Covenants are outdated and do little to protect a law firm. Georgina Stanley reports on the results of the latest Big Question survey

Today's City lawyers believe restrictive covenants preventing partners from joining rivals and taking clients are ineffective and inappropriate, according to new research.

Almost half of the partners at top firms (46%) think the covenants are no longer relevant in today's business environment, while more than half think they do little to protect law firms anyway.

The findings emerged in the latest Legal Week/EJ Legal Big Question survey, which follows the news that Herbert Smith is locked in a battle with real estate partner Chris de Pury over his departure to Berwin Leighton Paisner (BLP). Despite its strength in the real estate market, Herbert Smith is threatening to prevent de Pury from joining BLP for up to two years after handing in his notice.

The Legal Week research found that only 14% of respondents think restrictive covenants are still legitimate tools with a further 40% arguing they are 'sometimes' appropriate. However, 23% think 'their time is passing' and a further 23% think they already 'belong to a different age'.

Linklaters corporate partner Mark Stamp said: "In a small firm, a partner leaving could devastate the enterprise, but I would have thought that in big magic circle firms restrictive covenants are not that appropriate anymore. People move between firms quite seamlessly now."

He added: "You can try to take someone out of the market for a while but it is all a bit old-fashioned, to be honest. At the end of the day they do not work anyway – clients can always pick up the phone to you."

However, Addleshaw Goddard partnership expert Richard Linsell argued against this. He said: "The vast majority of English firms have restrictive covenants in their partnership agreements and I would encourage firms to have them. It makes anybody else thinking of going more likely to stay because they see getting out will be more difficult.

"Herbert Smith comes from my school of thought where if you sign up to the rules of the club, those have to be upheld."

Despite the fact that the overwhelming majority of respondents (63%) said that their firms have some restrictive covenants, most believe that enforcing these covenants does little to protect a law firm's business.

Just over half (51%) said they thought restrictive covenants would have only a limited impact on protecting a law firm's business while a further 6% believed them to be entirely ineffective. Only 23% said they thought covenants could be effective or very effective.

Nilufer von Bismarck, a corporate partner with Slaughter and May, which, like Macfarlanes, does not have restrictive convenants, told Legal Week: "It is difficult to see their true value. A client's relationship with a firm is really their relationship with an individual at that firm. If that individual goes elsewhere, it is difficult to stop the client following.

"In theory there is a claim for breach of covenant, but this does not restore the client."

Peter Sharp, managing partner of LeBoeuf Lamb Greene & MacRae's London office, said: "The whole thing is anathema to US firms, which mostly manage to be quite successful without restrictive covenants.

"Personally, I think it is a lot of nonsense – we are long-term businesses and should be able to move on from a partner leaving."

The survey found that of those firms that do have restrictive covenants in place, 57% involve restrictions on taking clients when partners move and 26% have restrictions on soliciting clients.

Just 4% said their own firms had notice periods of more than six months with a further 13% admitting to an enforced period of gardening leave.