How can law firms protect their interests when a key lawyer leaves? David Fisher looks at current law & practice on restrictive covenants
- Looks at scope of restrictive covenants against lawyers.
- Considers how courts would treat Bridge v Deacons today.
Like any other type of business, law firms need protection when key individuals leave to join a competitor. Most firms—but by no means all—include post-termination restrictive covenants in their partnership agreements and employment contracts, but they have to be drafted carefully and used appropriately, otherwise they are likely to be unenforceable.
The basic starting position is that restrictive covenants are void on grounds of public policy as they are in restraint of trade, but the law will allow them provided:
- They are necessary to protect one or more of the firm’s ‘legitimate business interests’, which normally means its trade secrets or confidential information, its client or supplier connections, or the stability of its workforce; and
- They go no further than is reasonably necessary between the parties to protect those interests.
A common misconception is that restrictive covenants can
