Harcus Sinclair LLP & Anor v Your Lawyers Ltd

LORD BRIGGS, LORD HAMblen AND LORD BURROWS: (with whom Lord Lloyd-Jones and Lady Arden agree)

1.         Introduction

1.                  This appeal involves a dispute between two law firms as to which firm can act for group claimants in respect of substantial litigation concerning diesel emissions from vehicles manufactured by Volkswagen.

2.                  The central issue on the appeal is whether a non-compete undertaking given by one of the law firms to the other in relation to the contemplated group litigation is unenforceable as an unreasonable restraint of trade. A related issue is whether the undertaking was a solicitor’s undertaking and, if so, whether it is enforceable against the individual solicitor who gave the undertaking on behalf of his firm and also against that law firm, which is a limited liability partnership (“LLP”). If it was a solicitor’s undertaking, further issues arise as to whether and how that affects the restraint of trade issue.

3.                  In this judgment, for reasons which appear later, we have deliberately used the trans-atlantic phrase “law firm” to encompass all business entities providing what are in the current regulatory legislation called “solicitor services”. This includes solicitors practising on their own or in traditional partnership, and also the newer corporate bodies such as solicitors’ limited liability partnerships (“LLPs”) and limited companies now authorised to provide solicitor services.

2.         The factual background

4.                  On 18 September 2015 the United States Environmental Protection Agency issued a notice of violation alleging that certain Volkswagen vehicles manufactured between 2009 and 2015 had been fitted with a “defeat device” which detected when the vehicle was being tested for compliance with emissions standards and manipulated the results. As a convenient shorthand, this has been referred to as the “Volkswagen emissions scandal”.

5.                  The appellant, Your Lawyers Ltd (“Your Lawyers”), is a limited company carrying on the business of solicitors. Mr Aman Johal (“Mr Johal”) is a solicitor and director of Your Lawyers.

6.                  The first respondent, Harcus Sinclair LLP (“Harcus Sinclair”), is an LLP carrying on the business of solicitors. The second respondent (“Mr Parker”) is a solicitor and was, at the material time, a member of Harcus Sinclair.

7.                  Mr Johal of Your Lawyers took the view that there was a potential group claim to be pursued in respect of the manipulation of emissions by Volkswagen and Your Lawyers made preparations to get such a group claim off the ground. On 26 October 2015, Your Lawyers sent a letter before action to Volkswagen Group United Kingdom Ltd (“VWUK”), the importer of Volkswagen vehicles into the United Kingdom, which listed causes of action including fraudulent misrepresentation, unjust enrichment and breaches of various consumer regulations and of the Sale of Goods Act 1979. Thereafter, Your Lawyers engaged in correspondence with Freshfields Bruckhaus Deringer LLP (“Freshfields”), solicitors for VWUK.

8.                  On 26 January 2016, Your Lawyers issued a claim on…