After a coordinated resignation, eight former Herbert
Smith Freehills ran FREE for the HILLS (don't you just love
puns!) to take up shop at White & Case, a big wig Wall Street
firm that's trying to crack our Australian shores.
Stung like spurned lovers, the rest of the HSF partners rushed
off to court seeking an urgent injunction to stop the runaway
defectors in their tracks, relying on the restraints in two
We hear that HSF was seeking to enforce 14 clauses across the
two agreements, which make us think that someone over there needs
to revisit their approach to drafting. However, the restraints
essentially boiled down to your typical prohibition on poaching
staff and clients, and non-competition that would prevent the
former partners from joining a competitor like White & Case for
When the dust settled, as is often the case, no one came out
happy (but both claimed victory) as the ex-partners were allowed to
join White & Case but were prevented from taking HSF staff and
clients with them for six months.
In upholding part of the restraints, the NSW Supreme Court said
the departing partners were "commercially and legally
sophisticated" when agreeing to the partnership agreements and
the Court was hesitant to "substitute its own commercial
judgment for theirs".
This reflects a growing trend in courts' handing of
restraints as they increasingly adopt a "your choice, your
problem" approach. While we don't like the thought of
people grovelling to the courts to fix their bad decisions, this
approach does seem to devalue the long-standing core principle that
restraints are unenforceable (because they infringe on personal
freedom of choice and are anti-competitive) other than to the
extent of what's reasonably necessary to protect legitimate
What would the Court say if a "commercially and legally
sophisticated" person signed a contract to jump off a bridge?
Extreme, but you get our point.
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