Legal News

Fiduciary Employees Free to Solicit Former Clients

Fiduciary employees may solicit the clients of their former employer, provided they do not use confidential documents or trade secrets, the BC Supreme Court has held. In this particular case, a financial consultant and investment advisor set up a team that operated within a large financial institution. Three members of the team terminated their employment without notice and established a new investment team with a competing financial institution.

The court was called on to determine whether the employees were fiduciaries and, if so, whether they had breached their obligations by soliciting former clients. A fiduciary employee is one who, by virtue of his or her position, has additional duties of good faith that must be exercised with respect to their employer, above and beyond the duties of good faith required of other employees.

The court found that none of the employees in issue were fiduciaries. Only in rare circumstances would an employee below senior management be found to be subject to fiduciary duties. Nonetheless, the court determined that even if there was a fiduciary relationship, the direct solicitation of the former employer’s customers would be permissible. In reaching its decision, the court emphasized the importance of free competition and of citizens being free to pursue new opportunities.

Stenner v. ScotiaMcLeod, 2007 BCSC 1377