Raymond James wins breach of covenants case

Financial services firm Raymond James has won a legal battle over breach of restrictive covenants in the High Court.

A lawyer acting for the defendants said the case was important for all breach of covenant cases.

Financial advisers Towry sued Raymond James for breach of covenants, misuse of information and alleged conspiracy to induce breach of contract in 2009 after seven staff left Edward Jones, a Towry acquisition, to join Raymond James.

Towry claimed that the seven staff had breached their covenants by soliciting Edward Jones clients to join Raymond James.

Law firm Faegre Baker Daniels, acting for Raymond James, argued that the clients had chosen to move and that covenants had not been broken because there was no restriction on ‘dealing’ with clients in the Edward Jones contracts.

Justice Cox ruled this week that the defendants were innocent of all charges and awarded costs to them.

Faegre Baker Daniels employment partner Alex Denny said: “This is a fantastic and well-deserved result for Raymond James and the advisors and an important decision from a wider legal perspective. 

“It highlights the importance of knowing what post-termination restrictions apply to potential new recruits and taking time to ensure that they are not breached. The fact that Raymond James and the advisors had consistently taken and followed legal advice was described by the judge as being a ‘striking feature’ of the case and a major factor in the claims being dismissed in their entirety.”