Contingent fees are the lifeblood of a plaintiffs' practice. To protect their right to a contingent fee, plaintiffs' lawyers must ensure that they have a proper, written contingent fee agreement, signed by the client(s).

Colorado Rule of Professional Conduct 1.5(c) requires that the terms of a contingent fee agreement be communicated in writing before or within a reasonable time after commencing the representation, and the writing must include certain, specified information.1

Rule 1.5(c) also provides that "[n]o contingent fee agreement shall be enforceable unless the lawyer has substantially complied" with all the provisions of the Rule.2 A form Contingent Fee Agreement is provided as an appendix to Rule 1.5, and that form Agreement "shall be sufficient to comply with paragraph (c)(1) of this Rule [1.5]."3

Lawyers are not required to use the form Contingent Fee Agreement authorized in Rule 1.5, as long as the agreement is consistent with the Rule.4

However, using the authorized form Agreement is the prudent approach. Doing so ensures that the Agreement will be enforceable. Further, the language in the authorized form Agreement is well established and predictable because it has been interpreted in numerous appellate decisions.

Withdrawal, Termination, and Conversion Clauses

One of the issues that arises in practice is that a representation ends before the event occurs that triggers the lawyer's right to a contingent fee (e.g., a recovery of money).

Sometimes, the lawyer withdraws from the representation, either because withdrawal is mandatory5 or permissive.6 Of course, if a lawyer moves to withdraw in a civil action or arbitration, the lawyer must strictly limit the information disclosed in the motion, in light of the lawyer's duty of confidentiality under Rule 1.6(a).7

Other times, the client terminates the lawyer and retains a new lawyer to pursue the claim and obtain a recovery as successor counsel. Rarely, a client terminates the lawyer after a settlement has been negotiated—but before it is finalized or funds disbursed—but the client does not engage successor counsel and instead proceeds to conclude the settlement without counsel in an effort to avoid paying the terminated lawyer a contingent fee and thus increase the funds payable to the client.

The effect of withdrawal or termination on a lawyer's right to a contingent fee is addressed in a so-called conversion clause in a contingent fee agreement. The conversion clause notifies the client of the lawyer's right to compensation if the representation is concluded before the event occurs that trigger's the lawyer's right to a contingent fee, whether by the lawyer's withdrawal or the client's termination of the representation.

Importantly, a conversion clause is one of the provisions that must be included in a contingent fee agreement if it is to be enforceable.8

The conversion clause in the authorized form Contingent Fee Agreement provides:

The Client is not to be liable to pay compensation otherwise than from amounts collected for the Client by the Lawyer, except as follows: In the event the Client terminates this contingent fee agreement without wrongful conduct by the Lawyer which would cause the Lawyer to forfeit any fee, or if the Lawyer justifiably withdraws from the representation of the Client, the Lawyer may ask the court or other tribunal to order that the Lawyer be paid a fee based upon the reason able value of the services provided by the Lawyer.9

Further, the conversion clause in the authorized form Contingent Fee Agreement provides at least a general approach to determining "the reason able value of the services provided by the Lawyer." It provides:

If the Lawyer and the Client cannot agree how the Lawyer is to be compensated in this circumstance, the Lawyer will request the court or other tribunal to determine: (1) whether the Client has been unfairly or unjustly enriched if the Client does not pay a fee to the Lawyer; and, if so (2) the amount of the fee owed, taking into account the nature and complexity of the Client's case, the time and skill devoted to the Client's case by the Lawyer, and the benefit obtained by the Client as a result of the Lawyer's efforts.10

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Footnotes

1 Colo. RPC 1.5(c)(1). Before January 1, 2021, the contingent fee rules and forms were codified in C.R.C.P. chapter 23.3. Although these rules and forms are now incorporated into Rule 1.5, the substance and even the language of the contingent fee rules remain mostly unchanged, to preserve continuity. One difference is that a separate Notice to the clients is no longer required, in addition to the Contingent Fee Agreement.

2 Colo. RPC 1.5(c)(6) (emphasis added). This Rule is unusual in that it addresses the enforceability of the agreement. Id. In general, the Rules of Professional Con ¬duct define proper conduct for purposes of professional discipline. Colo. RPC, Scope, [14], [19]. The Rules presuppose a larger legal context, including the substantive law in general. Id., [15]. Thus, the enforceability of an agreement is generally an issue of substantive contract law, and the mere violation of a Rule of Professional Conduct does not automatically render a related agreement unenforceable. See, e.g., Calvert v. Mayberry, 2019 CO 23, ¶¶ 14-15, 20-27, 440 P.3d 424, 429-32 (Colo. 2019) (the issue, instead, is whether the Rule expresses a fundamental public policy, such that failure to comply with a Rule render the related agreement unenforceable because it violates public policy) (involving Colo. RPC 1.8(a) on business transactions with a client). Like most rules, however, Rule 1.5(c)(6) has its exceptions. See Mullens v. Hansel-Hen-derson, 65 P.3d 992 (Colo. 2003).

3 Colo. RPC 1.5(c)(7) & Form—Contingent Fee Agreement.

4 Id.

5 See Colo. PRPC 1.16(a).

6 See Colo. RPC 1.16(b)

7 Colo. RPC 1.6(a) & 1.16 cmt. [3]. See Arizona Ethics Op. 09-02 (2009) (lawyer withdrawing "should resist any disclosure during the withdrawal process" and any disclosures must be "strictly limited" to those authorized by ethics rules); Oregon Ethics Op. 2011-185 (lawyer seeking to withdraw may not tell court that client will not follow advice or cooperate with counsel, hasn't paid legal bills, or is not cooperating with discovery unless an exception in Rule 1.6 applies); Rhode Island Ethics Op. 2003-04 (lawyer's reasons for withdrawing from representation constitute "information relating to the representation" and may not be disclosed).

8 Colo. RPC 1.5(c)(1)(iv).

9 Colo. RPC 1.5, Form—Contingent Fee Agreement, § 4 (emphasis added).

10 Id.

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