Breaking Free from Restrictive Covenants: Supporting a New Business Launch

30th Sep 2025
2 Min Read
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Background

RLK acted for a client who had left a large property management firm to launch their own business. Soon after setting up, the former employer issued proceedings, alleging breach of restrictive covenants and accusing the client of poaching business. The covenants were wide-ranging, including clauses that attempted to prevent the client from working with certain contacts and clients after leaving the firm.

Challenges

The client faced strong contractual restrictions and direct legal action from their former employer. The case also involved defending against claims of client solicitation in a highly competitive industry, while demonstrating that the client had acted lawfully.

Our Approach

RLK argued that clients who had moved their business did so voluntarily, and there had been no breach of fiduciary duties or unlawful solicitation. We reinforced the principle that restrictive covenants cannot override a client’s freedom of choice.

Crucially, evidence was uncovered showing that a Director of the former employer had previously given the client permission to continue working with certain clients because the firm could not service them. This became a decisive factor in undermining the claim.

Outcome

RLK successfully defended the client, who retained the right to run their new business without interference. The restrictive covenants were neutralised in practice, enabling the company to trade freely and establish itself in the market.

The Value of Our Approach

Restrictive covenants can be a powerful tool for employers, but they cannot prevent fair competition or override a client’s right to choose. By combining strong legal argument with clear evidence, RLK was able to safeguard entrepreneurial freedom and allow our client to move forward with confidence.

How We Can Help

If you are facing a dispute involving restrictive covenants, fiduciary duties or the transition from employment to business ownership, RLK can provide strategic advice and robust defence.
Contact us on 0121 450 7800 or enquiries@rlksolicitors.com.

Chris Guy

Chris has a strong background in insurance-based Civil Litigation and is Head of the Insurance Litigation department. Chris brings a sharp commercial mindset to his work, having spent time in the legal team of a major insurer and working in-house with FTSE 250 companies and international insurers. His expertise in Civil Litigation has earned him recognition in the Legal 500, and he is known for his meticulous attention to detail, commitment, and approachable client service.

This article does not present a complete or comprehensive statement of the law, nor does it constitute legal advice. It is intended only to provide information on issues that may be of interest. Specialist legal advice should always be sought in any particular case.

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