Harcus Sinclair LLP v Your Lawyers Ltd [2021] UKSC 32

Case Summary & Legal Reasoning

The case arose from a proposed group action concerning Volkswagen diesel emissions. In April 2016, Harcus Sinclair LLP and Your Lawyers Ltd entered into a non-disclosure agreement in connection with their cooperation. The agreement contained a non-compete provision under which Harcus Sinclair undertook: “not to accept instructions for or to act on behalf of any other group of Claimants in the contemplated Group Action without the express permission of [Your Lawyers].”

The undertaking was given in the context of the exchange of confidential information between the firms. Subsequently, Harcus Sinclair accepted instructions from another group of claimants in related litigation without obtaining Your Lawyers’ permission. The dispute raised fundamental questions regarding the enforceability of the non-compete undertaking and the court’s supervisory jurisdiction over solicitors’ undertakings. The Supreme Court considered, among other issues, whether the court’s inherent supervisory jurisdiction extends to undertakings given by solicitors on behalf of authorised bodies through which they practise, whether a solicitor’s undertaking that operates as a restriction on trade should be assessed according to contractual principles, whether the undertaking was unenforceable as an unreasonable restraint of trade.

The Supreme Court confirmed that the court’s inherent jurisdiction over solicitors’ undertakings has an important role in maintaining professional standards and confidence in the administration of justice. However, where an undertaking also has contractual characteristics and operates as a restraint on trade, its enforceability must be considered under the ordinary principles governing such restrictions. The Court held that the non-compete obligation in question was unenforceable because it constituted an unreasonable restraint of trade. While the protection of confidential information was a legitimate interest, the restriction went further than necessary by preventing Harcus Sinclair from acting for other claimant groups in the relevant litigation without Your Lawyers’ consent.

The decision illustrates an important principle of commercial contracting. A contractual obligation designed to protect legitimate interests must remain proportionate to that purpose. The judgment provides valuable guidance for parties entering into confidentiality arrangements, strategic collaborations and other commercial agreements containing restrictive obligations.