COLORADO COURT OF APPEALS 2017COA85
Court of Appeals No. 16CA0295
La Plata County District Court No. 13CV14
Honorable Jeffrey R. Wilson, Judge
Scott R. Larson, P.C., a Colorado professional corporation,
Appellant and Cross-Appellee,
v.
Michael K. Grinnan,
Appellee and Cross-Appellant.
JUDGMENT AFFIRMED IN PART, ORDER VACATED,
AND CASE REMANDED WITH DIRECTIONS
Division III
Opinion by JUDGE WEBB
Booras and Freyre, JJ., concur
Announced June 15, 2017
Holley, Albertson & Polk, P.C., Dennis B. Polk, Denver, Colorado; Recht
Kornfeld, P.C., Heather R. Hanneman, Denver, Colorado, for Appellant and
Cross-Appellee
Burg, Simpson, Eldredge, Hersh & Jardine, P.C., David P. Hersh, Diane
Vaksdal Smith, Nelson Boyle, Jacob M. Burg, Englewood, Colorado, for
Appellee and Cross-Appellant
¶1 This attorney fees dispute pits Colo. RPC 1.5(e) — which
prohibits referral fees between lawyers in different law firms —
against Colo. RPC 1.5(d) — which permits division of attorney fees
between lawyers who are not in the same firm, other than in
proportion to the work that each performed, only if the lawyers were
jointly responsible for the engagement. Exactly what “joint
responsibility” means is a novel question in Colorado.
¶2 Scott R. Larson, P.C., performed most of the work after the
underlying case was referred to the firm. Larson asserts that
because the trial court misinterpreted the “joint responsibility”
limitation in Colo. RPC 1.5(d)(1), its award of referral fees to
appellee and cross-appellant, Michael K. Grinnan, improperly
apportioned the contingent fee that arose from settlement of the
underlying case. Thus, Larson continues, fees the court awarded to
Grinnan for originating the case must be reapportioned to Larson,
leaving Grinnan with only the fees that the court awarded him for
“actual services performed.”
¶3 Grinnan, who referred the case to Larson but then acted
mostly as a conduit with the clients, responds that because the
court made a factual finding, with record support, that he and
1
Larson had joint responsibility for the case, the fees awarded to him
did not have to be in proportion to the services that he had
performed. Thus, in Grinnan’s view, the fee allocation properly
compensated him for having originated the case. Still, he further
asserts that the court erred in disregarding unrebutted expert
testimony as to the percentage of fees that would reasonably and
customarily be awarded to a lawyer in his position. He also
challenges the court’s award of prejudgment interest to Larson and
its refusal to award costs to either party.
¶4 We vacate the attorney fee award, reject the contentions raised
in Grinnan’s cross-appeal, and remand the case for additional
findings on joint responsibility and possible reconsideration of
costs.
I. Background
A. Facts
¶5 A propane explosion destroyed Tim Kelley’s home, seriously
injuring Mr. Kelley, his wife, and their daughter. Grinnan, a
life-long friend of Mr. Kelley, visited him in the hospital. Mr. Kelley
asked Grinnan to represent the family.
2
¶6 Grinnan, a general practitioner with limited experience in
personal injury cases, sought and obtained Mr. Kelley’s consent to
involve Larson. Larson entered into a contingent fee agreement
with the Kelley family. As relevant to the fee dispute between
Larson and Grinnan, this agreement:
identified Grinnan as “associated counsel”;
stated that Grinnan would be paid a percentage of Larson’s
fee, “not to exceed 100%”; and
provided that Larson was responsible for paying case expenses
as they were incurred.
Grinnan was not a signatory to this agreement.
¶7 On the Kelleys’ behalf, Larson brought claims against Creative
Plumbing and Heating, AmeriGas Propane, Inc., and Mesa Propane.
Relatively early in the case, and just before Creative Plumbing filed
for bankruptcy, its insurer made a policy limits settlement. From
Larson’s $333,333 fee on this settlement, he sent Grinnan a check
for $50,000.
¶8 Litigation continued against AmeriGas and Mesa Propane. On
the morning of the first day of trial, approximately three years after
3
the claims had been filed, AmeriGas settled. At the end of the first
trial day, Mesa Propane also settled.
¶9 Based on these settlements, the contingent fee agreement
entitled Larson to a total fee of $3,216,666.67. Larson had incurred
about $300,000 in costs.
B. Procedural Posture
¶ 10 Larson and Grinnan were unable to agree on how to divide the
contingent fee. Shortly before Grinnan filed an attorney’s lien, he
entered his appearance. The trial court granted Grinnan’s request
that all attorney fees paid to Larson be deposited in a restricted
interest bearing account. The court held an evidentiary hearing. It
heard testimony from Scott Larson, Grinnan, and several experts.
C. Trial Court’s Rulings
¶ 11 The trial court entered a detailed, written order allocating the
attorney fees.
¶ 12 The court began by finding that “the two attorneys did not
reach an agreement as to how the fees would be divided.”1 Then it
turned to Colo. RPC 1.5(d)(1). This rule permits “a division of a fee
1 Neither party challenges this finding.
4
between lawyers who are not in the same firm . . . only if: (1) the
division is in proportion to the services performed by each lawyer or
each lawyer assumes joint responsibility for the representation.”
¶ 13 The court declined to divide the fees in proportion to services.
Instead, it found that Grinnan had “assumed joint responsibility for
the representation of the Kelleys” in two ways. First, by
recommending Larson and being named as associated counsel,
Grinnan “subject[ed] himself to potential malpractice liability.”
Second, as to the fee generated by the Creative Plumbing
settlement, “by accepting a lesser amount than what [Grinnan]
thought he was entitled when Creative settled, [Grinnan] was
helping to pay the costs of the litigation.”
¶ 14 The court began the fee allocation by finding the one-third
contingency to be reasonable and that under Colo. RPC 1.5(d),
Grinnan “is entitled to have the Court determine the amount of
attorney’s fees he is entitled to receive.” Then it found as follows:
Larson benefitted from Grinnan’s “referring the case to him,”
as well as from Grinnan’s “initially acting as a go-between for
the Kelleys and Mr. Larson.”
5
“[T]he amount of work performed by Mr. Grinnan was
significantly dwarfed by the amount of work performed by Mr.
Larson” and other members of his firm.
“The majority of the value Mr. Grinnan provided was . . . the
origination of the case and . . . Mr. Grinnan’s close
relationship with Mr. Kelley that allowed Mr. Grinnan to
explain matters to the Kelleys . . . in a way that they were
reassured that the case was proceeding appropriately.”
“Mr. Grinnan provided no other services to Mr. Larson that
aided him in the prosecution of the case.”
¶ 15 Next, the court acknowledged expert testimony that “common
practice in the legal community in the State of Colorado” would give
“the attorney who originated the client . . . one-quarter to one-third
of the fee.” Still, the court drew on “its experience both in private
practice and on the bench.” It noted “the different amounts of work
required to settle as to” Creative Plumbing and “the remaining two
defendants.”
