Court Opinion

ID: 9754413
Source: CourtListenerOpinion
Date Created: 2023-08-28 19:59:48.488585+00
Date Added: 2024-06-11T07:27:53.109904
License: Public Domain

Justice COATS, dissenting.
135 I respectfully dissent from the judgment of the court for two separate but related reasons. Initially I do not share the majority's willingness to treat the several hundreds of thousands of dollars paid by Merenstein to his appellate attorneys, payments that did not even arguably fall within any sanctioned fee splitting or contingent fee arrangement, as allowable "expenses of litigation." In addition (and perhaps more importantly), however, I believe the majority simply fails to address, or perhaps even appreciate, what to my mind is the central question posed by the statutory fee award in this case: Whether, in the absence of any agreement between the appellate attorneys and the plaintiff in the case, their fees, for which the plaintiff's attorney seeks reimbursement, constitute "reasonable attorney fees" within the contemplation of section 12-14-118, C.R.S. (2011). .
T 36 While I readily agree that Mercantile is not barred from invoking ethical considerations as a basis for seeking reduction of the fees awarded against it, I would not consider it an appropriate exercise of our authority over the legal profession to deny a statutorily-authorized fee award to a successful consumer on the basis of unethical conduct by her attorney. To the extent the majority views Mercantile's defense primarily as a plea for fairness rather than an argument against treating the fees of other attorneys for which Merenstein is personally liable as the "reasonable attorney fees" of the successful consumer, and in fact construes Colo. RPC 1.8(e) to bless the fee arrangement in this case, I not only disagree but find it both unfortunate and ironic that a dispute over this statutory fee-shifting provision should become the vehicle for dissolving a firm and long-accepted distinction between attorney fees and other costs and expenses of litigation.
137 Traditionally, much of the world has regarded as highly unethical attorney fee arrangements that depend upon and are measured as a percentage of a successful recovery. See generally Samuel Issacharoff & Geoffrey P. Miller, Will Aggregate Litigation Come to Europe?, 62 Vand. L. Rev. 179, 198 (2009). In this country, by contrast, we have long accepted such contingency fee arrangements, at least in certain classes of cases and under limited cireumstances, as well as specific fee-shifting provisions, as techniques for providing greater access to the courts and encouraging the private enforcement of various rights and regulations. In doing so, however, we have never been oblivious to the ethical dangers inherent in providing financial assistance to clients and have, in fact, attempted to minimize those *360dangers through a host of ethical constraints, ranging from express limitations on the kinds of assistance and fee arrangements considered acceptable, to requiring written contracts, advisements, and warnings to ensure the informed consent of clients.
"[ 38 In addition to finding it acceptable for attorney fees to remain contingent on the outcome of a matter, our Rules of Professional Conduct have also given lawyers the leeway to advance court costs and expenses of litigation, with repayment similarly contingent on the outcome. Colo. RPC 1.5 & 1.8(e). In what strikes me as a kind of bootstrapping or circular logic, the majority reasons today that allowing the advancement of expenses of litigation is largely indistinguishable from, and serves the same purpose as, allowing contingent fees, and therefore the "expenses" contemplated by this exception to the prohibition against providing financial assistance to clients must be understood to comprehend any "expense" incurred in conducting the litigation, including even the expense of personally hiring other attorneys to conduct it. With this reasoning we appear to have come full circle, moving from a limited exception for legal services recompensed only upon a favorable outcome, to a rule permitting attorneys to personally invest in their clients' lawsuits, without regard for amount, risk, or motivation, to the extent of retaining other attorneys to conduct the litigation in their stead.
€89 This court can, of course, not only construe its own rules governing the profession but in fact rewrite them as it sees fit. The virtually identical provisions of the Model Rules of Professional Conduct, promulgated by the American Bar Association and adopted by this and many other jurisdictions, have, however, been persuasively interpreted elsewhere to precisely the opposite effect. See Fla. Bar v. Patrick, 67 So.3d 1009 (Fla.2011) (finding fees for separately hired appellate attorneys to fall outside the meaning of "expenses of litigation"). Should it be necessary, the principles of construction militating against the majority's interpretation are ably marshaled there, id., but my fundamental disagreement with the majority is one of policy, centered on emphasis and balance. Financial assistance of virtually every imaginable kind can have the effect of increasing access for those otherwise unable to afford it. 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. _ Subsidizing lawsuits is barred to the extent that doing so would encourage clients to pursue law suits that might not otherwise be brought and to the extent that providing such assistance would give lawyers too great a financial stake in the litigation. Colo. RPC 1.8 emt. Surely an example of these two dangers could not be more readily found than in a case such as this, in which an attorney mortgages his home and risks several hundred thousand dollars, admittedly for his own satisfaction and benefit, to perpetuate for years an action with a best possible outcome for his client of one thousand dollars.
