Ludgate will consider itself unlucky not to have been able to
secure an injunction against a former director in order to prevent her
from setting up in competition for six months, or approaching any of the
agency’s clients for a year, following her departure.
The agency apparently lost the case on a technicality: she had not
signed the new contract which specified those conditions and was
therefore bound only by the three month period of her previous
agreement. But experience suggests that contracts which attempt to
hamstring departing staff often come unstuck.
In many cases, the courts will rule that such restrictions amount to
restraint of trade and are therefore invalid. Even if the contract is
upheld, it is difficult to see what is gained by such a victory. Win or
lose, legal action is costly, time consuming and unpleasant for both
sides.
And if clients or staff are determined to leave, legal action can
usually only postpone the inevitable.
In a people business, clients’ loyalties often lie with the person or
persons in charge of their account rather than the consultancy.
Sometimes there is no option but to wield the big stick in order to
protect the interests of the business. But in many cases, agencies would
do better to consider negotiating a handover arrangement which allows
both sides to keep their dignity, leaves the client happy, and ensures
the agency holds on to the account for as long as possible.