¶ 16 Then it divided the fees as follows:
Of the $333,333.34 fee generated by the Creative Plumbing
settlement, Grinnan was entitled to 20%, “10% for bringing
6
the case to Mr. Larson and 10% for the actual services he
provided.”
Because “Mr. Grinnan’s involvement in acting as a go-between
became increasingly less necessary and eventually
unnecessary,” of the $2,883,333.33 fee generated by the
AmeriGas and Mesa Propane settlements, Grinnan would
receive 12.5%, “10% for originating the case and 2.5% for the
actual services” provided.
¶ 17 In a later written order on interest and costs, the court
awarded Grinnan prejudgment interest “at the rate of 8% percent
from the date the settlement checks were issued” until final
judgment entered on the fees allocated to him. However, the court
noted that because of the “very limited amount of services” provided
by Grinnan, his “claims for attorney’s fees are far in excess of what
any reasonable attorney would demand.” Then it concluded that
Grinnan’s demand “that 100% of the fees be placed in a restricted
account was, as a practical matter, a wrongful withholding,” which
entitled Larson to interest under section 5-12-102, C.R.S. 2016, on
the total amount of fees, less what was awarded to Grinnan.
7
¶ 18 Finally, the court declined to award costs, finding that neither
lawyer “was the prevailing party.”
APPEAL
II. Remand Is Required to Resolve Joint Responsibility
¶ 19 Whether Grinnan assumed joint responsibility for the case is
the heart and soul of this dispute. If he did not, then only fees
proportional to the services that he performed could be awarded to
him. Larson does not dispute that portion of the trial court’s fee
award.
¶ 20 Larson asserts that Grinnan never assumed joint
responsibility because he did not assume responsibility for the
representation as a whole. Ultimately, we conclude, as did the trial
court, that Grinnan satisfied one of two components of joint
responsibility — assuming financial responsibility. But remand is
necessary for the trial court to determine whether he satisfied the
other component — ethical responsibility, on which it made no
findings.
A. Standard of Review and Legal Framework
¶ 21 We review de novo the trial court’s interpretation of a rule of
professional conduct, People v. Hoskins, 2014 CO 70, ¶ 17 (citing
8
People v. Nozolino, 2013 CO 19, ¶ 9), but will not disturb the court’s
factual findings unless they have no support in the record, Perfect
Place v. Semler, 2016 COA 152M, ¶ 19. On this much, the parties
agree.
¶ 22 The Rules of Professional Conduct “establish standards of
conduct by lawyers,” Colo. RPC Preamble ¶ 20, for the purpose of
protecting clients, Mercantile Adjustment Bureau, L.L.C. v. Flood,
2012 CO 38, ¶ 15.
¶ 23 When interpreting the Rules, the text of the Rule is
authoritative. Colo. RPC Preamble ¶ 20. Our supreme court has
cautioned: “Comments to the Rules of Professional Conduct do not
add obligations to the Rules but merely provide guidance for
practicing in compliance with the Rules.” In the Matter of Gilbert,
2015 CO 22, ¶ 33.
¶ 24 Even so, our supreme court has sometimes relied extensively
on comments. See, e.g., Mercantile Adjustment Bureau, L.L.C., ¶ 39
(“However, as their accompanying comments make perfectly clear,
the ethical rules have developed to nevertheless limit the ability of
lawyers to subsidize law suits or administrative proceedings
brought on behalf of their clients, on the basis of two countervailing
9
considerations.”). And in People v. Lincoln, 161 P.3d 1274, 1280
(Colo. 2007), the court recognized that a comment broadened a
rule:
Rule 1.6(a) states that “[a] lawyer shall not
reveal information relating to representation of
a client unless the client consents after
consultation.” However, the comment to this
rule states that an attorney may not disclose
confidential information, unless authorized or
required by other Rules of Professional
Conduct or other law.
¶ 25 Colo. RPC 1.5 regulates fees lawyers may charge for their
work. As relevant here, Rule 1.5(e) prohibits referral fees. Even so,
Rule 1.5(d) provides that lawyers may divide a fee under certain
circumstances:
(d) Other than in connection with the sale of a
law practice pursuant to Rule 1.17, a division
of a fee between lawyers who are not in the
same firm may be made only if:
(1) the division is in proportion to the
services performed by each lawyer or
each lawyer assumes joint responsibility
for the representation;
(2) the client agrees to the arrangement,
including the basis upon which the
division of fees shall be made, and the
client’s agreement is confirmed in
writing; and
(3) the total fee is reasonable.
10
Comment 7 contextualizes paragraph (d):
A division of fee is a single billing to a client
covering the fee of two or more lawyers who are
not in the same firm. A division of fee
facilitates association of more than one lawyer
in a matter in which neither alone could serve
the client as well, and most often is used when
the fee is contingent and the division is
between a referring lawyer and a trial
specialist. Paragraph (d) permits the lawyers
to divide a fee either on the basis of the
proportion of services they render or if each
lawyer assumes responsibility for the
representation as a whole. In addition, the
client must agree to the arrangement,
including the share that each lawyer is to
receive, and the agreement must be confirmed
in writing. Contingent fee agreements must be
in a writing signed by the client and must
otherwise comply with paragraph (c) of this
Rule. Joint responsibility for the
representation entails financial and ethical
responsibility for the representation as if the
lawyers were associated in a partnership. A
lawyer should refer a matter only to a lawyer
who the referring lawyer reasonably believes is
competent to handle the matter. See Rule 1.1.
B. Discussion
1. Representation as a Whole
¶ 26 Larson starts by relying on the phrase in Comment 7 providing
that a fee may be divided other than in proportion to the work
performed only when each lawyer has accepted joint responsibility
11
for the representation “as a whole.” From this phrase, he asserts
that three components of joint responsibility flow — adequacy of
representation, financial responsibility, and ethical responsibility.
¶ 27 Larson’s argument for reading adequacy of representation into
the phrase “representation as a whole” falls short for three reasons.
First, the phrase does not appear in the text of the rule. See Colo.
RPC Preamble ¶ 20 (text of the rule is authoritative). Second, the
phrase “adequacy of representation” does not appear in Comment
7. Third, the Comment defines “joint responsibility” — not
“representation as a whole” — as ethical and financial
responsibility. See Colo. RPC 1.5 cmt. 7.
¶ 28 As well, focusing on representation “as a whole” obscures a
more instructive inquiry. Specifically, because the text of the rule
includes “joint responsibility” and Comment 7 provides a definition,
our joint responsibility analysis focuses on the phrase itself.
