Attorney Engagement Letter and Fee Agreement
(Contingency Fee Arrangement) (CO)

Summary

This template engagement letter can be used to enter into and formalize an attorney-client relationship for a civil litigation matter in Colorado on a contingent fee basis. It includes practical guidance, drafting notes, and alternate and optional clauses. An engagement letter must contain certain essential information, such as the client's identity, the intended scope of the contemplated legal work, and the fee arrangement (including billing frequency). This template provides for a contingent fee arrangement, which is most commonly used by plaintiffs' attorneys in personal injury litigation and occasionally in other types of litigation. The Colorado Rules of Professional Conduct (Rules of Professional Conduct) require a contingent fee arrangement to be in writing and include certain information. Colo. RPC 1.5. The agreement must be signed by the attorney and the client. Colo. RPC 1.5(c)(2). The attorney must maintain a copy of the agreement for seven years following the final resolution of the case or the termination of the attorney's services, whichever occurs first. Colo. RPC 1.5(c)(3). Before the attorney and the client enter into a contingent fee agreement, the attorney must communicate to the client in writing the following: • The basis or rate of the fee and expenses for which the client will be responsible, except when the attorney will continue to charge a regularly represented client on the same basis or rate and • The scope of the representation, except when the lawyer will perform services that are of the same general kind as previously rendered to a regularly represented client. Colo. RPC 1.5(b). You must communicate promptly to the client in writing any changes in the basis or rate of the fee or expenses. Colo. RPC 1.5(b). The terms of the fee agreement must be communicated in writing before or within a reasonable time after commencing the representation, and must include the following information: • The names of the attorney and the client • A statement of the nature of the claim, controversy, or other matters with reference to which the services are to be performed, including each event triggering the attorney's right to compensation • The method by which the fee is to be determined, including the percentage or amounts that will accrue to the attorney in the event of settlement, trial or appeal, or other final disposition, and whether the contingent fee will be determined before or after the deduction of: ○ Costs and expenses advanced by the attorney or otherwise incurred by the client and ○ Other amounts owed by the client and payable from amounts recovered • A statement of the circumstances under which the attorney may be entitled to compensation if the attorney's representation concludes by discharge, withdrawal, or otherwise before the occurrence of an event that triggers the attorney's right to a contingent fee • A statement regarding expenses, including: ○ An estimate of the expenses to be incurred ○ Whether the lawyer is authorized to advance funds for litigation-related expenses to be reimbursed to the attorney from the recovery, and, if so, the amount of expenses the lawyer may advance without further approval and ○ The client's obligation, if any, to pay expenses if there is no recovery • A statement regarding the possibility that a court will award costs or attorney fees against the client • A statement regarding the possibility that a court will award costs or attorney fees in favor of the client, and, if so, how any such costs or attorney fees will be accounted for and handled • A statement informing the client that if the lawyer wishes to hire a lawyer in another firm to assist in the handling of a matter ("associated counsel"), the lawyer will promptly inform the client in writing of the identity of the associated counsel, and that: ○ The hiring of associated counsel will not increase the contingent fee, unless the client otherwise agrees in writing and ○ The client has the right to disapprove the hiring of associated counsel and, if hired, to terminate the employment of associated counsel and • A statement that other persons or entities may have a right to be paid from amounts recovered on the client's behalf, for example when an insurer or a federal or state agency has paid money or benefits on behalf of a client in connection with the subject of the representation Colo. RPC 1.5(c)(1). The agreement should also reflect whether the representation includes the handling of counterclaims, third-party claims to amounts recovered, and appeals. Colo. RPC 1.5, Comment 6A. Additionally, you may include a provision setting forth your agreement to reimburse the client for any attorney's fees and costs awarded against the client. Colo. RPC 1.5, Comment 6B. You may not include a provision in which the client must reimburse you for any attorney's fees or costs awarded against you. Colo. RPC 1.5, Comment 6B. Upon conclusion of a contingent fee matter, you must provide the client with a written disbursement statement showing the amount or amounts received, an itemization of costs and expenses incurred in the handling of the matter, sums to be disbursed to third parties, including attorneys in other law firms, and computation of the contingent fee. Colo. RPC 1.5(c)(5). For a template hourly fee agreement, see Attorney Engagement Letter and Fee Agreement (Hourly Fee Arrangement) (CO). For a flat fee agreement, see Attorney Engagement Letter and Fee Agreement (Flat Fee Arrangement) (CO).