In the case of Law by Design Limited v Saira Ali the High Court has upheld a 12-month non-compete clause imposed by a niche employment practice on a director joining national law firm Weightmans. Saira Ali was an experienced employment lawyer who worked for Law by Design Limited which was a niche practice based in Manchester; in the main, it provided advice to clients within the healthcare services sector, particularly specific NHS entities in the Northwest of England and one in Hertfordshire.
The majority of Ms Ali’s time was in the provision of employment advice to those entities. Ms Ali had a 12 month non-compete covenant under her contract of employment and a 12 month non-compete covenant under the terms of a Shareholder Agreement which she signed when she was allocated minority shares in Law By Design Limited.
Ali, 46, prepared a ‘business plan’ for Weightmans in which she said she could ‘transition’ clients generating around £250,000 a year – more than a third of LBD’s turnover – from her former employer, the court heard. She argued that non-competition covenants in her agreement with LBD, which prevented Ali working for a competitor on business she was involved in for LBD for 12 months after she left, were unenforceable.
However, the High Court ruled in LBD’s favour, saying the firm was ‘entitled to seek to protect the customer connections built up by LBD employees providing legal services to NHS clients’. Jason Beer QC found that the non-competition covenant, which ‘allowed (and allows) Ms Ali to join a business anywhere in England and Wales that does not compete with LBD for NHS clients in the north west or in the area covered by the Herts Valley CCG’, was ‘no wider than is reasonably necessary’ to protect LBD’s interests.
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