¶ 29 Still, Larson emphasizes adequacy of representation and
adequate client communication. Both phrases appear in ABA
Commission on Ethics and Professional Responsibility, Informal
Opinion 85-1514 (1985) (ABA Opinion 85-1514), which discusses
the Model Code predecessor provision to Model Rule 1.5(d). See
12
Model Rules of Prof’l Conduct r. 1.5 reporter’s explanation of
changes (Am. Bar Ass’n 2002), https://perma.cc/EY87-62FK (“The
Commission proposes revising the explanation of “joint
responsibility” to entail legal responsibility, including financial and
ethical responsibility, as if the lawyers were associated in a
partnership. This is the interpretation that has been given to the
term according to ABA Informal Opinion 85-1514, as well a number
of state ethics opinions.”).
¶ 30 We take up adequacy of representation in the following
financial responsibility and ethical responsibility sections. We need
not address client communication because the trial court found
that Grinnan “explain[ed] matters to the Kelleys . . . in a way that
they were reassured that the case was proceeding appropriately,”
and Larson does not challenge those findings.
2. Joint Responsibility
¶ 31 Recall, Comment 7 treats joint responsibility as involving two
components: financial responsibility and ethical responsibility.
First addressing financial responsibility and treating the trial
court’s conclusion as a mixed question of law and fact, we conclude
that Grinnan assumed financial responsibility. Second, because
13
the trial court did not make any findings on ethical responsibility,
which is also a mixed question, we further conclude that remand is
required. Then, because little authority — and none in Colorado —
informs the analysis of ethical responsibility, we identify three
criteria that the court should apply in making further findings on
remand.
a. Mixed Question of Law and Fact
¶ 32 The parties dispute how the standard of review should be
applied. According to Larson, everything the trial court decided is
subject to de novo review because the court interpreted Colo. RPC
1.5(d)(1). See Nozolino, ¶ 9. Grinnan responds that whether he
assumed joint responsibility for the representation raises a mixed
question of law and fact. He is correct.
¶ 33 “A mixed question of law and fact involves the application of a
legal standard to a particular set of evidentiary facts in resolving a
legal issue.” Atl. Richfield Co. v. Whiting Oil & Gas Corp., 2014 CO
16, ¶ 22 (quoting Mt. Emmons Mineral Co. v. Town of Crested Butte,
690 P.2d 231, 239 (Colo. 1984)). This standard applies here
because we must first consider what joint responsibility means
under Colo. RPC 1.5, a legal question. Next, we must consider
14
whether Grinnan complied with the joint responsibility standard, a
factual question. Therefore, we will afford “traditional deference to
the trial court’s extensive findings regarding [the parties’] actions
. . . while interpreting [Rule 1.5] independent of the trial court.” See
Sheridan Redevelopment Agency v. Knightsbridge Land Co., L.L.C.,
166 P.3d 259, 262 (Colo. App. 2007).
b. Grinnan Assumed Financial Responsibility
¶ 34 Whether Grinnan assumed financial responsibility is informed
by court decisions and ethics opinions in other jurisdictions. With
minor variations, financial responsibility has been equated with the
referring lawyer’s being subject to joint and several or vicarious
liability for the trial specialist’s legal malpractice. See generally
Jennifer F. Zeiglar, Note, Firm Arrangements, Including Fee-Sharing
Agreements, with the Imposition Malpractice Liability, 24 J. Legal
Prof. 537, 545 (2000) (“Although liability pursuant to fee-sharing
agreements is relatively new, it is based on the traditional principles
of vicarious liability and respondeat superior, both of which are
firmly embedded in tort law.”). We adopt this interpretation.
¶ 35 Reading Colo. RPC 1.5 and Comment 7 together provides
context. Under Rule 1.5(d)(1), fees may be divided between lawyers
15
in different firms only if the division is “in proportion to the services
performed by each lawyer or each lawyer assumes joint
responsibility for the representation.” Comment 7 defines joint
responsibility as undertaking both ethical and financial
responsibility for the case as if that lawyer and the lawyer to whom
he refers the case “were associated in a partnership.” Because
neither the Rule nor the Comment defines financial responsibility,
we turn to other jurisdictions that have done so.
¶ 36 New York narrows joint responsibility to only financial
responsibility:
This Court’s view, therefore, is that joint
responsibility is synonymous with joint and
several liability. When lawyers assume “joint
responsibility” in order to share a fee under
NY-DR § 2-107 without regard to work
performed, they are ethically obligated to
accept vicarious liability for any act of
malpractice that occurs during the course of
the representation.
Aiello v. Adar, 750 N.Y.S.2d 457, 465 (N.Y. Sup. Ct. 2002). The
court explained that “[a]lthough the harsh financial consequences
. . . create a strong incentive for the referring lawyer to keep
himself/herself abreast of the manner in which the matter is being
16
handled by the receiving lawyer, the rule does not create an ethical
obligation to supervise the receiving attorney’s work.” Id.
¶ 37 Illinois takes a similar approach. See Ill. Jud. Ethics Comm.,
Op. 1994-16 (1994), https://perma.cc/3QD9-AF9L (“The
Committee believes that such legal responsibility consists solely of
potential financial responsibility for any malpractice action against
the recipient of the referral.”). So do Arizona and Florida. See Ariz.
Comm. on Rules of Prof’l Conduct, State Bar Ethics Op. 04-02
(2004), https://perma.cc/VW8M-Z25B (“[T]he requisite ‘joint
responsibility’ exists if the referring attorney assumes financial
responsibility for any malpractice that occurs during the course of
the representation.”); Noris v. Silver, 701 So. 2d 1238, 1240 (Fla.
Dist. Ct. App. 1997) (“Therefore, if Silver and Falk agreed to divide
the attorney’s fee [by assuming joint responsibility], Silver would be
liable for the malpractice committed by Falk.”). In Wisconsin,
financial responsibility as if the lawyers were associated in a
partnership means the referring lawyer’s assumption of vicarious
liability for the representation, as well as responsibility for costs.
Wis. State Bar Comm. on Prof’l Ethics, Ethics Op. E-00-01 (2000),
17
https://perma.cc/C4XB-EAQ2 (hereinafter Wis. Ethics Op. E-00-
01).
¶ 38 That “financial . . . responsibility . . . as if . . . associated in a
partnership,” Colo. RPC 1.5 cmt. 7, equates to the referring lawyer’s
vicarious liability for malpractice is illustrated in Duggins v.
Guardianship of Washington Through Huntley, 632 So. 2d 420
(Miss. 1993). There, the court concluded that when one lawyer is
associated with another, although they are not in the same law
firm, principles of partnership and joint venture give rise to
vicarious liability. Id. at 428-29. It explained that such an
association may result in a “relationship [that] can be described as
a joint venture, at the least.” Id. at 427; accord Phillips v. Joyce,
523 N.E.2d 933, 941 (Ill. App. Ct. 1988) (stating it was reasonable
to conclude that division of contingent fee between lawyer handling
pretrial work and lawyer handling trial work was joint venture).
