Man in suit at desk with clock and jar of cash

In a recent unpublished decision, the Colorado Court of Appeals held that the trial court can consider as financial resources one spouse negotiated a sweetheart deal for discounted attorney fees in deciding whether to order that spouse, in turn, to pay attorney fees to the other party.

While in most American jurisprudence each litigant pays his/her own attorney’s fees, one of the exceptions is that in a family law case, the court has discretion to award attorney fees to one party based upon economic circumstances:

“The court from time to time, after considering the financial resources of both parties, may order a party to pay a reasonable amount for the cost to the other party of maintaining or defending any proceeding under this article and for attorney’s fees, including sums for legal services rendered and costs incurred prior to the commencement of the proceeding or after entry of judgment. The court may order that the amount be paid directly to the attorney, who may enforce the order in his name.”

C.R.S. 14-10-119 (Emphasis added).

Vogl was a post-decree case where the parties had been divorced three years previously, and were now returning to court to litigate parenting and child support issues. While those motions were pending, the father changed counsel to one who had agreed to represent him for a reduced rate, with his attorney fees capped at $14,000.

As part of the trial court’s decision to order the father to pay $30,000 of the mother’s legal fees, the trial court considered the fact of the father’s discounted attorney fees, especially given his fees were just $14,000 for a case which had been highly litigated for two years.

The father appealed, and the Court of Appeals upheld the trial court attorney fee decision.

Award of Attorney Fees Can Consider Own Discounted Fees

Attorney fees as financial resourcesAttorney fees as financial resources

The father argued that his receipt of discounted attorney’s fees was not a “financial resource” within the meaning of C.R.S. 14-10-119. The appellate court noted that the Colorado Supreme Court has interpreted that term broadly, to be “economic circumstances”, and “in evaluating the relative financial status of each party, the district court must consider their relative incomes, assets, and liabilities.” Vogl, ¶ 8 (Cleaned Up).

Not only is there nothing in the attorney fees statute which excludes treating discounted legal services as a financial recourse, but it was appropriate to consider such discount:

“the receipt of legal services at a reduced rate is an asset in the sense that a party receives a financial or economic benefit, which frees up money for other uses. In other words, the receipt of discounted legal services increased father’s other financial resources. And the court can consider discounted legal services in the parties’ overall economic circumstances when determining attorney fees under section 14-10-119.”

Vogl, ¶ 10 (Cleaned Up).

Further, allowing a family law court to award attorney fees based upon financial resources does not “interfere with the statutory purpose as it accomplishes the goal of equalizing the parties’ financial positions.” ¶ 11 (this paragraph also has some good quotes from other cases highlighting the policy rationale of “leveling the playing field”). And the father himself was not an indigent litigant receiving pro bono services, but was a high income earner who was “taking advantage” of discounted attorney fees.

Not Abuse of Discretion to Award Attorneys Fees

The father also argued that the trial court abused its discretion by awarding attorney’s fees to his ex-wife. Though attorney’s fees are within the discretion of the trial court, this argument is not as crazy as it appears. After all, there was no finding of sharp dealing or fault by the father, and the mother actually earned more than he did, so why should he pay her legal fees?

However, the mother’s total legal fees were $93,000, so even after paying $30K of her fees, the father’s total attorney fees were “only” $44,000 compared to the mother’s $63,000. (I use the word “only” with hesitation – when a couple has collectively spent over $100K litigating parenting and child support, that is probably an indication that this was a very, very hotly contested case).

So in the end, the father paid about 41% of the total legal fees incurred by both parties, which was pretty close to his 44% of the parties’ combined incomes – the appellate court thought that sounded fair, so was not an abuse of discretion. Vogl, ¶ 16.

The takeaway? The father is probably feeling more than a bit upset – he negotiated for a smoking deal to pay his own lawyer just $14K, giving him a green light to litigate the hell out of a case for no extra cost (not sure why an attorney would even do that). But that resulted in greater financial resources, and he ends up paying the mother more than twice what he paid his own lawyer, just to help cover her attorney fees.

Finally, the court of appeals also considered educational issues as part of the same appeal – read our separate blog post for a discussion of its holding that courts will choose the school when parents disagree, and that private school costs can be included in child support.

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