Committee backs bill to clamp down on private‑equity influence in law firms

Sponsors told the committee HB14‑21 aims to preserve lawyer independence by banning nonlawyer ownership, indirect profit participation and fee‑sharing practices that can allow private equity to influence legal decision‑making. Senator Fazil framed the bill as protecting a level playing field and preserving trust in the legal market; co‑prime sponsor Senator Doherty described targeted reforms that would allow ordinary administrative service contracts while closing loopholes such as management companies and out‑of‑state shell entities.

Witnesses split. Jason Waisoki (Colorado Trial Lawyers Association) and Kevin Chaney (CTLA) urged the panel the bill closes a dangerous backdoor that could let investor priorities drive case volume and settlement decisions. Lauren Fuhrman (Colorado Chamber of Commerce) and several business witnesses said the measure will protect small businesses from rising litigation costs and preserve consumer confidence. Opponents from outside‑ownership proponents argued the bill would block innovation and access to capital used to expand services and lower prices.

Committee members asked detailed questions on "phantom equity" financing, nonprofit exemptions and how the bill interacts with professional‑conduct rules. The committee adopted technical amendments (L9 and L10) clarifying economic outcomes language and moving any damages to the general fund. Senator Doherty moved the bill to the Committee of the Whole with a favorable recommendation; roll call showed 6–1 in favor.

The bill now heads to the Committee of the Whole with committee amendments; sponsors said they will continue work to balance access to capital, financing mechanisms and attorney ethical obligations.