¶ 39 These cases are well reasoned. Also, their approach finds
some support in Colorado. See Bebo Constr. Co. v. Mattox &
O’Brien, P.C., 998 P.2d 475, 477 (Colo. App. 2000) (concluding that
where a law firm and a construction consulting firm entered into a
18
joint venture agreement, the consulting firm was liable for damages
flowing from the law firm’s legal malpractice).
¶ 40 In addition, commentators and ethics opinions suggest that
sound policy supports allowing a fee division disproportionate to the
work performed in exchange for greater financial protection of the
client through joint and several or vicarious liability. See, e.g., N.Y.
Cty. Lawyers’ Ass’n, Comm. on Prof’l Ethics, Ethics Op. 715, at 5
(1996), https://perma.cc/Q8UM-JQNF (“[J]oint responsibility . . .
[i]s intended to add to the protection otherwise available to the
client . . . . Since a lawyer is liable for his or her own failure to
exercise due care, the writing given to the client must create some
additional vicarious liability on the part of the referring lawyer in
order to satisfy [the New York Code].”); Sheryl Zeligson, The Referral
Fee and the ABA Rules of Model Conduct: Should States Adopt Model
Rule 1.5(e)?, 15 Fordham Urb. L.J. 801, 818 (1986) (“The increased
liability associated with the Model Rule, however, will provide the
incentive for attorneys to refer their clients to the person who will
most competently handle the case.”); cf. Wis. Ethics Op. E-00-01 (“It
must be remembered that in such a [joint responsibility] referral
arrangement, the referring lawyer still maintains an attorney-client
19
relationship with the client. It is the ongoing protection of the
client’s interests by the referring lawyer that justifies the referring
lawyer receiving a fee that is beyond the proportion of the services
actually provided by that lawyer.”).
¶ 41 The statement in ABA Opinion 85-1514, on which Larson
relies — that joint responsibility includes a “responsibility to assure
adequacy of representation . . . that a partner would have for a
matter handled by another partner” — does not persuade us to
include supervision by the referring lawyer in the financial
responsibility calculus. Note, the opinion refers to partners in the
same firm. And the vicarious liability of one partner for the
negligence of another partner in actions concerning the
partnership’s affairs does not arise from lack of supervision.
Instead, “each participant in a joint venture is vicariously liable for
the negligence of the other participants.” Am. Family Mut. Ins. Co.
v. AN/CF Acquisition Corp., 2015 COA 129, ¶ 9.
¶ 42 Therefore, we adopt the joint and several or vicarious liability
test for financial responsibility. Next, we turn to the law of
partnership and joint ventures to determine whether Grinnan
assumed financial responsibility.
20
¶ 43 To begin, the trial court held:
Had a malpractice claim against Mr. Larson
been initiated, Mr. Grinnan, despite his
friendship with Mr. Kelley, would likely have
been named as a defendant by the Kelley’s
malpractice lawyer. By subjecting himself to
potential malpractice liability, Mr. Grinnan
was accepting responsibility for representation
in the case.
¶ 44 Larson does not dispute this holding. Rather, he asserts that
because a referring lawyer would always be liable for negligence in
choosing the lawyer to whom the case was referred, it sets the bar
too low. Ultimately, our conclusion aligns with the trial court’s.
Yet, the court’s somewhat oblique language, “would likely have been
named as a defendant,” coupled with Larson’s low bar assertion,
demand further analysis.
¶ 45 Because a joint venture is a partnership formed for a limited
purpose, the substantive law of partnership must be applied in
determining whether a joint venture exists. Batterman v. Wells
Fargo Ag Credit Corp., 802 P.2d 1112, 1117 (Colo. App. 1990). “A
joint venture exists when there is: (1) a joint interest in property; (2)
an express or implied agreement to share in profits or losses of the
venture; and (3) actions and conduct showing joint cooperation in
21
the venture.” Compass Ins. Co. v. City of Littleton, 984 P.2d 606,
619 (Colo. 1999) (quoting City of Englewood v. Commercial Union
Assur. Cos., 940 P.2d 948, 957 (Colo. App. 1996)).
¶ 46 Since the trial court did not follow this path, normally the next
step would be a remand for further findings. See, e.g., Dempsey v.
Denver Police Dep’t, 2015 COA 67, ¶ 19 (“We agree that the record
does not clearly demonstrate that the trial court made a finding as
to whether Officer Jossi was exceeding the lawful speed limit at the
relevant time and, thus, we remand for further findings.”). But not
always. An exception exists because if the “relevant facts are
undisputed and complete, remand to the district court would only
further delay the ultimate disposition.” TABOR Found. v. Reg’l
Transp. Dist., 2016 COA 102, ¶ 39 (citation omitted) (cert. granted in
part, Jan. 23, 2017). On this record, the exception applies.
¶ 47 As in Duggins and Phillips, both Larson and Grinnan had a
joint interest in successfully prosecuting the Kelley case; their profit
would depend on the degree of their success. The fee agreement
reflected that Grinnan was “associated” with Larson and that both
he and Larson would share in the contingent fee. While the trial
22
court found that their roles differed, both of them cooperated in
bringing the case.
¶ 48 Despite these undisputed facts, Larson argues that because
Grinnan never agreed to be jointly and severally liable for costs, he
failed to assume financial responsibility. True, only Larson
obligated himself to pay costs. And on this basis, Larson challenges
the trial court’s finding that when Grinnan accepted a lower fee
division from the first settlement, which Grinnan testified was to
help defray significant costs already incurred by Larson, Grinnan
assumed financial responsibility.
¶ 49 Recall, Wisconsin considers whether a referring lawyer
assumes responsibility for costs, but observes that allocation of
costs is not dispositive. Wis. Ethics Op. E-00-01 (noting that
assumption of financial responsibility for costs “may be secondary
to the financial responsibility assumed by the lawyer to whom the
matter was referred”). We agree that a referring lawyer’s
responsibility for costs is at most one possible indicator the lawyer
cooperated in the joint venue. See Compass Ins. Co., 984 P.2d at
619 (reiterating that third prong of joint liability test is “actions and
conduct showing joint cooperation in the venture”). And we decline
23
to attach much weight to responsibility for costs because whether
such joint responsibility significantly advances the overarching
purpose of the Rules of Professional Conduct to protect clients, see
Mercantile Adjustment Bureau, L.L.C., ¶ 15, is questionable. After
all, the referring lawyer’s joint responsibility for costs in a
contingency fee arrangement primarily protects third parties, who
can look to a pocket other than that of the trial specialist.
