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House passes bill limiting private‑equity and fee‑sharing in law firms after heated debate
Summary
Lawmakers approved HB14‑21, a bill aiming to block certain fee‑sharing and non‑lawyer ownership arrangements in law practices; backers said it protects client trust and rural legal access while opponents warned of separation‑of‑powers concerns and potential court review.
The House adopted HB14‑21, titled the Colorado Legal Practice Integrity and Fee‑Sharing Prohibition Act, after floor debate that focused on whether the measure intrudes on the judiciary’s traditional regulation of lawyers. "Rule 5.4 exists to protect the independence of legal judgment," Representative Mabry said in floor remarks supporting the bill.
Sponsors argued the bill targets business structures — particularly outside private equity control — that could place non‑lawyer profit motives ahead of client interests. Representative Mabry said the legislation seeks to prevent investors from directing case strategy.
Opponents, including Representative de Graaf and Representative Espinosa, argued the judiciary should address professional‑conduct questions and that the bill risks encroaching on the courts' role. "We need the Supreme Court to interpret rule 5.4," Rep. Espinosa said, describing a preferred path to adjudicate the underlying professional‑conduct questions.
After several members explained their positions and some sought amendments and clarifications, the bill passed on third reading; sponsors noted an automatic sunset and a proposed path for judicial clarification during the interim.
Next steps call for coordination with the state courts and rule‑making guidance to confirm how the statutory language will interact with existing professional‑conduct enforcement.
