Know Your Contractual Limits

This month the much-anticipated judgment in the case of Towry EJ Ltd v Raymond James & Ors was handed down. Mrs. Justice Cox comprehensively exonerated the defendants of allegations of breach of their restrictive covenants, misuse of confidential information and conspiracy that had been brought by financial advisory firm Towry.

The claim followed Towry's acquisition of another advisory firm, ­Edward Jones. In late 2009 seven ­Edward Jones advisers left to join Raymond James and a significant number of their clients followed. Towry claimed the advisers had "solicited" the clients and were therefore in breach of restrictive covenants.

In this case the advisers had ­enforceable non-solicitation restrictions in their contracts which they complied with, and the clients still transferred their business. The lesson to be learnt here is that if an employer wants to stop its employees from dealing with their clients, it needs to have a properly drafted non-dealing restriction. Read more.