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SCMP Reporter

A FIRM of solicitors has failed to stop a former partner working for clients of the firm and hiring solicitors from the firm.

  Kao, Lee and Yip was seeking an interlocutory injunction against Donald Koo Hoi-yan, who has now set up a new firm employing five other lawyers from Kao, Lee and Yip, pending trial.

  The firm wanted to invoke a clause in its partnership agreement saying if a partner leaves, he cannot work for the firm's clients for five years, nor can he employ any Kao, Lee and Yip employee.

  Mr Koo, represented by Michael Thomas QC, argued in a three-day chambers hearing before Mr Justice Mayo that this clause was unenforceable because it constituted undue restraint of trade.

  The same firm of solicitors recently took similar proceedings against John Edwards, formerly a partner, but lost and is applying for special leave to appeal to the Privy Council.

  Charles Ching QC, for the firm, said there was a difference between the two cases because Mr Edwards was a salaried partner, but Mr Koo was an equity partner, taking a share in the profits.

  However, the judge found Mr Koo was not a full equity partner because the firm's capital assets and goodwill are vested in Mr Kao and Mr Yip, the founding partners. They manage the firm and only need consult other partners about decisions they make.

  Therefore, the judge found the partners did not have mutuality of interests when making the employment contract. He also held that the contract was a worldwide ban on Mr Koo, which could not be justified.

  On the attempt to stop Mr Koo employing solicitors from Kao, Lee and Yip, the judge agreed with an English Court of Appeal decision which held that people cannot be regarded as stock in trade, such as apples and pears.

  Mr Justice Mayo held that he was not satisfied there was a serious issue to be tried. Therefore he said there was a greater risk of injustice being caused if he granted the injunction, than if he withheld it.

  If Mr Koo was restrained from acting for any of the firm's clients, the judge said, it was likely the new firm would be unable to continue practising on anything approaching its present scale.

  However, he ordered that Mr Koo keep accounts of all work done for such clients, so if Kao, Lee and Yip succeeded at trial, it would not be difficult to quantify the damages suffered.



Solicitors fail to stop rival