Towry court case: ex-EJ adviser's phone records under scrutiny

From the outside and as a non-lawyer, my guess is that the defence's only hope of dispelling the notion of probable solicitation is to plant a more robust idea that all the clients who defected to RJ were so disaffected with their treatment at the hands of TL that there was simply no need to solicit them. It appears still to be very sticky ground, though and I don't envy the RJ7 one little bit.

"all the clients who defected to RJ were so disaffected with their treatment at the hands of TL that there was simply no need to solicit them" - never a truer word spoken! Ask clients who are still trying to transfer away assets what they think of Towry!

It doesn't matter whether the clients were unhappy with Towry. If the ex-advisers encouraged them in anyway to break the relationship with Towry and move to Raymond James, it is probably in breach of the non-solicitation clause.

They can only get away with breaching the non-solictation clause, if they can prove that Towry/EJ broke the contract first. I am not sure whether the clients views or experiences of Towry/EJ have any relevance on the employment contract between the adviser and EJ. So the question is whether EJ/Towry did anything to breach the ADVISERS contractual or statutory rights, not how they treated the clients.

I'm just wondering how robust the case is if the EJ guys hadn't signed new contracts at the time? My recollection was that a whole bunch refused? Therefore how valid would the clause be?

Perhaps a copy of the clients phone bill would be proof either way as to who called who first......

None of them signed the towry contract. The old EJ contract was non-solicitation only, there was no non-dealing clause. Clients choice cannot be restricted by contract and therefore any client contacting the adviser first can transfer and deal with that adviser. There are many reasons why the clients would want to do that and many chose to listen to Towry advisers before transferring away anyway.

@whiteknightof theindustry - as per previous threads about this topic - solicitation is not about who contacted whom first. It is about whether the adviser encouraged clients to break their client relationship with EJ or not. The advisers could have solicited, even if the client contacted first.

@ Ex-Towry Law Employee. Towry bought EJ, so it "owned" all of the employment contracts. Even though the EJ advisers refused to sign a new contract with Towry, they were still under contract to Towry, under the terms of the EJ contract.

I'd suggest Mr Lowson is bringing a competent and balanced legal analysis to the issue. There's the outcome which most of us would like to see, which we'd probably characterise as "justice", and there's the actual contractual argument at hand which is tediously getting in the way.

@Jon Lawson - clearly solicitation can be proved even if a client contacts their previous adviser in the first instance. It is not just about encouraging clients to break their relationship with Towry either. If it were, then the defendents would be clearly in breach (and clients need little encouragement to leave Towry and neither do advisers). It is about both things and initiation of the dialogue is a key factor in determining solicitation, else why produce phone records.

@ Peter Parker - Come out of the closet if you are going to attack people like Jon Lawson and I for expressing our opinions and having the courage to use our own names.

I don't always agree with Jon, but when he makes a comment he justifies it ratehr than throwing insults.

DON'T hide behind a pseudonames.

I agree with Adam Smith and Jon Lowson. The court case is about whether the contracts were breached and to some extent how much this needs to be proved - i.e. how enforceable these contracts are in practice.

Much as I am no Towry fan (and as someone who always posts under his own name rather than a pseudonym I'm not getting into that), I am getting a little bored of the comments on some of the Towry individuals and related charcter judgements when in a court of law it is the facts that are important and not personal opinion. There is nothing illegal about (allegedly) not being 'liked'.

There is one thing that continues to irritate me when contracts are being discussed. When Towry offered their contracts out (demanding a response within 7 days, or it was deemed the adviser had turned it down and would be on notice), there was a fundamental alteration in the restrictive covenants from "no solicitation" in the EJ contract to "no dealing" in the Towry contract. As one of the guys said (and others are probably now finding) "it would have been commercial suicide to accept".

To my mind, this was constructive dismissal. Why is that important? well it would make any previously signed contract void.

Obviously the Lawyers have looked into this and ruled it out from a legal aspect, but it does annoy me that a cmpany can force a person to leave and then go after them for trying to survive. Doesn't feel very just to me.

of course they broke the contract. The point being tested here is whether inference from phone records and transfer forms is enough to prove it. They are the only facts involved here.

The fact that Andrew Fisher is an ********* is largely irrelevant.

Apart from whether or not there was any actual need to solicit former EJ clients away from TL, the other issue, as raised previously by one of my learned colleagues, is whether or not TL by its own actions rendered void any powers of enforceability it might otherwise have had with regard to the contracts of the former EJ people. Disproving beyond doubt solicitation is one thing (and very difficult), but if TL can't enforce the contract, then their case may crumble.

@TCF - If they were on employed contracts, that does sound somewhat like constructive dismissal to me, but does that render the other terms in a contract void? I would have thought not.

I think this Towry EJ thing has got to the stage where clearly no facts are being released for public scrutiny for us to discuss (whilst people say they've seen teh contracts, different people with different drums to bang tell us they imply different things). I think we might just as well wait until the end of the court case and the dissect the decision to see if we can work out why the judge arrived at his decision and can all learn from it and avoid any pitfalls for the future.

