Partner & team moves

Partnership and LLP agreements often contain lengthy notice periods and onerous restrictive covenants. These are more likely to be enforceable than for employees, so partners will need to understand their legal position and need to carefully negotiate exit terms.

Partners and LLP members will have more stringent legal duties which will restrict any preparations to join or create a competitive business. These restrictions will often be expressly set out in the partnership or LLP agreement but will also be implied as part of the relationship between the partners and the firm or LLP. These might include fiduciary duties or obligations of confidentiality.

A team move offers the acquiring firm the opportunity to quickly enter a new business area with a group of people who have a proven track record in the sector. However, the commercial appeal of team moves is matched by the potential risks in such situations. There is a risk for legal liability both of the individuals moving firm and for the firm which is recruiting them. Navigating these risks successfully requires careful planning, otherwise the team, their new firm and any third party involved in the recruitment may find themselves subject to legal action (sometimes at very short notice) for claims such as breach of contract, breach of confidence and unlawful conspiracy.

Even where a partnership or LLP agreement provides a right for the other partners (or the firm’s management board) to remove a partner without cause, there may well be grounds to challenge such a decision. As well as protection against discrimination, partners can challenge decisions that are wholly unreasonable or where an improper process was followed.