advisory Committee, which was created in 1998 to assist the Court in the area of attorney regulation.2
Colorado now joins the growing number of states that require fees to be confirmed in writing. Seven states and the District of Columbia already have this or a similar requirement. During the Advisory Committee's study of these proposals, its members contacted officials in several of these states. None reported any difficulty in the implementation of their rules requiring fees to be confirmed in writing. Colorado's Attorney Regulation Counsel reported that adoption of this rule likely will reduce fee-related grievances.
The Advisory Committee heard reports that in many disciplinary complaints from clients, the dispute could have been avoided if the lawyer had sent the client a written explanation of how the fee would be determined. When the Advisory Committee recommended the change to Colo.RPC 1.5 to the Court, it stated the change would "further protect the public while at the same time reduce the number of fee-related grievances." The Advisory Committee recognized that, frequently, when the fee is not in writing, neither the lawyer nor the client can state with clarity the terms of the fee agreement. The new rule should reduce that potential uncertainty, for the benefit of both lawyers and clients.
The Comment to Rule 1.5 explains that the new rule does not require a formal fee agreement or engagement letter signed by the client. The Comment suggests that it is preferable to obtain the client's signature, but it is not required. Sending the client a copy of a fee schedule, for example, would be adequate. The written explanation of the fee must be sent promptly, but not necessarily before the work is started. The new rule does not change the language of Rule 1.5 that states that the basis of the fee must be communicated "before or within a reasonable time after commencing the representation." The only change is that now such communication must be done in writing.
Rule 1.5 only applies to clients whom the lawyer "has not regularly represented." Existing clients therefore do not need to receive this written confirmation of the fee, although common sense would dictate that every file should contain a copy of the written statement of the basis or rate of the fee sent to the client. However, even with existing clients, the new Comment suggests that whenever the fee arrangement is changed, the lawyer should confirm that in writing. The Comment suggests that "lawyers are well-advised to use written disclosures even when they are not required." Contingent fees are not affected by these changes, because under existing rules, they already must be in writing.3
The amount of detail that goes into the disclosure is addressed by prior language in the Comment to Rule 1.5 and is not affected by these changes. The disclosure need not discuss all of the possible factors that are involved in determining the fee, only those factors "that are directly involved in its calculation."
Response Now Required
The Supreme Court also changed the Comment to Colo.RPC 1.4, making it clear that lawyers must answer questions from clients about the amount of ongoing fees and costs. The addition to the Comment to Colo.RPC 1.4 makes it clear that lawyers must respond to reasonable requests from clients for information about fees and expenses incurred. The Court "strongly recommends" that the response be in writing. The previous Colo.RPC rules and comments did not have this express requirement, although common sense might dictate that a lawyer should provide this information. Rule 1.15(b) requires an accounting, but only in regard to funds or property of the client or a third party of which the lawyer has possession.
When the Advisory Committee reported to the Court its recommendation to add to the Comment to Rule 1.4, it stated that "if a client asks how much the lawyer has billed or how much has been advanced in costs, the lawyer has the duty to provide that information."4 The new language in the Comment "strongly" suggests that the information be sent in writing. The safety valve of the new requirement is that the lawyer's duty applies only to "reasonable" requests from the client. What is reasonable depends on the circumstances.
The amendments to these rules reflect what many lawyers already do as common-sense office routine: confirm in writing with new clients how the fee will be charged; confirm in writing with existing clients if the fee agreement changes; and provide an answer when a client asks about the amount of fees and costs incurred. It is hoped that adopting these practices as requirements under the Colorado Rules of Professional Conduct will reduce the number of disagreements and misunderstandings between lawyers and clients that can lead to disciplinary complaints.
1. 29, "Court Business," The Colorado Lawyer 95 (March 2000).
2. See C.R.C.P. 251.34.
3. C.R.C.P., Chapter 23.3, Rule 1.
4. Report of November 18, 1999.
John Lebsack, Denver, is a shareholder at White and Steele, (303) 296-2828, and a member of the Colorado Supreme Court Advisory Committee, which recommended these rule changes to the Court.
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