Are non-compete clauses still relevant?

In recent years, there has been a growing movement in the US to limit the use of non-compete clauses, which are contractual agreements that prevent employees from working for a competitor for a defined period after leaving their current employer. The issue has become particularly salient in the legal sector, where non-compete clauses have long been a standard feature of many employment contracts.

In October 2021, the US Supreme Court signalled that it may be looking to ban the use of non-compete clauses altogether, citing concerns that they stifle competition and limit worker mobility.

Some states in the US have already enacted laws that limit or ban their use in certain industries, and there is increasing pressure on the legal industry to follow suit.

The Federal Trade Commission announced in January plans to ban all non-compete clauses without exception and battle lines have been drawn, with the debate reaching fever pitch. While the decision has not yet been made, it represents a significant shift in the legal landscape and one that could have implications for other countries, including the UK.

What’s the problem?

First, it’s worth examining why non-compete clauses have become such a contentious issue in the US legal sector. Many argue that these clauses, which can prevent lawyers from practising in their chosen field for years after leaving their current firm, are anti-competitive and can lead to a concentration of power in the hands of a few large firms. This in turn makes it harder for smaller firms and individual practitioners to compete, ultimately limiting choice and raising prices for clients. Others suggest it suffocates the entrepreneurial spirit that some firms rely upon to develop and grow.

Moreover, some assert that non-compete clauses can be unfair to employees, forcing them to choose between staying in a job they don’t like or risking their livelihoods by leaving for a competitor. This can make it harder for workers to negotiate better wages or conditions, as they are effectively held hostage by their current employer.

The current state of play in the UK.

The situation in the UK is somewhat different, as non-compete clauses are already subject to greater regulation than in the US. Under UK law, non-compete clauses must be reasonable and proportionate to be enforceable, and they cannot be used to prevent employees from earning a living. This means that while non-compete clauses are still relatively common in the UK legal sector, they are generally more limited in scope than their US counterparts.

That said, there are still concerns that non-compete clauses can be used to limit competition and restrict worker mobility in the UK. For example, some firms may use non-compete clauses to prevent lawyers from leaving to start their own firms or to discourage them from moving to smaller or less prestigious firms. This can create a situation where only a handful of large firms have access to the most talented and experienced lawyers, while smaller firms are left struggling to secure business.

In light of these concerns, the UK may also move to limit the use of non-compete clauses in the legal sector. While a blanket ban on such clauses may be unlikely, there could be a push to further regulate their use and ensure that they are not being used to unfairly restrict worker mobility or limit competition.

The jury is out……for now.

The proposal to ban non-compete clauses for staff in the legal sector is a contentious issue, with both supporters and opponents arguing their case. While non-compete clauses may be necessary to protect employers’ intellectual property and client relationships, they can also limit job mobility and prevent lawyers from pursuing professional development and career progression.

As such, there may be a push for further regulation of non-compete clauses in the UK to ensure they are not being used to unfairly disadvantage workers or limit competition in the legal sector. Ultimately, it will be up to lawmakers and the legal industry to decide whether to enact a ban on non-compete clauses or to continue to allow them to be included in employment contracts. Watch this space! is a business that offers the ultimate in flexibility and where our lawyers have the freedom to work when and where suits them best. Our clients receive legal solutions from highly qualified and engaged professionals that combine legal expertise with technology to deliver the best results.
Visit our website to learn more and subscribe to our Insights to receive our regular content.
arch green a-01-01

Authored by

Andrew Leaitherland
Andrew Leaitherland Founder and CEO
Although Andrew is an employment lawyer by training, over the last fifteen years he has built up extensive experience in leading M&A activity with professional services firms including leading the listing of DWF Group plc on the main market of the London Stock Exchange. Andrew uses these skills to advise strategically on inorganic growth opportunities for all types of professional services businesses, in conjunction with other members of arch who support on the necessary legal work. Andrew is also the Chair of The Legal Director and a NED of Summize which gives him great insight into how the respective businesses can collaborate to further the interests of our clients.

Leave a Reply

Your email address will not be published. Required fields are marked *