Scott R. Larson, P.C., a Colorado professional corporation, Appellant and Cross-Appellee,
Michael K. Grinnan, Appellee and Cross-Appellant.
Plata County District Court No. 13CV14 Honorable Jeffrey R.
Holley, Albertson & Polk, P.C., Dennis B. Polk, Denver,
Colorado; Recht Kornfeld, P.C., Heather R. Hanneman, Denver,
Colorado, for Appellant and Cross-Appellee
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 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.
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.
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.
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 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.
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.
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." Then it turned to Colo. RPC 1.5(d)(1).
This rule permits "a division of a fee 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
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 "subjected]
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
• "[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
• "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 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.
18 Finally, the court declined to award costs, finding that
neither lawyer "was the prevailing party."
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.
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 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,
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 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