Wright Hassall's specialist restrictive covenant team of Susan Hopcraft, Andrew Spooner and Rebecca Green successfully advise former Affinity IFAs on the £10m claim brought against them by Wealth at Work ("WAW").
The 27 Affinity advisers who left after it was acquired by discretionary firm Wealth at Work are delighted by the collapse of the claim brought against five of them to enforce 12 month restrictive covenants.
The claim was discontinued by WAW on Thursday after the judge, Mr Justice Jay, had already taken the rare step of dismissing the claim against 2 of the advisers at the end of evidence given by WAW’s CEO, David Cassidy, and Head of Legal, Mark Hutchinson.
Following the discontinuance of the claim, all 27 former Affinity advisers are now free to deal with all their customers without any restraint whatsoever.
WAW was ordered to pay all the advisers’ costs and there will be an inquiry as to the damages that WAW must now pay the advisors for wrongfully preventing them from working since 1 August 2016. WAW was also ordered to release the sum of over £500,000 that it owed to the advisers and had withheld pending the outcome of the trial.
The Affinity advisers instructed a specialist restrictive covenant team at Wright Hassall of Susan Hopcraft, Andrew Spooner and Rebecca Green.
Mrs Hopcraft said: “There was a real inequality between the resources of the parties in this claim but the result shows what the determination of the defendants to fight what they considered to be an unreasonable stance by Wealth At Work, can achieve. Any restrictive covenant can only be upheld if it is reasonable to protect legitimate business interests. That means they should be as narrow as possible and, if it is any wider than absolutely necessary, then it is likely to be unenforceable as this case has shown.”
Their barrister, Chris Quinn of Littleton Chambers (who also acted for the successful IFAs in the landmark Towry case) said: “This case illustrates that the financial services industry is still reaching the wrong conclusions about the enforceability of restrictive covenants. Firms are not taking proper advice when preparing them. IFAs are too quick to sign them and firms acquiring other firms (often for huge sums of money) are too confident that they will be able to enforce them. The case also brought into sharp focus the complications that are caused when a firm whose focus is discretionary management of investments acquires an independent advisory firm.”