Fee Sharing with Nonlawyers in Legal Practice

     The bill prohibits a lawyer or law firm, in connection with providing legal services concerning a legal matter arising, asserted, or properly venued in Colorado (legal services), from:

• Providing any portion of legal fees or revenues to a nonlawyer or an organization that economically participates in the provision of legal services or shares in the profits of legal fees or revenues and is owned or controlled by one or more nonlawyers (alternative business structure);
• Entering into a financial or contractual arrangement with an alternative business structure, which arrangement relates to providing legal services;
• Forming an entity recognized under Colorado law with a nonlawyer if any of the activities of the entity consist of providing legal services;
• Practicing with or in the form of a professional company authorized to provide legal services if a nonlawyer owns an interest in the company or a nonlawyer has the right to direct the judgment of a lawyer; and
• Compensating a person that provides administrative or nonlegal business services to a lawyer or law firm unless the compensation is not contingent upon a percentage of legal fees or revenues and not determined by reference to recoveries, settlements, or other case outcomes.

     The bill also creates a private right of action that allows the following persons to enforce the prohibitions in the bill:

• A person to whom a lawyer or law firm provides legal services that are alleged to be in violation of the bill; and
• A law firm doing substantial business in Colorado that has suffered a loss in revenue due to a violation of the bill by another law firm, which law firm doing substantial business is not eligible for recovery of economic damages.

     A person may seek economic damages, injunctive or declaratory relief, and disgorgement of the funds paid in violation of the bill to the state, except to the extent that the funds are paid as economic damages to a plaintiff. The state treasurer shall deposit any funds disgorged to the state into the judicial stabilization cash fund. The bill repeals on September 1, 2032, subject to a sunset review of the bill by the department of regulatory agencies.


(Note: This summary applies to this bill as introduced.)