[ 40 While it may be within the authority of this court to formulate the ethical rules governing the legal profession in the jurisdiction, the ultimate question here is one of legislative authorization for the specific fee award in this case. Among other things, section 12-14-118(1)(c) makes a debt collector liable for the "reasonable attorney fees" of a consumer who successfully prosecutes an action to enforce the collector's statutory obligations. Whether the fees of appellate attorneys personally engaged and paid for by the consumer's contingency-fee attorney qualify as the "reasonable attorney fees" of the consumer herself is therefore largely a matter of statutory interpretation.
T41 There can be little doubt that the statute renders the debt collector liable to the consumer only for her own attorney fees. As we have indicated elsewhere, although the Rules of Professional Conduct prescribe the obligations of an attorney to his client, including the limits and formalities of fee agreements, they expressly contemplate that external principles of substantive law must determine whether an attorney-client relationship exists in the first place. People v. Gabriesheski, 262 P.3d 653, 658 (Colo.2011). *361In this regard, we have held generally that a client is a person who employs or retains an attorney for advice or assistance on a matter related to legal business, and an attorney-client relationship is established when it is shown that the client seeks and receives the advice of the lawyer on the legal consequences of the client's past or contemplated actions. Id. at 659 (citing People v. Bennett, 810 P.2d 661, 664 (Colo.1991) & People v. Morley, 725 P.2d 510, 517 (Colo.1986)).
[ 42 Although the majority now holds that an attorney may make himself personally liable for paying a different attorney on behalf of his client, in this case Merenstein not only paid the fees of the appellate attorneys, he retained them as well. In fact, when considered in light of the ethical obligations of attorneys to their clients, the cireum-stances of this case point more to an attorney-client relationship between the appellate attorneys and Merenstein himself, than Mer-enstein's client. While the Colorado Rules of Professional Conduct admit of the possibility of representation in which the attorney is compensated by a third party, such as a relative or friend, an indemnitor, or a co-client, this kind of representation is permissible only if the attorney, among other things, at least obtains the informed consent of the client. Colo. RPC 1.8 emt. 11 & 12. The record indicates that the appellate attorneys in this case had no agreement with the consumer, contingent or otherwise, and instead that their fee agreement, which required payment on an hourly basis, was solely with Mr. Merenstein.
43 Similarly, while the majority indicates that Merenstein's contingency fee agreement with his client authorized him to hire other attorneys and that he did so with the knowledge of his client and the understanding that he would be reimbursed from any ultimate fee award, that agreement was purposefully never produced, either to Mercantile or in court. Merenstein did testify, however, that he had no other agreement with his client, and instead that he merely informed his client of his agreement with appellate counsel. I ean find nothing in the record to indicate that the client was ever informed about the specifics of the fee arrangements between Merenstein and the appellate attorneys, other than that she would not be liable for their fees, which, like Merenstein's contingent fee, would be satisfied from the ultimate fee award. In any event, I find absolutely nothing in the record to suggest the client's written informed consent, see Colo. RPC 1.8 emt. 12 & Colo. RPC 1.7(b), to Merenstein's payment of the appellate attorneys' fees.
I 44 Given the clear purpose of this statutory fee-shifting provision to benefit consumers rather than attorneys, I believe it must be construed to require greater justification for an award than merely appearing on the consumer's side of the action. At least where the attorneys whose efforts are at issue concede that they had no agreement whatsoever with the consumer and were both retained and compensated by the consumer's attorney, from his own pocket, I would require some showing that an attorney-client relationship existed with, and their loyalties flowed to, the consumer rather than her attorney.
145 Because I would find that the fees earned by the appellate attorneys were not shown to be the reasonable attorney fees of the consumer at all, and in addition that the statute should not be construed to invite a fee arrangement I consider prohibited by the ethical standards of the jurisdiction, I respectfully dissent.
T46 I am authorized to state that JUSTICE EID joins in this dissent.