¶ 50 In the end, we need not address Larson’s costs argument any
further because the undisputed evidence shows that Grinnan and
Larson entered into a joint venture for the purposes of representing
the Kelleys and sharing in the fee. From that arrangement flows
vicarious malpractice liability. Therefore, we further conclude that
Grinnan assumed financial responsibility for the case.
c. Remand is Required as to Ethical Responsibility
¶ 51 The conclusion that financial responsibility can be determined
from a referring lawyer’s exposure to liability for malpractice of the
lawyer to whom the case was referred rests on common law
principles of vicarious and joint and several liability. But one does
not usually think of ethics and professional discipline in these
terms. So, do the same principles guide inquiry into ethical
24
responsibility in terms of a referring lawyer’s exposure to
professional discipline for unethical conduct of the lawyer to whom
the case was referred?
¶ 52 No. The Rules of Professional Conduct are “designed to
provide guidance to lawyers and to provide a structure for
regulating conduct through disciplinary agencies. They are not
designed to be a basis for civil liability.” Colo. RPC Preamble ¶ 20.
And ethical responsibilities primarily arise from court rules not
common law principles.
¶ 53 As discussed, Comment 7 to Colo. RPC 1.5 provides that “joint
responsibility . . . entails . . . ethical responsibility for the
representation as if the lawyers were associated in a partnership.”
But what constitutes assuming ethical responsibility for a case one
lawyer refers to another? Answering this question is confounded
because Comment 7 does not define ethical responsibility, very
limited authority exists, and the few jurisdictions to have weighed
in disagree on whether, and to what extent, joint responsibility
requires a lawyer to ensure ethical responsibility, once that lawyer
has referred a case to another lawyer. Broadly speaking, two
25
standards have emerged: one requires the lawyer have some
involvement in the case; the other requires minimal or no action.
¶ 54 Wisconsin and Ohio have adopted the broader standard. In
Wisconsin, a referring lawyer must “remain sufficiently aware of the
performance of the lawyer to whom the matter was referred to
ascertain if that lawyer’s handling of the matter conforms to the
Rules of Professional Conduct” by “periodically reviewing the status
of the matter with that lawyer, the client, or both.” Wis. Ethics Op.
E-00-01. This requirement implicates “being available to the client
regarding any concerns of the client that the lawyer to whom the
matter has been referred is handling the matter in conformity with
the Rules.” Id. In other words, the referring lawyer must at least
continue to be available to act on the client’s behalf and to provide
independent professional judgment. Id. Similarly, Ohio Rule of
Professional Conduct 1.5(e) provides that to receive a fee division
disproportionate to the services he or she provides, a referring
lawyer must assume joint responsibility and agree to be available
for consultation with the client.
¶ 55 Turning to the minimalist standard, New York limits joint
responsibility to joint and several financial responsibility, with one
26
court noting that joint responsibility “does not create an ethical
obligation of the referring lawyer to supervise the activities of the
receiving lawyer.” Aiello, 750 N.Y.S.2d at 464-65 (citation omitted).
The court explained that such a limitation is “the more pragmatic
approach . . . . [I]t does not make much pragmatic sense that a
lawyer would be expected to supervise the handling of a matter by a
specialist, who is more familiar with the case and generally more
competent in the type of action involved than the referring
attorney.” Id. at 465.
¶ 56 A similar sentiment appears in Arizona State Bar Ethics
Opinion 04-02: “It also would be somewhat illogical to require a
referring attorney to ‘supervise’ the handling of a matter by another
attorney believed to be more experienced or capable in a particular
area.” True, Arizona’s version of Rule 1.5 does not include language
requiring the referring lawyer to accept responsibility as if the
lawyers were associated in a partnership. Ariz. RPC ER 1.5. Even
so, Opinion 04-02’s recognition of the challenges presented by
requiring a referring lawyer to supervise a specialist echoes
Comment 7 to Colo. RPC 1.5:
27
A division of fee facilitates association of more
than one lawyer in a matter in which neither
alone could serve the client as well, and most
often is used when the fee is contingent and
the division is between a referring lawyer and a
trial specialist.
¶ 57 At first blush, these pragmatic considerations are alluring.
But fully embracing the minimalist view would ignore Comment 7,
which explicitly requires assumption of ethical responsibility. While
the comments are only “intended as guides to interpretation,” Colo.
RPC Preamble ¶ 21, that limitation is not a license to ignore them
entirely. And as relevant here, consistent with this interpretative
function, Comment 7 defines “joint responsibility” to include ethical
responsibility. But a closer look at Comment 7 and its history
shows that in this context, and contrary to Larson’s assertion,
ethical responsibility of the referring lawyer does not entail
assuming a supervising lawyer’s ethical obligations.
¶ 58 Take the history first. When the ABA revised Model Rule 1.5
in 2002, the revisers recognized the difficulty in holding a referring
lawyer to the ethical standards of a supervising lawyer and removed
the cross-reference to Rule 5.1 (Responsibility of a Partner or
Supervisory Attorney) from the comment. See ABA Comm’n on
28
Evaluation of Rules of Prof’l Conduct, Minutes from Meeting in
Atlanta, Ga. § X (Aug. 6-8, 1999), https://perma.cc/XL2C-QDYC
(“A member asked why the reference to Rule 5.1 was deleted in
Comment [5]. The Reporter responded that since there is not a
supervisory relationship between the lawyers in the joint
representation, Rule 5.1 is not applicable.”). The Model Rule was
revised to include language that had been used in ABA Opinion
85-1514.
¶ 59 Then consider “as if the lawyers were associated in a
partnership,” which appears in Comment 7 to Colo. RPC 1.5, just
as in the ABA Model Rule. Neither Colo. RPC 1.5 nor any of its
comments tell us what this phrase means. But while the Colorado
version of this comment has never included the cross-reference to
Colo. RPC 5.1, only Colo. RPC 5.1(a) and (c) spell out the ethical
obligations — as opposed to the vicarious liability — of a partner in
a law firm:
(a) A partner in a law firm, and a lawyer who
individually or together with other lawyers
possesses comparable managerial authority in
a law firm, shall make reasonable efforts to
ensure that the firm has in effect measures
giving reasonable assurance that all lawyers in
29
the firm conform to the Rules of Professional
Conduct.
....
(c) A lawyer shall be responsible for another
lawyer’s violation of the Rules of Professional
Conduct if:
(1) the lawyer orders or, with knowledge of
the specific conduct, ratifies the conduct
involved;
(2) the lawyer is a partner or has
comparable managerial authority in the law
firm in which the other lawyer practices, or
has direct supervisory authority over the
other lawyer, and knows of the conduct at a
time when its consequences can be avoided
or mitigated but fails to take reasonable
remedial action.
And these responsibilities can be reconciled with the pragmatic
consideration that because clients usually benefit from referrals to
lawyers with particular expertise, the process should not unduly
burden the referring lawyer. See generally Curtis L. Cornett,
Comment, Ohio Disciplinary Rule 2-107: A Practical Solution to the
Referral Fee Dilemma, 61 U. Cin. L. Rev. 239, 256 (1992) (ABA
Model Rule 1.5(e) “allows small practitioners to receive some type of
compensation for their referrals and, in addition, encourages them
to refer clients to more specialized and more competent attorneys.”).
