When attorney Grant Bursek left employment with Johnson Family Law, eighteen of the firm’s clients followed. The firm subsequently sought to enforce an agreement that required Bursek to pay an undifferentiated per-client fee for continued representation of these clients. Bursek now argues that this violates the Colorado Rules of Professional Conduct, which prohibit attorneys from making employment agreements that “restrict the right of a lawyer … to practice after termination of the relationship.”
The Colorado Supreme Court agreed: “There may be circumstances in which a firm can seek reimbursement of specific client costs when the client leaves a firm to follow a lawyer. But a firm may not require a departing attorney to pay an undifferentiated fee in order to continue representing clients who wish to maintain their relationship with that attorney. Such an agreement is an impermissible restriction on the attorney’s right to practice and on the clients’ right to counsel of their choice, both of which are important policy interests protected by Colorado Rule of Professional Conduct 5.6.”
“The language of Rule 5.6(a) plainly forbids any agreement that would entirely prohibit a lawyer from practicing law after departure from a firm. But what about an agreement — like the one at issue here — that imposes a financial cost on a lawyer who leaves a firm and intends to continue a practice in competition with that firm? As to this type of agreement, courts are divided….
“The majority view holds that any contractually imposed financial burden on an attorney’s professional autonomy violates the rule….
“The minority view does not treat financial disincentives to departure and competition as per se violations of Rule 5.6(a). Instead, these cases evaluate agreements for whether they represent a reasonable balance between client choice and attorney autonomy on the one hand and a firm’s interest in financial and practice stability on the other….
“As a general matter, we agree that the reasonableness inquiry is an appropriate approach to assessing whether a particular financial disincentive imposed on a departing lawyer constitutes a restriction on the right to practice. As to the specific financial disincentive at issue here, however, we conclude that an undifferentiated fee assessed for each client who chooses to follow a departing lawyer violates Rule 5.6(a). An 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. As the Ethics Advisory Committee of the Arizona Supreme Court recognized when considering a similar agreement, it ‘acts as a substantial disincentive for the departing lawyer to agree to continue representing a client who wants to continue working with that lawyer.’ Of particular concern, such a fee forces attorneys to make individualized determinations of whether a client is ‘worth’ retaining and incentivizes them to retain clients in high-fee cases and to jettison clients with less lucrative claims. This direct intrusion on the attorney-client relationship is quite different from financial disincentives that might indirectly affect client choice by making it more costly for an attorney to leave a firm. No reasonableness analysis is needed to determine that per-client fees of the sort at issue here violate Rule 5.6(a).”
Johnson Family Law v. Bursek, No.22-497, 2024 WL 159107 (Colo. Jan. 16, 2024).