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Fees Awarded For Appellate Counsel Hired by Colorado Attorney in Fee Shifting Case

 

When an attorney has been hired for a case for which he feels he might not be the best attorney for the job, there is frequently an allowance in his contract with the client for him to hire outside counsel to assist him in the case. Mr. Merenstein recently took advantage of this in the case of Mercantile Adjustment Bureau v. Flood in which he represented Flood.

Having lost her case in the county court, Flood filed an appeal. Merenstein, having little experience in appeals, hired an appellate attorney to argue the case for Flood. Flood lost the appeal and appealed again. For the second appeal, the appellate attorney resigned and Merenstein hired another law firm. Merenstein was working the case on a contingency basis, meaning he would get paid when Flood won the case. The appellate attorneys however, required advance payment and so Merenstein paid their fees with the understanding that Flood would pay him back with the money she won in court. Flood won her second appeal and the case was returned to the county court to determine the amount of damages she was due.

In a third appeal, Mercantile Adjustment Bureau (“MAB”) alleged that, by paying in advance for the attorneys representing Flood, Merenstein was violating the Rules of Professional Conduct which does not allow a lawyer to provide financial assistance to his client. However, the judge disagreed. The Rule provides an exception which states that a lawyer may provide financial assistance to his client in matters relating to the case. This includes reasonable attorneys’ fees and court costs. The judge therefore ordered MAB to pay the attorneys’ fees.

Flood then filed a request for attorneys’ fees incurred in the third appeal, which the court rejected. MAB filed an appeal on the Rules of Professional Conduct allegation and Flood filed an appeal against the judgment on her attorneys’ fees. Both cases were argued before the Colorado Supreme Court.

The Colorado Supreme Court agreed with the district court that an advance on attorneys’ fees was covered by the exception provided by the Rules of Professional Conduct. Regarding the matter of Flood’s attorneys’ fees for the third appeal, the Court had found that the district court had referred to an appellate law in delivering their judgment. A lower court is not permitted to use an appellate law in a judgment and so the court ordered the district court to return the case to the county court in order to determine the amount of attorneys’ fees Flood had accumulated in the third appeal.


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