30
¶ 60 As applied to a referring lawyer, paragraph (a) of Colo. RPC 5.1
would require that the referring lawyer only “make reasonable
efforts to ensure that the firm has in effect measures giving
reasonable assurance.” “Reasonable” does not guarantee an
outcome; it “denotes the conduct of a reasonably prudent and
competent lawyer.” Colo. RPC 1.0(h). Comment 3 to Colo. RPC 5.1
further dilutes the burden by clarifying that the required measures
“can depend on the firm’s structure and the nature of its practice.”
Thus, paragraph (a) of Colo. RPC 5.1 does not expose the referring
lawyer to professional discipline based solely on unethical conduct
of another lawyer.
¶ 61 Nor does paragraph (c) impose an undue burden on a referring
lawyer. Because the referring lawyer is outside the receiving
lawyer’s firm, “reasonable efforts” for a referring attorney is
necessarily a lower bar than what Rule 5.1(a) would require from a
partner inside that firm. Otherwise, why would a referring lawyer
who directs or ratifies unethical conduct — or who turns a blind eye
toward such conduct rather than take remedial action, while
adverse consequences could still be avoided — not be subject to
professional discipline, as would any other similarly situated
31
lawyer? This paragraph, too, does not make the referring lawyer
vicariously accountable for unethical conduct of another lawyer,
absent the referring lawyer’s complicity.
¶ 62 Thus, the referring lawyer’s obligations under either of these
paragraphs stop far short of the obligations that Rule 5.1(b)
imposes on supervising lawyers: “A lawyer having direct supervisory
authority over another lawyer shall make reasonable efforts to
ensure that the other lawyer conforms to the Rules of Professional
Conduct.”2
¶ 63 But exactly what must that referring lawyer do to assume
ethical responsibility? In our view, an approach like that adopted
in Wisconsin — which requires that a referring lawyer only stay
abreast of the progress of the matter and be available to address
any of the client’s ethical concerns — is necessary but not always
sufficient to establish “reasonable efforts to ensure that the firm has
in effect measures giving reasonable assurance” of compliance with
2 This aspect of our discussion is a purely hypothetical analysis. No
one has suggested that Larson violated the rules of professional
conduct in his representation of the Kelleys. To the contrary, the
record shows that after a long and hard fight, he obtained favorable
settlements.
32
the Rules. To be sure, the referring lawyer’s staying sufficiently
abreast of the progress of the case to advise the client might
encompass the “reasonable efforts” mandate of Colo. RPC 5.1(b).
Yet, because it also might not, a case-by-case inquiry is essential.
¶ 64 The same picture comes into focus through the lens of
“responsibility to assure adequacy of representation” under ABA
Opinion 85-1514. In the ethical context, some types of professional
misconduct could harm the client who had been referred. For
example, Colo. RPC 1.3 requires “reasonable diligence and
promptness.” So, assuring adequacy of representation would
require some awareness of “measures giving reasonable assurance”
of ethical compliance.
¶ 65 Undaunted, Grinnan asserts that he assumed ethical
responsibility for the case merely by representing the Kelleys. While
correct, this assertion only gets Grinnan half way. It ignores Colo.
RPC 1.5 Comment 7’s use of “joint” to modify “ethical
responsibility.” Thus, the inquiry returns to the referring lawyer’s
assuming responsibility for the actions of the trial specialist.
¶ 66 In sum, the more balanced view requires that to assume
ethical responsibility, the referring lawyer must:
33
actively monitor the progress of the case;
“make reasonable efforts to ensure that the firm [of the lawyer
to whom the case was referred] has in effect measures giving
reasonable assurance that all lawyers in the firm conform to
the Rules of Professional Conduct,” Colo. RPC 5.1(a); and
remain available to the client to discuss the case and provide
independent judgment as to any concerns the client may have
that the lawyer to whom the case was referred is acting in
conformity with the Rules of Professional Conduct.
¶ 67 For reasons known only to the trial court, it made no findings
as to whether Grinnan assumed ethical responsibility for the Kelley
case. The record does not expressly indicate that Grinnan assumed
ethical responsibility. But whether that would be a fair inference to
draw from his interaction with Larson and extensive
communications with Mr. Kelley is within the province of the trial
court. See Target Corp. v. Prestige Maint. USA, Ltd., 2013 COA 12,
¶ 24 (“It is the trial court’s sole province to resolve disputed factual
issues and to determine witnesses’ credibility, the weight to accord
testimony, and the inferences to be drawn from the evidence.”).
34
Additionally, the court did not have the benefit of the standard that
we have adopted.
¶ 68 Therefore, we remand the case to the trial court to determine
whether Grinnan assumed ethical responsibility, applying the
three-part test we have articulated. See Dempsey, ¶ 19. The court
shall make further findings on the existing record. If the court finds
that Grinnan assumed ethical responsibility, then the court’s fee
award stands, subject to an appeal by Larson.3 But if the court
finds that Grinnan did not assume ethical responsibility, then he is
only entitled to fees in proportion to the services he performed, with
the referral fees to be reallocated to Larson, subject to an appeal by
Grinnan.
3 At oral argument, Larson asserted that under a theory of quantum
meruit, Grinnan may only recover an hourly rate for the services
provided. But neither case Larson relied on supports this
proposition. See Melat, Pressman & Higbie, L.L.P. v. Hannon Law
Firm, L.L.C., 2012 CO 61, ¶¶ 19-30 (holding that an attorney may
recover the reasonable value of services provided to former
co-counsel under a theory of quantum meruit); Law Offices of J.E.
Losavio, Jr. v. Law Firm of Michael W. McDivitt, P.C., 865 P.2d 934,
937 (Colo. App. 1993) (allowing division of contingent fee but
remanding for further factual findings). In any event, Larson did
not assert this argument in his briefs, and therefore we do not
consider it. See Qwest Corp. v. Colo. Div. of Prop. Taxation, 310 P.3d
113, 125 (Colo. App. 2011) (declining to address assertion first
made at oral argument).
35
CROSS-APPEAL
III. The Propriety of the Trial Court’s Drawing on “Its Experience
both in Private Practice and on the Bench” Is Not Properly Before Us
¶ 69 On cross-appeal, Grinnan does not assert that the trial court’s
fee allocation was clearly erroneous. Instead, he challenges the
allocation because the court relied on its personal experience rather
than accepting the allocation proposed by his expert. But Grinnan
did not preserve this issue.
