C.R.S. § 13-93-403: Definitions.

As used in this part 4, unless the context otherwise requires:

(1) "Alternative business structure" means an entity or organizational structure, wherever organized or denominated, that:

(a) Either:

(I) Economically participates in, provides, or holds itself out as providing legal services to third parties or that exercises control over the provision of legal services to third parties; or

(II) Shares in profits or percentages of legal fees or amounts awarded to or received by a lawyer or law firm as a result of the provision of legal services, directly or indirectly, regardless of whether the entity or organizational structure exercises any control over legal services; and

(b) Is owned by, is controlled by, or economically participates in or is fee sharing with, directly or indirectly, one or more nonlawyers.

(2) (a) "Economically participates in" includes exercising authority or control over legal representation, legal strategy, legal fee determination, settlement decisions, or the allocation of legal fees; fee-sharing arrangements; equity interests; profit- or revenue-sharing arrangements; equity options; warrants; convertible or contingent equity interests; phantom equity; or any other arrangement, however structured or described, that provides a nonlawyer with a financial interest in legal fees, law firm revenue, or law firm profitability.

(b) "Economically participates in" does not include a financial interest arising solely from the ownership or assignment of a claim if the person does not direct or control the professional judgment of a lawyer.

(3) (a) "Law firm" means a partnership, professional company, sole proprietorship, employer of a lawyer who is directly employed as in-house counsel or licensed under a single-client certification, or other entity through which a lawyer, LLP, or combination of lawyers, LLPs, or both provide legal services, which entity:

(I) Operates for profit in compliance with rule 5.4 of the Colorado rules of professional conduct and rule 265 of the Colorado rules of civil procedure; and

(II) Complies with Colorado law and supreme court rules governing law firm ownership and fee sharing.

(b) "Law firm" does not include an alternative business structure or managed services organization.

(4) (a) "Lawyer" means an individual who is licensed to practice law in any jurisdiction in the United States.

(b) "Lawyer" does not include an LLP.

(5) (a) "Legal fee" means any payment, compensation, remuneration, or other financial consideration charged, assessed, collected, or received for the provision of legal services, regardless of how the payment is described, structured, or allocated.

(b) "Legal fee" includes:

(I) Contingent fees, flat fees, hourly fees, hybrid fees, success fees, performance-based compensation, or any other arrangement that compensates a lawyer or law firm based on the provision of legal services to a client;

(II) Any portion of a settlement, verdict, judgment, award, recovery, or payment received on behalf of a client that is allocated to the lawyer or law firm as compensation for legal services;

(III) Any amount paid by a client or third party for legal representation, legal counseling, legal advocacy, legal investigation, legal analysis, negotiation, demand services, or litigation-related activities;

(IV) Retainers, deposits, advanced fees, or security amounts intended to secure payment for legal services, whether refundable or nonrefundable; and

(V) Any revenue or financial benefit derived from legal services, including revenue collected through affiliated entities, subsidiaries, technology platforms, service providers, or fee collection intermediaries.

(c) "Legal fee" does not include:

(I) Payments made solely for nonlegal goods or services, including purely administrative, clerical, or operational support, if the payments are reasonably separable from compensation for legal services;

(II) Ordinary course reimbursements of costs or expenses advanced by the lawyer or law firm, including court filing fees, expert fees, transcript costs, and other pass-through expenses not constituting compensation for legal services;

(III) Lawful wages, salaries, benefits, or discretionary bonuses paid to a nonlawyer employee of a law firm for services rendered in the ordinary course of their employment;

(IV) Amounts recovered on a claim by a person that owns or has been assigned the claim if the recovery does not constitute compensation for legal services; or

(V) Any statutory or contractual entitlement to attorney fee reimbursement held by a law firm's client or direct employer.

(6) "Legal services" means any of the following while acting in a representative capacity concerning a legal right arising in whole or in part in Colorado:

(a) Protecting, defending, or enforcing the legal rights or duties of another person;

(b) Representing another person before a tribunal or, on behalf of another person, drafting pleadings or other papers for a proceeding before a tribunal;

(c) Counseling, advising, or assisting another person in connection with that person's legal rights or duties;

(d) Exercising legal judgment in preparing legal documents for another person;

(e) Exercising legal judgment to advise another person about the legal effect of a proposed action or decision;

(f) Exercising legal judgment to advise another person about legal remedies or possible courses of legal action available to that person;

(g) Exercising legal judgment to select a legal document for another person or to prepare a legal document for another person other than solely as a typist or scrivener;

(h) Exercising legal judgment to represent or advocate for another person in a negotiation, settlement, conference, mediation, or alternative dispute resolution proceeding; and

(i) Soliciting fees for services involving the exercise of legal judgment.

(7) "Licensed legal paraprofessional" or "LLP" means a licensed legal paraprofessional licensed under part 3 of this article 93.

(8) "Managed services organization" means a person other than a lawyer, LLP, or law firm that provides administrative, operational, financial, marketing, management, or other nonlegal business services to a lawyer or law firm.

(9) "Nonlawyer" means an individual who is not licensed to practice law in any United States jurisdiction or is not authorized to practice law by the Colorado supreme court.

(10) (a) "Nonprofit organization" means a charitable organization, as defined in section 39-26-102 (2.5).

(b) A nonprofit organization is not an alternative business structure and does not economically participate in the provision of legal services solely by virtue of the nonprofit organization's relationship with a lawyer or law firm, including where the lawyer or law firm earns legal fees.

(11) "Substantial business in Colorado" means that a law firm generates more than ten percent of the law firm's annual revenue from legal services performed for clients.