Updating Colorado Legal Engagement Letters for New Pricing and Surcharge Laws

Colorado’s legal professionals are overhauling their client agreements to comply with pricing transparency statute CRS § 6-1-737 and credit card surcharge rules under CRS § 5-2-212. Enacted to mandate single-number pricing and regulate credit transaction fees, these state laws carry severe penalties, including potential 18% compound interest on unpaid demands and statutory fines up to $50,000 per violation.

Colorado Law Compliance Metrics

• Statutory Exposure: Under CRS § 6-1-737, violators face actual damages plus 18% per annum compound interest if unresolved within 14 days of a written demand.
• Civil Penalties: Fines reach up to $20,000 per violation, escalating to $50,000 if the affected consumer is an elderly person.
• Surcharge Caps: Under CRS § 5-2-212, credit card processing fee pass-tos are strictly capped at either 2% of the total transaction or the exact merchant discount fee incurred.

Rewriting Engagement Letters for Total Price Transparency

Colorado law CRS § 6-1-737 took effect on January 1, 2026, under the Colorado Consumer Protection Act. The statute originally sparked widespread debate regarding whether it applied to professionals billing by the hour. However, recent regulatory updates cleared any ambiguity. The Colorado Supreme Court adopted amendments to Colorado Rule of Professional Conduct 1.5 on December 18, 2025, taking effect alongside the statute to confirm that hourly rate professionals must adhere to clear pricing disclosures.

The statute requires service providers to clearly and conspicuously disclose the total price as a single number. Because hourly legal matters make a precise final figure impossible at the outset, attorneys must rely on statutory exceptions. Practitioners must explicitly outline the determining factors—such as hourly rates, time required, and client decisions—that influence the final bill.

Statute / Rule	Effective Date	Compliance Mandate
CRS § 6-1-737	January 1, 2026	Single-number total price disclosure or explicit variable pricing factors.
Colo. RPC 1.5 (Comment 3)	January 1, 2026	Requires lawyers offering services via fee agreements to comply with C.R.S. § 6-1-737.
CRS § 5-2-212	July 1, 2022	Caps credit card processing surcharges at 2% or the actual merchant discount fee.

Managing Credit Card Surcharges Under Colorado Law

In addition to pricing transparency, law firms accepting plastic must comply with CRS § 5-2-212, adopted under the Colorado Consumer Credit Code. The statute permits sellers to pass along a portion of credit card processing fees, provided they stick to strict calculation limits.

The Colorado Attorney General’s Office Administrator’s Interpretive Opinion Letter clarifies that while the surcharge statute applies broadly to sales transactions, the Administrator considers the rules inapplicable to business-to-business transactions lacking a consumer purpose.

Non-Compliant Pricing Exposes Firms to Severe Liability

Failing to update engagement letters exposes firms to severe liability. Under subsection (5)(a) of the consumer protection statute, non-compliant pricing is deemed an unfair and unconscionable practice. Aggrieved clients can issue a written demand seeking fee reimbursements and actual damages.

If a firm fails to resolve the demand within 14 days, statutory penalties compound rapidly. Herrick K. Lidstone Jr., a business attorney with Jennings Haug Keleher McLeod Waterfall LLP in Denver, has noted that the Attorney General’s Office has not issued formal guidance validating specific engagement letter templates, leaving firms to draft disclosures carefully based on statutory text.

Firms must also ensure that existing clients who signed agreements prior to January 1, 2026, receive proper notice. Colorado practice groups, such as the CBA Trust and Estate Section Orange Book Committee, have updated joint representation templates to embed mandatory disclosure language. Whether through revised fee agreements, updated invoices, or email notices, firms must document compliance across all active files to mitigate exposure.

Disclaimer: The information provided in this article is for educational and informational purposes only and does not constitute financial advice.