When an experienced adviser joined the claimant company in Merlin Financial Consultants v Cooper he brought with him a substantial base of financial services clients. The parties signed two contracts: an employment contract and a "goodwill agreement" under which he was paid over £40,000 in addition to his salary. Both contained restrictive covenants but only the goodwill agreement had a potentially effective non-compete restriction covering the clients he had brought with him.
The High Court decided that a 12 month post termination restriction was reasonable because of the exceptionally strong relationship with clients. It was highly relevant that the restriction was contained in a goodwill agreement; the Court regarded it as akin to a business sale between parties with equal bargaining power. It did not matter that it was not limited to London and the South East where the majority of the company's clients were based; the financial services industry is now considered to be a single geographical market.
The Court rejected the adviser's argument that the company could have done more to mitigate its loss by (for example) taking away his laptop and mobile phone, putting him on garden leave and applying for an injunction to prevent him having client contact. It was unlikely that any of these actions would have proved beneficial and they could easily have damaged the company's relationship with its clients.
The Court ordered the adviser to pay damages for the employer's loss of profit for two years after he left, on the basis that his employer would have retained 70% of the clients in the first year and 40% in the second.