Lawyers Guilty of Astonishing Undercharging

This month the High Court has, at vast expense to those involved, come to a decision about what an employee is and is not allowed to do when leaving one company to join a competitor, where his contract of employment stops him from soliciting his old clients.  It held, unsurprisingly, that the key feature of solicitation is an element of persuasion.These clauses are the first line of defence for companies trying to hang on to their customers, and they have to prove to the court that the defence is justified.  The next barrier is a non-dealing clause – a rule preventing them from doing business with their old clients, even if it is the client who comes knocking.  These might be justified where a non-solicitation clause would be too hard to enforce.  It is often difficult to prove who approached whom.  The customer might prefer to deal with their old contact at the company, might even be very happy to say that they were the one doing the chasing, so that a non-solicitation clause is not worth the paper it is written on.This was clearly the suspicion of the employer in Towry EJ Ltd v Bennett, which has made a considerable splash in the financial pages this month.   Wolferstans had a small part to play in this great legal drama, and so the outcome was of more than usual interest.  Towry alleged a conspiracy by seven financial advisers and their former clients to get around their non-solicitation clauses.  The advisers and clients all trooped to the High Court to be cross-examined about their actions and intentions.   The company lost, amid much criticism of their hostile approach to the case, which had lacked any real basis in fact.  They were ordered to pay legal costs of £1.2m, in addition to their own costs, rumoured to be about £2m.  Our small part was simply to advise one of the financial advisers at the outset about their duty of non-solicitation, setting out what was and was not permissible and the careful record-keeping needed when dealing with former contacts.  We wished them the best of luck for the future and sent off our bill for £250 plus VAT.  So, it is gratifying that the High Court should have found that the approach taken was justified.  The fact that the trial cost more than 10,000 times this amount goes to show that common sense often goes out of the window when parties go to court, and perhaps it is high time that courts took more active steps to control the scope of trials and the legal costs to the parties.  And of course it shows what astonishingly good value for money we are.Article written by Eoin Fowell, Partner, Woferstans. Eoin can be contacted on 01752 292350 or efowell@wolferstans.com