On January 16, 2024, the Colorado Supreme Court held that Colorado Rule of Professional Conduct 5.6(a) prohibits agreements which require a lawyer departing from a firm to pay the firm an undifferentiated per-client fee for continued representation of those clients. See Johnson Family Law d/b/a a Modern Family Law v. Bursek, 22SC497 (Colo. Jan. 16, 2024).
In 2019, Bursek, an associate lawyer at the firm Modern Family Law “MFL”) signed a “Reimbursement Agreement” obligating him to reimburse the firm for marketing expenses related to any client, case or active matter that elected to leave the firm and follow him to a new firm. The agreement did not require Bursek to pay the actual marketing expenses incurred by MFL for any client. Rather, the agreement required Bursek to pay $1,052 for each client who chose to continue to be represented by Bursek after he departed from MFL. In September of 2019, Bursek left the MFL. Eighteen clients elected to leave the firm and continue on with Bursek as their lawyer. MFL demanded $1,052 for each of the departing clients—a total of $18,936—under the Reimbursement Agreement. Bursek refused to pay. MFL sued Bursek.
The Colorado Supreme Court held that Rule 5.6 forbids the MFL from seeking reimbursement of the undifferentiated marking fees under the Reimbursement Agreement. Colorado Rule of Professional Conduct 5.6(a) provides that “[a] lawyer shall not participate in offering or making…a partnership, shareholders, operating, employment, or other similar type of agreement that restricts the right of a lawyer or LLP to practice after termination of the relationship, except an agreement concerning benefits upon retirement.” The agreement at issue here required Bursek to pay a $1,502 per-client fee without regard to costs attributable to any specific client. The Court found that this agreement violated Rule 5.6(a) because “[a]n agreement that requires a lawyer to pay a former firm such an undifferentiated fee is fundamentally at odds with the twin policy goals of Rule 5.6(a): to protect lawyers’ professional autonomy and to ensure that clients have the freedom to choose an attorney.” See Bursek, 22SC497 at 9.
The court noted that “there could be circumstances that justify a firm seeking reimbursement of particular costs that it incurred for or expended on a client.” For example, it may be reasonable to expect a departing lawyer to reimburse the firm for costs the firm had advanced in litigation costs for a particular client or if the firm expended unusual funds to attract a particular client. But as to a reimbursement not based on specific spending for a client but imposed without any individualized assessment of every client who wishes to maintain a lawyer-client relationship with the departing lawyer, such an agreement violated Rule 5.6(a).