¶ 70 Civil cases too numerous to cite say that “issues not raised in
or decided by a lower court will not be addressed for the first time
on appeal.” See, e.g., Robinson v. Colo. State Lottery Div., 179 P.3d
998, 1008-09 (Colo. 2008). Under C.A.R. 1(d), however, “appellate
courts also have the discretion to notice any error appearing of
record, whether or not a party preserved its right to raise or discuss
the error on appeal.” Id. at 1008. That said, failure to object
usually means that the issue will not be considered on appeal. See,
e.g., Murray v. Just In Case Bus. Lighthouse, LLC, 2016 CO 47M,
¶ 30 n.7 (“We agree with the court of appeals that Murray failed to
preserve this issue for appeal because he did not object to Sumner’s
testimony on this basis at trial.”).
36
¶ 71 Applying these familiar principles, we first conclude that
Grinnan failed to preserve an objection to the trial court’s reliance
on its personal experience. Next, we discern no reason to exercise
our discretion and take up this unpreserved issue.
A. Lack of Preservation
¶ 72 At the December 1, 2015, hearing, and before taking further
testimony, counsel and the trial court discussed several procedural
issues. Before taking further testimony, the court told counsel:
And if the parties are okay, I can take judicial
notice of the fact that I also have tried
explosion cases in a previous life, I have pieces
of a bomb on my desk, actually, where I spent
one year of my life working on one case solely.
So I know how much work these things are. It
was a little different, it was in the criminal
context, but I was the only attorney and it was
incredibly difficult to get the thing together, get
it ready, and then I actually took it all the way
through trial. So if that helps people
remembering that and viewing what I saw in
the case in terms of everything that was filed
and everything that was done, I’m certainly
willing to take judicial notice of all that, too, so
— but you don’t have to agree to anything.
Larson’s attorney replied, “I understand.” Grinnan’s attorney
moved on to another procedural issue.
37
¶ 73 Grinnan does not identify any point during the hearing — or,
for that matter, any point before the court ruled — where his
attorney expressed concern over the court’s reference to taking
“judicial notice” of its personal experience. See C.A.R. 28(a)(7)(A)
(Arguments must include “whether the issue was preserved, and if
preserved, the precise location in the record where the issue was
raised and where the court ruled.”). Instead, Grinnan responds
that “such an objection would have been futile and thus
unnecessary to preserve the issue.”4 His response misses the mark
in three ways.
¶ 74 First, according to Grinnan, “the [trial] court simply could not
have taken judicial notice of his personal experience.” Under CRE
4 According to Grinnan’s reply brief: “Thus, Grinnan did preserve
the issue by the steps he took by filing his motions after judgment.”
However, he provides no record citation. See C.A.R. 28(a)(7)(A)
(requiring, for preserved issues, “the precise location in the record
where the issue was raised”); Shiplet v. Colo. Dep’t of Revenue, 266
P.3d 408, 412 (Colo. App. 2011) (“However, Shiplet has failed to
indicate where he raised the issue of ADA compliance at his hearing
below. We therefore decline to reach this issue.”); O’Quinn v. Baca,
250 P.3d 629, 632 (Colo. App. 2010) (noting that the court is under
no obligation to search the record to determine whether an issue
was raised and resolved, and that “parties ‘should not expect the
court to peruse the record without the help of pinpoint citations’.”
(quoting L.S.F. Transp., Inc. v. Nat’l Labor Relations Bd., 282 F.3d
972, 975 n.1 (7th Cir. 2002))).
38
201(b), he may be correct. But the language from this rule that he
cites on appeal — “[a] judicially noticed fact must be one not
subject to reasonable dispute” — affords ample reason why his
counsel should have raised a contemporaneous objection. See
Uptain v. Huntington Lab, Inc., 723 P.2d 1322, 1330 (Colo. 1986)
(The primary purposes of the contemporaneous objection rule is “to
permit the trial court to accurately evaluate the legal issues and to
enable the appellate court to apprehend the basis of the
objection.”).
¶ 75 Second, Grinnan asserts that “the [trial] court did not take
judicial notice of the specific facts it intended to use.” But the trial
court’s statement — “I know how much work these things are” —
belies this assertion. In apportioning the fee, “how much work
these things are” would be relevant. And in any event, Grinnan’s
counsel could have asked the court about what additional facts it
contemplated judicially noticing. For example, counsel could have
asked the court — as Grinnan proposes in his cross-reply brief —
“whether the law or jurisdictions were similar.” Why he did not do
so remains unexplained.
39
¶ 76 Third, Grinnan questions holding that a party waives appellate
review “simply by not objecting to a judge’s toss-away comment.”
But the “toss-away” characterization rings hollow because the court
expressly referred to “tak[ing] judicial notice.” And as Grinnan
argues in his first point, judicial notice is a formal process, limited
by CRE 201(b) and interpreted by many Colorado cases, several of
which Grinnan cites.
¶ 77 In sum, this issue was not preserved.
B. Discretionary Review
¶ 78 Not easily deterred, Grinnan asserts that even if the issue was
not preserved, this court should exercise discretion and take it up.
But Grinnan argues only that we should do so “in light of the
prejudicial errors that occurred in the [trial] court as further
explained below and in Grinnan’s Opening-Answer Brief.” This
argument ignores the larger point.
¶ 79 Grinnan cites no authority — nor are we aware of any in
Colorado — holding that other preserved errors give an appellate
court license to ignore the contemporaneous objection requirement
as to an unpreserved error. And to the extent that Grinnan’s
argument implies a nexus between other preserved errors and this
40
unpreserved error, “[t]he doctrine of cumulative error, although
applied regularly in criminal appeals, has not been extended to civil
cases.” Acierno By & Through Acierno v. Garyfallou, 2016 COA 91,
¶ 66.
¶ 80 For all of these reasons, we decline to take up the judicially
noticed personal experience issue.
IV. The Trial Court Did Not Err in Awarding Prejudgment Interest
to Larson on the Basis of Grinnan’s Wrongful Withholding
¶ 81 After Grinnan filed an attorney’s lien, Larson proposed that
thirty-five percent of the attorney fees be put in escrow until the
dispute was resolved. This proposal would give Larson access to
sixty-five percent of the fees. Grinnan disagreed, explaining:
In this instance all attorney’s fees are in
dispute and thus they all must be placed in
trust or escrow until the dispute is
resolved. . . . The fee agreement in this matter
provides that Mr. Grinnan “shall be paid a
percentage of the firm’s fee, not to exceed
100%.” Thus, at this time and until this
matter is resolved (either through an
agreement between the parties or through
litigation), all attorney’s fees are in dispute.
Following extensive argument, the trial court held:
No attorney’s fees to any attorney shall be paid
from the settlement unless the parties
stipulate to doing so. All remaining funds
41
shall be placed by Mr. Larson into a separate
interest-bearing account. The funds in the
interest-bearing account shall remain in the
account until further order of the Court.
¶ 82 After the court entered its order allocating the attorney fees,
both parties moved for prejudgment interest under section
5-12-102(1)(a). As relevant here, Larson argued that he was
entitled to prejudgment interest because he had been “deprived of
the use his portion of the undisputed amounts.” Grinnan
responded that that he did not wrongfully withhold Larson’s portion
of the attorney fees because he lacked control over them; rather,
Lawson had deposited them into a restricted account, as the trial
court had ordered.
