Editor’s Note: Law Week Colorado edits court opinion summaries for style and, when necessary, length.
When attorney Grant Bursek left employment with Johnson Family Law, P.C., Modern Family Law, 18 of the firm’s clients followed, preferring to maintain the attorney-client relationship they had established with him. MFL subsequently sought to enforce an agreement that required Bursek to pay an undifferentiated per-client fee for continued representation of these clients. Bursek argued this per-client fee 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. However, a firm may not require a departing attorney to pay an undifferentiated fee 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 client’s right to counsel of their choice, both of which are important policy interests protected by Rule 5.6, according to the Colorado Supreme Court opinion.
In April 2019, Bursek, an associate attorney at MFL in Denver, signed a “Reimbursement Agreement” that required him “to reimburse [MFL] for marketing expenses related to any client, case or active matter” that left the firm and followed him. Recognizing “actual expenses may be difficult to determine,” the agreement provided that “historic costs directly related to marketing expenses” for each client of the Denver office were $1,052. For each client who chose to continue being represented by Bursek, the agreement required him to pay MFL $1,052, whether or not there was evidence MFL had expended marketing funds on that client.
If Bursek didn’t pay the total amount owed under the agreement within 30 days of departing the firm, he would owe interest accruing at a rate of 1.5% per month on any unpaid amounts. The agreement also contained a provision requiring Bursek to pay MFL’s “court costs and expenses, including reasonable attorneys fees” for any litigation about the agreement, regardless of whether MFL prevailed in that litigation. Finally, the agreement included a severability clause providing such a holding would not “invalidat[e] the remaining provisions.”
Bursek left MFL in September 2019. 18 clients elected to leave the firm and continue their attorney-client relationship with him. MFL demanded $1,052 for each client, a total of $18,936, as reimbursement under the agreement. When Bursek refused to pay, the firm sued for breach of contract. At trial, both parties asked the court to determine whether the agreement was enforceable under Rule 5.6(a).
The trial court concluded the per-client reimbursement requirement unreasonably restricted Bursek’s right to continue to represent his clients. The court further determined the entire agreement was unenforceable.
MFL appealed, and a division of the Court of Appeals affirmed in part. The division held a fee that disincentivizes an attorney from leaving a firm can comply with Rule 5.6(a) if it is not “unreasonably restrict[ive].” To determine whether a fee is unreasonably restrictive, the division concluded a court should examine several factors including the agreement’s effect on lawyer autonomy and client choice, the financial burden an attorney’s departure imposes on the firm, the relationship of the disincentive created by the reimbursement to the harm suffered by the firm and whether the reimbursement requirement has any colorable justification apart from disincentivizing competition.
The division also referenced other relevant factors, including the number of departing clients, the lawyer’s billing rate and salary structure, the client’s tenure with the firm, the community where the lawyer practices and the practice area at issue. After considering all these factors as they applied to Bursek, the division found the fee unreasonable and held the contract provision relating to the fee was unenforceable.
However, the division also reversed in part, sua sponte holding the provisions of the contract that didn’t impose the per-client fee including the court costs and fees provision remain enforceable.
MFL petitioned the Colorado Supreme Court for review, and it granted certiorari to determine whether a firm may ever contractually require a departing lawyer to pay a per-client fee for each client the lawyer takes with them and if so, how to determine the reasonableness of such an agreement.
After evaluation, it was found Rule 5.6(a) prohibits a firm from charging a departing attorney an undifferentiated fee for each client choosing to follow that attorney for continued representation. Any contract provision imposing such a per-client fee is therefore void as a matter of public policy. Accordingly, the Colorado Supreme Court affirmed in part, reversed in part and remanded for further proceedings.
James Dye informed the district court during a pretrial hearing he was considering presenting alternate suspect evidence at trial to defend against charges he murdered a woman in rural Greeley, Colorado, over 40 years ago. But he asked the court to declare he was under no obligation to endorse the alternate suspect defense, let alone disclose before trial any information related to that defense.
The prosecutors objected, arguing Dye was seeking permission to subject them to trial by ambush. They requested, if Dye intended to pursue the alternate suspect defense, he be required to disclose any alternate suspect’s name and all the evidence bearing on that defense. They further urged the court to hold a pretrial hearing to address the admissibility of any alternate suspect evidence.
The district court and the prosecution observed the information already in discovery and previously adduced during pretrial hearings will almost always suffice to permit a trial court to make the admissibility determinations mandated by In re Colorado v. Elmarr. The Colorado Supreme Court was inclined to agree and thus expected a defendant would rarely need to offer a trial court previously undisclosed information regarding the alternate suspect defense.
According to the opinion, this decision carved out a path between Dye’s overly restrictive reading of Criminal Procedure 16(II)(c), requiring no disclosures related to the alternate suspect defense and the district court’s overly broad order, requiring disclosure of all the evidence bearing on that defense.
The Colorado Supreme Court noted it tried to strike a balance between the two proposed disclosure approaches. It rejected Dye’s argument that requiring him to make any disclosures related to the alternate suspect defense violates his constitutional rights. While the court declined to provide the relief Dye requested, it made the rule absolute.
Because the district court’s order requiring Dye to disclose “all evidence” bearing on the alternate suspect defense exceeded the boundaries of Criminal Procedure 16(II)(c), it’s vacated. On remand, if Dye intends to rely on the alternate suspect defense, he must do the following no later than 35 days before trial: provide notice of his intent to introduce alternate suspect evidence, identify any alternate suspects and produce the addresses of any alternate suspects he intended to call at trial.
It will then be up to the prosecution to conduct its own investigation into any alternate suspect identified, the opinion added. If the prosecution has a good faith belief evidence related to that suspect is inadmissible under Elmarr, it must file, without undue delay, a pretrial objection explaining its position.
In the event the prosecution files a good faith objection, the district court should rule on it before trial. At its discretion, the district court may hold a hearing strictly to adjudicate a good faith objection advanced by the prosecution. If the district court does so, Dye may proceed by offer of proof. The information already in discovery and previously adduced during pretrial hearings may well suffice to permit the district court to make the admissibility determinations mandated by Elmarr. However, the district court’s gatekeeping function under Elmarr may require Dye to proffer additional information to the court.
For these reasons, the Colorado Supreme Court vacated the district court’s discovery order regarding alternate suspect evidence. It also made absolute the rule to show cause.