When Mr Bennett and six colleagues left the financial advisory business Towry to join a competitor, they were sued for breach of covenant. Towry alleged that they had broken the non-solicitation and confidentiality clauses of their contracts and had unlawfully conspired with their new employer by planning to poach Towry's clients.
The High Court dismissed Towry's claims, ordering it to pay costs. While the non-solicitation and confidentiality clauses were enforceable, the judge found that solicitation hadn't actually been proved. Towry had assumed that solicitation must have happened because of the level of business transferred to the new employer. But there had to be an element of directly or indirectly requesting, persuading or encouraging clients to move.
Here it was understandable that clients wanted to stick with their personal financial advisor. The burden of proving otherwise – that the clients hadn't exercised free will - was on the employer. Solicitation couldn't simply be inferred from the "tidal wave" of clients switching firms.
Time for a review of your contracts? Towry's didn't contain non-dealing clauses, which are stronger than non-solicitation clauses. Had they done, the company would have been better protected or would at least have had a better shot at winning in court.
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