Attorney Fees
Denver, Colarado
Attorney fees are rightfully on the minds of anyone who has a legal issue when he or she is contemplating contacting an attorney for legal help.
The amount of attorney fees may be a small (relative term) amount, may be a substantial amount (relative term), or may be somewhere in between, depending on the type of legal matter involved and the amount of time required for an attorney to help resolve the legal matter, either informally without a lawsuit (always the preferred method of resolving legal matters) or by the filing of a lawsuit (always a last resort).
At the first meeting with a client, I always discuss attorney fees and I answer all questions that my client has about attorney fees.
As much as possible, I try to quote a flat fee so that my clients know what the total attorney fees will be and there are no unknowns.
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The areas where I am able to quote a flat fee include:
- Estate planning.
- Form a limited liability company.
- Form a corporation.
- Preparation of an Operating Agreement for a limited liability company.
- Preparation of bylaws for a corporation.
- Preparation of a buy-sell agreement for the shareholders of a corporation.
- Preparation of an asset purchase agreement.
- Preparation of a stock purchase agreement.
- Preparation of a membership interest purchase agreement.
- Preparation of a residential lease.
- Preparation of a commercial lease
- Preparation of a contract for the sale of a home (for sale by owner without real estate agents).
- Preparation of a sales contract.
- Preparation of a services contract
- Filing of a mechanic’s lien.
- Preparation of a promissory note.
- Preparation of a deed of trust.
- Preparation of an employment agreement.
- Preparation of a covenant not to compete agreement.
- Preparation of a non-disclosure agreement.
- Preparation of a letter of intent.
- Preparation of a settlement agreement.
- Preparation of a demand letter.
- Preparation of a consulting agreement.
- Preparation of an independent contractor agreement.
- Preparation of a settlement agreement.
- Preparation of a financing agreement.
While many legal services may be billed on a flat fee basis, with examples listed above, the time that will be required for certain legal services is unknown (because there is a party on the other side of the matter and we do not know what all will be involved to address and resolve all legal issues) and I, therefore, charge for my services for those legal matters based upon my hourly rate broken down into six minute increments.
Even if I am unable to give my clients a flat fee, I am usually able to provide a range for my estimated attorney fees to make sure my clients are comfortable moving forward to resolve their legal matter.
When I am discussing with my client about a party to my client’s agreement breaching the agreement, I am often asked by my client if the other side will pay my client’s legal fees. My response is to state the general law in Colorado concerning payment of attorney fees. In Colorado, the general law is that each side pays his, her, or its own attorney fees unless (1) there is a statute that states otherwise or (2) an agreement states otherwise.
There are a few statutes in Colorado that provide for the payment of attorney fees to a party, but there are not very many statutes that do so. A few examples of when a statute provides attorney fees include:
- Failure of a residential landlord to return a security deposit after notice is provided pursuant to the statute. C.R.S. 38-12-103. .
- The filing of a false or excessive mechanic’s lien. Any person who files a mechanic’s lien for an amount greater than is due without a reasonable possibility that said amount claimed is due and with the knowledge that said amount claimed is greater than that amount then due, the person shall be liable for all costs and attorney fees. C.R.S. 38-22-128.
- The trust fund statute, which states that “All funds disbursed to any contractor or subcontractor under any building, construction, or remodeling contract, or on any construction project shall be held in trust for the payment of the subcontractors, laborers or material suppliers, or laborers who have furnished laborers, materials, services, or labor, who have a lien, or may have a lien, against the property, or who claim, or may claim against the property, or who claim, or may claim against a principal and surety under the provisions of this article and for which such disbursement was made.” C.R.S. 38-122- 127. Any violation of this statute is civil theft, which is C.R.S. 18-4-401. Attorney fees for civil theft are recoverable pursuant to C.R.S. 18-4-405.
- Civil theft pursuant to C.R.S. 18-4-401. Attorney fees for civil theft are recoverable pursuant to C.R.S. 18-4-405.
- Documents that are recorded without a legal basis or an agreement between the parties are referred to as spurious, fraudulent, and bogus, and attorney fees are recoverable. C.R.S. 38-35-201-204
- If a person gives a check to someone that is NSF, the payee may recover attorney fees if the provisions of the statute are met. C.R.S. 13-21-109
- When the bringing or defense of an action, or part thereof is determined to have been substantially frivolous, substantially groundless, or substantially vexatious, the other party may recover attorney fees. C.R.S. 13-21-101. However, this standard is a very high standard to meet, and is very difficult to meet, because courts do not want to chill parties’ rights to bring lawsuits.
- Consumer protection actions provide for the recovery of attorney fees. C.R.S. 6-1-113.
Attorney Fee’s Clause
When I prepare any agreement for my client, my client and I always discuss whether to include an attorney fee’s clause in the agreement. As previously stated, if the agreement is silent, each party pays her, his, or its own attorney fees unless there is a statute that is applicable and most transactions do not fall within the legal area where a statute provides for attorney fees to a party. The most common language used in an agreement concerning attorney fees is to state that the prevailing party shall receive attorney fees and costs.
Colorado courts have defined a “prevailing party” as one which prevails on a significant issue in the litigation and derives some of the benefits sought by the litigation.
There are always practical issues when thinking about when to include attorney fees in agreements that I prepare and in reviewing agreements which have attorney fees provisions.
The advantage of including a prevailing party paragraph is that if someone is being unreasonable and you must take him, her, or it to court, you may ask for the other party to pay your attorney fees a trial if you prevail.
However, you do not want to assume that if you prevail, you will automatically receive your attorney fees and, therefore, you file a lawsuit because you expect you will recover all of your attorney fees in addition to other damages or relief that you request. A judge will review if the attorney fees are “reasonable” and has the authority to state that the attorney fees are not “reasonable,” even if everyone else clearly thinks that the amount of attorney fees is “reasonable” and the judge does not.
In some contracts I have not included an attorney fees paragraph if my client and I believe an attorney’s fee paragraph will embolden the other side to think he, she, or it will recover attorney fees if there is a dispute because the other side believes he, she, or it will win no matter what, which makes negotiations that much more difficult if there are problems. Therefore, they won’t even discuss settlement and take a very hard line, unreasonable position.
Another consideration when a client is having a contract dispute and the contract states the prevailing party receives attorney fees is always to remember that I am unable to guaranty the outcome of any dispute. Therefore, the best option is always to try to negotiate a reasonable settlement. An example that I sometimes state to clients if it is appropriate is that you do not want to turn a ten thousand dollar ($10,000.00) dispute into a thirty thousand ($30,000.00) dispute if you lose (for example ten thousand dollars ($10,000.00) in dispute plus attorney fees of ten thousand dollars ($10,000.00) for my client’s attorney fees plus ten thousand dollars ($10,000.00) payment for the other party’s attorney fees).
When discussing problems with the opposing party and a potential settlement, in addition to discussing attorney fees, I always inform my clients that there is always a dollar value attached to the “brain damage” that is involved in litigation.
