Senate Health & Human Services [May 06, 2026 - Upon Adjournment]

. Thank you. Thank you. Thank you Thank you. Thank you.

Senators, Carson.

Doherty.

Kenrickson.

Here.

Present.

Here.

Here.

Thank you Mr Chair and committee members Well I tell you what Senate Bill 71 has had quite the journey Lots of lessons learned Where I was with this bill and where we're at and how it's going to end, well, we knew there's a fiscal note on this, and with the budget constraints that we are facing, there's no way that Senate Bill 71 will proceed forward. I had thought of doing a strike-through and just keeping, there was a very important part of the bill that was to give citizens the ability that if law enforcement were going to buy more equipment or equipment that has different technology, that citizens would have to be informed 30 days before that contract would be signed. So I was thinking of just carrying this bill through with just that. But as I started talking with law enforcement, even with that, they had some concerns. And I definitely want to bring in the law enforcement. As with Senate Bill 70 and 71, it is critical to bring in law enforcement. There was areas that I had not even thought of, and that's part of shaking out a bill and trying to make it good. And that's what I want. And so I am going to PI Senate Bill 71. it has, as far as the good things that have come from this bill it definitely has gotten the discussion rolling out of all the bills that I've been on Senate Bill 71 has definitely gained the attention of the public in the news and it is very clear this is important to Coloradans And so, again, just real quickly, I'll highlight for those that are new to 71, 71 just creates guardrails against overreach, empowers law enforcement within constitutional bounds, and shields citizens for their privacy. And so, again, the goal is to optimize that balance of equipping our law enforcement with this technology so they can enhance the safety of citizens while also putting guardrails up to protect citizens, liberty, privacy, and information. and we know that even on the federal level there's a bill coming forth in Congress very similar to 70 and 71 so this is important across the nation and so I hope to find I'll be working on this over the summertime and hope to find an optimal path with our law enforcement and citizens In fact, the chief of police, the paternal order of police, the district attorneys, the Colorado sheriffs of Colorado have agreed to work with me. And I greatly appreciate that. I want to make sure to get this bill right. I realize that this is going to be a bill where not everyone is happy. but if we could get to where people don't oppose, I'm told that's how you can tell it's a good bill. And so that is the goal, and I look forward to working with all the stakeholders, and it's an honor to be here. Thank you.

Thank you, Mr. Chairman. Yes, I just want to thank our colleague, Senator Zamora Wilson, for working on this legislation. I think, you know, it's a huge challenge here between our law enforcement concerns, public safety, but also privacy. And I know a lot of our constituents are increasingly concerned about the privacy issues out there and that we're constantly under surveillance. You know, I generally side with the law enforcement view of these things, but I do think there's some very legitimate concerns here, and so I wish you well in finding a balance, and hopefully we'll get to see that next year. Thank you.

Aye.

Yes.

With respect to the work the sponsor has done and also the criticality of this issue, no.

Yes.

Aye.

Aye.

Greetings, Judiciary Committee, from the Health and Human Services Committee, where I have migrated from. Senator Doherty and I bring you House Bill 1421, and I'm really pleased to present this today as a targeted measure to maintain a fair, transparent, and well-functioning legal marketplace in Colorado. one that businesses and consumers alike can rely on. At its core, this bill is about preserving a level playing field. When outside investors, particularly private equity, enter the legal market, their primary obligation is to generate financial returns. Colorado has long recognized this risk and has indeed prohibited non-lawyer ownership of law firms and fee sharing with non Today however private equity firms are using complex management agreements shell entities and out structures to circumvent these safeguards For businesses, predictability and trust in the legal system are essential. When financial stakeholders without professional obligations influence legal services, it can create volatility in costs, inconsistent service delivery, and reduced confidence in outcomes. These arrangements erode public trust in our justice system and undermined a lawyer's duty of undivided loyalty to their client. Colorado attorneys are bound by ethical obligations, and private equity investors are not. Yet their financial influence can shape legal decision-making. There is a broader economic concern, and that is that business models driven by investor returns may prioritize volume and speed over thoughtful resolution. This can increase litigation costs, prolong disputes, and create inefficiencies that ripple across the broader business environment. This influence can incentivize faster resolutions or high-volume practices that prioritize returns over outcomes. This drives up litigation costs and compromises the pursuit of fair results. Ultimately, House Bill 1421 reinforces a stable, transparent legal framework that supports economic growth, protects consumers, and ensures that Colorado's legal market remains competitive on the basis of quality and integrity, not financial engineering. So I'd now like to pass it over to my co-Prime sponsor, Senator Doherty, to discuss the policy in more detail.

Thank you. And I'll just briefly walk through how House Bill 1421 works in practice. First, it preserves the integrity of the legal system. The bill reinforces Colorado's longstanding prohibition on non-lawyer ownership, profit participation, and fee sharing in the practice of law. It makes clear that legal strategies, settlement decisions, and client representation must remain in the hands of licensed attorneys, not outside investors. Second, it closes the loopholes that are currently being exploited. Private equity firms are using alternative business structures, management companies, and out-of-state entities to bypass our rules. This bill ensures that those arrangements cannot be indirectly used to do what Colorado law already prohibits. Third, it takes a measured approach by allowing legitimate business services to continue. Law firms can still contract with managed service organizations for administrative and operational support, and it expressly allows flat fee and hourly arrangements, preserving flexibility for law firms to operate efficiently. Last, any claims against a law firm backed by private equity will be referred to the Attorney General's office. If the AG decides not to file suit, a private right of action will be available. If an individual or local firm files a claim, however, any recovery will go to the general fund through an amendment that we're running today, removing any financial incentive to misuse the process. This structure ensures accountability while preventing abuse. Colorado is not alone in addressing this issue. States like California, Illinois, and Florida are already pursuing similar solutions to protect the independence of the legal profession. In short, this is a targeted, balanced solution, and we urge your support. Thank you.

yes I think we'll leave those answers to the first panel of witnesses

Thank you, Mr. Chair. Jason Wasoki, current president of the Colorado Trial Lawyers Association. Appreciate the opportunity to be here today. First, I just want to let the panel know, the committee know rather, the work that's gone into this bill to work with various stakeholders, including nonprofits, to ensure that there is a space for them to work with those who are underserviced in the legal system. We are acutely aware of that, and as an attorney that works with various different types of fee arrangements, hourly, contingency, and also pro bono, I'm aware and understand that that is an issue. And so what we are facing here in Colorado is essentially a backdoor to having non-lawyers own or have a vested financial interest in and control over law firms. The back door is made possible by our sister state, Arizona, that has essentially opened up what I would characterize as a Pandora's box to allow any type of ownership structure for a law firm. For example, KPMG has a law firm in Arizona. And so while the Colorado Rules of Professional Conduct prohibit a non-lawyer from owning a law firm, it is completely unclear, and we believe that it's so unclear that it's happening here in Colorado, whether or not a lawyer in Colorado can work with a licensed law firm in Arizona that may or may not be owned by non-lawyers and have that law firm in Arizona essentially dictate decision-making. processes. And so the sponsors highlighted the concern about churn and burn, is how I would call it, where the volume of cases and the priority being only how fast and for how much or even how little you can settle a case just to get on to the next one becomes the driver of a private equity firm's quarterly profit motivation. I welcome any questions.

Thank you, Chairman, members of the committee. Lauren Fuhrman, President and CEO of the Colorado Chamber of Commerce, here in strong support of House Bill 1421. Do appreciate the rare but very productive collaboration we've had with CTLA and our bill sponsors. I do want to mention.