Larson, P.C. v. Grinnan

2017 COA 85

• Court: Colorado Court of Appeals
• Decided: June 15, 2017
• Docket: 16CA0295
• Status: Published

Opinion

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

¶ 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

¶ 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.