@ TCF - I am not sure whether EJ advisers were sacked, for not signing the new Towry contracts. Even if they were, this may not be constructive or unfair dismissal but just ACTUAL dismissal, which I think is still legal, (unless you work in the public services).

It might be possible that the non-solicitation clause still applies, if the contract is terminated legally and fairly.

@Phil - I think you are right, in that there are many unknowns. On the contract front, I have copies of both the EJ and Towry contracts (and before anyone asks, no I will not be "airing" them). like everyone else I was under pressure to get the contract signed and sent back - not even time to get a solicitor to check it out. Not a good period I have to say, particularly for those with families and who were relatively new to the industry. People were effectively forced to make decisions that many have since regretted.

Whatever happens in this case, I find it difficult to comprehend how Towry could ever take the higher moral ground. From my experience their actions would suggest something very different. I thought Ethics played a big part in our industry. Perhaps a certain Mr Fisher should take note when he is next on one of his crusades.

Jon - They were told they would not have a job if they didn't sign the new contract.

@TCF - That happens all the time though. An employer is allowed to change the terms of the contract of employment and the employee has the right to accept or reject the changes. If they reject the proposed changes then they have effectively resigned.

Unless the terms of the changes can be proved to be "unfair" and the advisers constructively dismissed, then it is probably perfectly legal to do this.

Jon. That's the key question - is it unfair? I think it is a massive change to the contract and many would (and did) feel it is an impossible condition to accept - so,in my opinion, yes it is unfair. But, I am no lawyer.

I wonder if there were any unfair / constructive challenges made against Towry? I am not aware of any, although several advisers at the time suggested they would have a go. Maybe they decided they hadn't the resources to fight .

One issue that is overlooked but comes into play in the real world is the catch 22 that EJ advisers faced at the point of TL pointing a 7 day gun to the heads of EJ advisers to sign – whether to sell off or abandon the client’s interests and TCF rights knowing that new TL advisers would, as a precondition of joining TL, no longer be whole of market.

The act of signing a new TL contract for EJ advisers would have automatically created a material change to their previous ‘terms and conditions’ just by the act of retaining their future employment with TL. The act of signing up to the new TL contract terms and conditions would have prevented EJ advisers from taking up a seemless continuous contract of employment on the basis ‘a whole of market adviser contract’ was not on offer from TL.

Morally and ethically EJ advisers faced the dilemna that signing up to TL would have severely damaged their own and EJ client interests and the right to be treated fairly.

Ensuring the best deal for a client in terms of the FSA’s TCF outcome principal is not recognised in any TL or EJ (or any other employer’s) contract. From now on, the FSA should be brave enough to stand up and use this EJ/ TL case as a test case to ensure that this overrides outdated employer contract law in future. The FSA should force employers to recognise that an employee cannot be forced to sell out a client’s TCF interests for personal gain, motivation or bribes to join an acquisition predator company. To do so should automatically invalidate a ‘client ownership handcuff’ contract as being illegal and in breach of TCF and EU human rights principles.

With TL’s premeditated action of switching out clients en masse and tearing up perfectly good investment portfolios into a one size fits all expensive DFM service, the spirit of TCF is breached. EJ advisers would have been fully aware that to do would be a conspiracy to lead ‘whole of market’ clients down one route only, a route that was a direct contradiction to TCF - how does this square with code of ethics of CII, CSI etc?

A whole of market adviser signing up to be a ‘restricted wealth advice salesman’ for TL’s one shop DFM service would itself have breached EJ’s contract, which therefore makes the act of solicitation an irrelevance and makes the issue of whether there was a breach of ‘non dealing’ clause (especially under an TL contract not signed up to by the RJ7) even more of an irrelevance.

If EJ advisers had signed the new TL contract, they would have done so knowing they were signing over previous ‘whole of market’ clients to the ‘non whole of market’ wealth advice model.

Changing from a contract with a whole of market firm (EJ) to a non whole of market / restricted wealth adviser contract is without question a fundamental and material change to the EJ adviser’s terms and conditions. In addition, the act or ability to buy and sell securities (shares/ bonds) i.e. stockbroking functions ceased to exist under TL. For many EJ advisers, the stockbroking function alongside the whole of market adviser function was their main reasons to join Edward Jones who had a unique position in the marketplace with a dual role (whether they were individually licensed for securities or as one company is irrelevant).

What I think about is why no Towry employee comments on these blogs and defends the company? Is it because they have nothing to defend?

Maybe they feel it's beneath them,... or maybe they just don't care because they know that they're going to win the case,...

Interesting point made in the NMA article in this weeks mag on the court case!

On Nick Anderson's performance( who is the Head of Risk and Compliance at Towry) it is stated that "even his robust stand failed to mask the fact Towry's case is built on inference rather than evidence".

!

Have we all missed the end to this case,or is it still draging on???