Non-Compete Clause for Solicitors?
Restrictive Covenants Defined
A restrictive covenant in an employment contract is designed to protect a company's confidential information, client relationships, and workforce after an employee leaves. Common forms include non-compete, non-solicitation, non-dealing, and non-poaching clauses, as well as extended gardening leave. These clauses are often used for senior employees or those with access to sensitive information.
Restrictive covenants limit former employees' ability to compete with their previous employer or work with the employer's clients for a set period. They are especially prevalent in the legal sector, where firms aim to protect client relationships and retain business after employees or partners depart.
Are Restrictive Covenants Enforceable?
In the UK, restrictive covenants are enforceable but must meet strict criteria. They must protect legitimate business interests, such as client relationships or confidential information, and be reasonable in scope, duration, and geographic reach. Courts generally favor shorter restrictions (3–12 months) and scrutinise non-compete clauses more closely, often preferring less restrictive alternatives like non-solicitation clauses. For legal professionals, courts exercise additional caution due to existing professional conduct rules and a duty to clients.
Navigating Restrictive Covenants
For legal professionals with restrictive covenants in place, several strategies can help:
- Negotiate with Your Employer: Before leaving, discuss the covenant terms with your employer. Employers may agree to reduce the restrictions if they do not critically impact the business.
- Assess Reasonableness: Consult a legal advisor to review the covenant's terms. Overly broad restrictions may not hold up in court, particularly if they are excessive in length, scope, or geographic area.
- Explore Alternative Roles: Look for positions that avoid breaching the restrictions. For instance, with a non-compete clause, consider roles outside the restricted area or sector.
- Collaborate with a New Employer: If moving to a competitor, discuss the restrictions with them. They may be able to adjust your role to avoid breaching the covenant.
- Challenge the Covenant: If you believe the restrictions are unreasonable, you can challenge them legally. Courts often modify or void covenants if less restrictive options could protect the employer's interests.
- Wait It Out: If feasible, consider waiting until the restricted period ends, especially if it's short. This may be the simplest way to avoid legal complications.
Courts' Stance on Restrictive Covenants
UK courts balance the employer's right to protect legitimate business interests with the employee's right to earn an income and the broader principle of freedom of trade. Restrictive covenants must be clear, specific, and necessary to protect business interests without unfairly limiting an employee's career. If a restriction is excessively broad, infringes upon the freedom of trade, or imposes an unreasonable restraint, courts may narrow its scope or refuse to enforce it. They also consider the context in which the covenant was signed, particularly if the employee had limited negotiating power.
The Best Outcome
Enforcing a restrictive covenant can be costly for both parties. Ideally, the best outcome is a negotiated agreement that works for both the employer and departing employee or partner. This may be achieved directly or through mediation.
Legal professionals should not be discouraged from advancing their careers due to previously signed agreements. Ultimately, the focus is on reasonableness and finding workable solutions.
For confidential guidance on navigating conversations around restrictive covenants, legal professionals are welcome to contact us.
Author: Dom Carthy, Partner - KRX Talent
Note: This article is for informational purposes only and does not constitute legal advice.