¶ 83 The trial court agreed with Larson:
The Court, in its previous order regarding
attorney’s fees, found and continues to find
that Mr. Grinnan provided a very limited
amount of services to the plaintiffs in this
case. Mr. Grinnan’s claims for attorney’s fees
are far in excess of what any reasonable
attorney would demand based upon the
limited amount of work he performed on the
case. At the start of this dispute, the Court
granted Mr. Grinnan’s request that all the
attorney’s fees in this case be placed in a
restricted interest bearing account. The
demand by Mr. Grinnan that 100% of the fees
be placed in a restricted account was, as a
42
practical matter a wrongful withholding of
money from Mr. Larson entitling Mr. Larson to
receive interest pursuant to CRS 5-12-102.
A. Standard of Review and Law
¶ 84 An appellate court reviews the trial court’s interpretation of a
statute de novo and its findings of fact for clear error. See Semler,
¶ 19; Hoskins, ¶ 17.
¶ 85 Section 5-12-102(1)(a) provides a statutory rate of interest for
money or property wrongfully withheld. “[W]rongfully withheld,” as
used in section 5-12-102(1), means an aggrieved party is deprived
of the use of money to which the party was otherwise entitled. See
Goodyear Tire & Rubber Co. v. Holmes, 193 P.3d 821, 825 (Colo.
2008).
¶ 86 As a result of a wrongful withholding, the aggrieved party
suffers a loss, frequently termed the “time value of money.” Id. at
826; see Mesa Sand & Gravel Co. v. Landfill, Inc., 776 P.2d 362, 364
(Colo. 1989). This lost value is caused by inflation, reducing the
value of money over time, and by the aggrieved party’s inability, due
to the withholding, to earn any return. Goodyear Tire, 193 P.3d at
826.
43
¶ 87 Even so, wrongful withholding does not require tortious or bad
faith conduct. Benham v. Mfrs. & Wholesalers Indem. Exch., 685
P.2d 249, 254 (Colo. App. 1984). Instead, courts have given this
term “a broad, liberal construction” that focuses on “whether money
or property was wrongfully withheld from the nonbreaching party
and not whether the nature of the conduct of the breaching party
brings him or her within the ambit of the statute.” Rodgers v. Colo.
Dep’t of Human Servs., 39 P.3d 1232, 1237-38 (Colo. App. 2001).
B. Analysis
¶ 88 Grinnan contends the trial court erred in finding a wrongful
withholding under section 5-12-102 because until the court
allocated the fees, “neither party knew how much of the attorney
fees Mr. Larson and Mr. Grinnan would receive.” Thus, he
continues, filing an attorney’s lien against all the fees and urging
that they be placed in a restricted account could not have
constituted a wrongful withholding.
¶ 89 True, how the attorney fees would be allocated was unknown
at the time Grinnan filed the attorney’s lien and later when he
requested that the fees be placed in a restricted account. But “an
attorney’s lien which misstates facts and is utilized to overreach
44
and to force payment of more than is owed cannot be tolerated.”
People v. Radinsky, 182 Colo. 259, 261, 512 P.2d 627, 628 (1973).
And under Colo. RPC 1.15A(c), only “the portion [of the attorney
fees] in dispute” was required to be kept in a separate account until
the dispute resolved.
¶ 90 The trial court found that Grinnan’s request to put all the fees
into a restricted account far exceeded “what any reasonable
attorney would demand based upon the limited amount of work he
performed on the case.” Grinnan does not challenge this finding as
clearly erroneous, nor could he. He testified during the attorney
fees hearing that his compensation should be “somewhere from the
middle of the difference between the 25 percent and one-third . . .
towards the 25 percent.” His expert offered a similar opinion as to
customary fees splits between a referring attorney and a trial
specialist in Colorado.
¶ 91 Yet, by filing an attorney’s lien against all the fees and then
requesting that the court place them “in trust or escrow until this
dispute is resolved,” Grinnan deprived Larson of the use of money
to which only he was entitled. These actions establish a wrongful
withholding under section 5-12-102(1)(a).
45
¶ 92 Despite his undisputed actions, now Grinnan emphasizes that
he did not wrongfully withhold the attorney fees because they were
placed into a restricted account based on the court’s order. But to
be clear, the court ordered that no “fees to any attorney shall be
paid from the settlement unless the parties stipulate to doing so.”
Thus, Grinnan could have stipulated to disbursing to Larson from
the settlement the portion of fees beyond Grinnan’s claim. In any
event, and as a matter of law, the trial court’s order does not shield
Grinnan.
¶ 93 A similar argument was rejected in Rodgers, where the division
awarded interest under section 5-12-102 on back pay that a state
employee had been required to return when the back pay award
was reversed on appeal. 39 P.3d at 1238. The division explained
that the employee was, “in effect, the breaching party because he
demanded and received money from [the state] that a division of
this court determined he was not entitled to receive.” Id. And
because he “was never entitled to the money . . . he has been
wrongfully withholding it since the time he received it.” Id.
¶ 94 In so holding, the division rejected the employee’s argument
“that he could not have been wrongfully withholding the money
46
because he received it pursuant to the [State Personnel] Board’s
order.” Id. The division explained that this “argument fails because
it only views the situation from the perspective of [employee’s]
conduct and does not take into account the harm suffered by [the
state].” Id. The same is true here.
¶ 95 Finally, Grinnan asserts that he could not have wrongfully
withheld the fees because he never had control over the restricted
account. But at Grinnan’s urging, the trial court ordered that the
attorney fees be placed in a restricted account. And once Grinnan
filed an attorney’s lien against all of the fees, Larson was deprived of
their use.
¶ 96 Thus, we conclude the trial court properly awarded Larson
prejudgment interest.
V. The Trial Court May Reconsider Its Ruling on Costs
¶ 97 Both parties sought costs under C.R.C.P. 54(d), which
provides: “Except when express provision therefor is made either in
a statute of this state or in these rules, reasonable costs shall be
allowed as of course to the prevailing party . . . .” The trial court
denied the requests. It concluded that “it did not rule in favor of
47
either of the attorneys and finds that neither was the prevailing
party.”
¶ 98 “Determining the reasonableness and necessity of costs is
within the trial court’s discretion and will vary on a case-by-case
basis.” In re Estate of Fritzler, 2017 COA 4, ¶ 40. Given our
remand, after the trial court makes further findings on joint ethical
responsibility, the court may reconsider its costs ruling and, if
appropriate, modify it.
VI. Conclusion
¶ 99 The attorney fee award is vacated, the cross-appealed rulings
are affirmed, and the case is remanded for additional proceedings
consistent with this opinion.
JUDGE BOORAS and JUDGE FREYRE concur.
48