A lot of lawyers are facing a double whammy at the moment – redundancy and restrictive covenants. It’s bad enough losing your job, but finding that your former employer can influence who you can and cannot work for in the future, adds salt to the wound
Restrictive covenants will typically aim to prevent lawyers contacting clients with a view to obtaining their business, providing services to clients or joining a rival employer for a defined period after termination. There may also be a geographical restriction preventing an employee from carrying out activities in a specified area, usually defined as a radius around the former employer's premises. This is more appropriate for businesses who rely on local goodwill, such as hairdressers and dentists, rather than legal firms who often have clients around the country. Still one to look out for though.
But before lawyers give up hope of getting another job this year, it’s worth considering whether the restrictions are even enforceable.
Post-termination restraints are only enforceable if they are reasonable, having regard to the interests of the parties and the public interest. They must not therefore be any wider than is strictly necessary to protect the firm’s business interests. For instance, a clause that prevents solicitors contacting former clients for 24 months will almost certainly be too wide. So too will a clause that stops them providing services to all the firm’s clients, even those they had no previous contact with.
The question of reasonableness has to be considered at the point when the covenant was entered into, not in the light of subsequent events. So, if you joined the firm as a newly qualified solicitor and your contract has not been updated, the reasonableness of the restrictions will be judged at that point, not ten years later when you have become a senior associate.
Has your employer acted in breach of contract, for instance by dismissing you without notice? If so, the restrictions may fall away. In a previous article I looked at the possibility of partners imposing pay cuts on staff. If you have resigned in response to such a repudiatory breach of contract and so have been constructively dismissed, your former employer will not be able to enforce any of the post-termination restrictions.
If there is one thing lawyers should be good at it’s drafting. However, there are still some poorly worded restrictive covenants out there. If the clause is vague or uncertain because of imprecise or ambiguous wording, it may not be enforceable.
Even if the restrictions are enforceable, the length of the restriction may be reduced by any time spent on garden leave. Check the wording of the garden leave clause in your contract
So, if you want to pursue the legal career you trained so hard for, don’t give up in the face of seemingly insurmountable restrictions. They may not be enforceable, and even if they are, you may be able to negotiate a list of clients who you can continue to work for, clients you introduced to the firm for instance.
Of course, if you want an excuse to take 6 months off or open a tea shop in the Lake District, then go for it!
BCLP said that in the face of continued economic uncertainty around the globe, it was undertaking "targeted reductions".