A team move is where two or more partners or members leave their partnership or limited liability partnership (LLP), either to set up on their own (usually in competition with their former firm) or to join a competitor.
If a team move is discovered, the partnership or LLP is likely to take action if the partner’s/member’s action is unlawful. This may depend on whether the firm is a general partnership or an LLP. Partners in a general partnership are in a fiduciary relationship with each other and therefore owe one another a duty of good faith. Conversely, subject to what’s in the LLP Agreement, members don’t owe each other the same duty. But that’s not to say they can act with impunity.
What does a team move solicitor do?
If you are thinking about joining a competitor or setting up your own firm with one or more partners in your current firm, it is important to get specialist advice at an early stage. B P Collins has extensive experience advising partners and LLP members on team moves, helping them mitigate costly and time-consuming litigation that could’ve put an immediate stop to their plans.
If you have already started the process of a team move and have come under fire and/or have a claim against you, please contact our solicitors who can help you reach a solution.
Team moves in traditional partnerships
In the case of a partnership, forming a team of partners with the intention of leaving would breach the duty of good faith, as the partners would not be acting in the best interests of the partnership. That will equally be the case if a partner tries to solicit employees of the partnership to join them. In fact, as partners also have a duty to disclose both their own wrongdoing and the wrongdoing of others, they will breach that duty too if they don’t inform the partnership of their plans.
However, an individual partner can lawfully leave a partnership and join a competitor without breaching their fiduciary duties. So, if a competitor firm wants to recruit a team of partners, provided none of the partners know the bigger plan (triggering their duty to disclose it to the partnership), it may be possible to achieve the goal. If a partner wants to set up in competition, they would have to leave and wait until any post-termination restraints have expired (assuming they’re enforceable) before approaching any former colleagues to join them.
Team moves in LLPs
Conversely, an LLP member planning a team move may not breach any duty if there aren’t any express obligations in the LLP agreement. If there is no member’s agreement, the default provisions under the Limited Liability Partnerships Regulations 2001 simply provide that members must not carry on a business which is of the same nature as that of the LLP and competes with it (while a member).
However, LLPs will usually have an agreement which contains additional duties, so it is worth taking advice early to ensure you aren’t breaching its obligations. Also, if the member wants to approach any employees of the firm, they might breach their fiduciary duties as an agent of the LLP.
The same may apply to a board member of the LLP, who may owe a fiduciary duty to act in the best interests of the LLP. It is also important that a member does not misuse any LLP property, particularly confidential information.
If a team move is discovered, a partner or member who has breached their duties to the partnership or LLP (fiduciary or contractual) could find themselves facing a claim for damages and an account of profits or even facing an injunction, so if you are considering a team move, get in touch with our experienced lawyers, before you start approaching your colleagues.
Why choose B P Collins as your solicitors?
With over 50 years of experience in employment law, we’re consistently ranked by Chambers UK and The Legal 500 for the tenacity of our employment practice. Our solicitors have helped many partners and LLP members navigate team moves with confidence and clarity. The firm has been named one of The Times’ Best Law Firms from 2022 to 2024.
The employment lawyers at B P Collins are members of the Employment Lawyers Association.
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For further advice on team moves, please contact our team move lawyers, based in London, Ickenham, Thame and Gerrards Cross, on 01753 889995 or email enquiries@bpcollins.co.uk.
