The concept of protecting a business using restrictive covenants in employment contracts is well established.
They are of key importance in protecting a firm's goodwill.
Covenants for assistant solicitors or salaried partners aim to establish what the solicitor is prevented from doing for a period of time after employment ends and typically prohibit: solicitation of clients; solicitation of staff; competing with the firm; accepting work from clients; and misusing confidential information.
When drafting restrictions, 'reasonableness' is vital - courts, which will not imply these terms, are more likely to enforce restrictive covenants where firms can show they go no further than necessary to protect 'legitimate business interests'.
This means their scope of activities, territory and duration should be limited.
The duration should depend on the extent of the solicitor's influence, for example, over clients and staff.
The maximum enforceable restrictions are typically no more than between six and 12 months.
The restriction on misuse of confidential information could be open ended, save for that which comes into the public domain.
With 'non-competition' restrictions, firms should assess the area and nature of its business.
In a city, a ten-mile restriction preventing working as a 'solicitor' may be unenforceable; a small area ought to be considered, say one mile from the solicitor's main place of work and limited to their area of specialism.
This would not necessarily work in the City of London, where firms are so concentrated.
Ideally, firms should tailor covenants for each lawyer.
Try to remain objective - balance the firm's and employees' interests.
For example, if it takes a firm six months to replace a solicitor in the client's mind, then limit the restriction to that.
Non-solicitation restrictions should be limited to only those clients or staff with whom a solicitor has acted or had 'material' contact, say in the six months before termination.
Assess whether the full raft of restrictions is necessary or whether a combination of 'non-solicitation' combined with 'non-dealing' will suffice.
Non-competition restrictions are generally disliked by the courts.
Many contracts contain 'garden leave' provisions, enabling the firm to require the solicitor to remain away from the office, usually on full pay, once notice has been served.
They too must be reasonable.
Consider offsetting any garden leave period against the duration of the restrictive covenant.
A further period out of the marketplace may be unreasonable.
Include a 'pay in lieu of notice' clause, entitling a firm to immediately and lawfully terminate employment.
Otherwise, termination could be breach of contract and vitiate the restrictive covenants.
A solicitor in breach of enforceable restrictive covenants could be the subject of injunctive relief, damages or may even have to account for profits.
More often, though, a negotiated settlement is reached.
Clare Murray is a partner and Archin Talpade a senior associate in the employment department at City law firm Fox Williams
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