For media inquiries, please contact Teresa Busk at [email protected].
DENVER – The Colorado Chamber today announced legislation that will protect the integrity of the legal profession by addressing the growing influence of private equity firms in legal services. The Colorado Chamber has been a lead on the legislation in partnership with the Colorado Trial Lawyers Association. House Minority Leader Jarvis Caldwell, Rep. Javier Mabrey, Sen. Lindsey Daugherty and Sen. Lisa Frizell are the prime sponsors of the bill.
House Bill 1421 strengthens Colorado’s longstanding rules prohibiting non-lawyer ownership of law firms and fee-sharing with non-lawyers, while closing loopholes that allow private equity firms to influence legal outcomes through complex business arrangements. The bill ensures that legal decisions remain in the hands of licensed attorneys and not outside investors.
“Protecting the integrity of Colorado’s legal system is critical for maintaining trust in our courts,” said Colorado Chamber President and CEO Loren Furman. “When non-lawyers have a financial stake in legal fees or case outcomes, the interests of consumers and businesses are no longer the top priority, and litigation costs increase for everyone. This legislation ensures that legal decisions are made in the best interest of Coloradans and not driven by profit.”
“This bill takes a thoughtful and balanced approach to a complex issue,” said House Minority Leader Jarvis Caldwell. “It recognizes that law firms may rely on outside support for administrative services, while drawing a clear line against financial arrangements that could influence legal judgment. By prohibiting profit-sharing tied to case outcomes, HB 1421 protects the integrity of our legal climate and keeps costs under control.”
“HB 1421 is about protecting the integrity of our legal system and making sure it continues to work for the people of Colorado,” said Rep. Javier Mabrey. “Legal decisions should be made by attorneys using their professional judgment and focusing on what is best for their clients. That line starts to blur with outside investor influence, and this legislation helps restore that balance.”
“Private equity’s goal is to generate profits – not to seek justice for injured Coloradans,” said Colorado Trial Lawyer Association Executive Director Julie Whitacre. “When outside companies have financial stake in legal cases, consumers take a back seat to profit. Colorado lawyers are bound by ethical duties of loyalty, confidentiality, and independent judgment. Private equity firms are not. This legislation reinforces the simple principle that legal decisions must belong to Coloradans and their lawyers, not outside investors.”
Private equity firms are increasingly entering the legal market through management companies, alternative business structures and out-of-state entities as a way to bypass existing safeguards. These arrangements weaken confidentiality protections, interfere with attorney-client relationships and prioritize profit over fair legal outcomes.
HB 1421 prohibits the sharing of legal fees with non-lawyers, entering into agreements with investor-backed entities that influence legal services, and operating law firms where non-lawyers have ownership or control over legal decisions. It also allows law firms to use outside companies for administrative services, such as billing and operations, but requires those arrangements to be paid through flat-fee or hourly arrangements and are not tied to legal fees or case outcomes.
The legislation also establishes an enforcement process through the Colorado Attorney General’s Office, and legal action for injured individuals and local law firms against a law firm backed by private equity. Any recovered funds are paid to the Legal Aid Foundation of Colorado.
Similar legislation and administrative rules to address private equity influence in the legal profession have been passed in California, Florida, Georgia and Texas.
To view HB 1421, please click here.
###
The Colorado Chamber of Commerce champions free enterprise, a healthy business environment and economic prosperity for all Coloradans. It is the only business association that works to improve the business climate for all sizes of business from a statewide, multi-industry perspective. What the Colorado Chamber accomplishes is good for all businesses, and that’s good for the state’s economy. It was created in 1965 based on the merger with the Colorado Manufacturers’ Association.
The Colorado Trial Lawyers Association (CTLA) is dedicated to protecting people and righting wrongs. With more than 1,200 members statewide, CTLA supports the civil plaintiff attorneys who fight for everyday Coloradans. Through advocacy, education, and a deep commitment to public safety, CTLA stands up for your rights when it matters most.