Firms are taking steps to minimse the danger of employees leaving with key business

Brokers will be asked to sign up to more restrictive contracts as the industry tightens up the terms that govern departing employees in the wake of a poaching epidemic.

With the legal costs of court battles over employment contracts reaching £10m a year, according to one expert, broking firms are asking lawyers to make sure that their contracts are watertight, an Insurance Times investigation has revealed.

They are anxious to stop employees that leave for rival firms taking key business and confidential information with them, through the use of restrictive covenants which limit what former employees can do for a stated time after their departure.

One high profile case, concerning an aviation team that left Willis for Marsh, was settled out of court this week.

Chris Syder, head of employment at law firm Davies Arnold Cooper, said: “Insurance firms are paying closer attention to restrictive covenants when making senior hires, and more attention is being given to what restrictive covenants they want.”

Syder said it was now more common place for firms to seek advice, or what he calls “sanity checks”. He added: “It is a growing trend as they are more aware of the potential disputes.

“People are more aware of the fact that it could lead to litigation and they are looking at managing the risk.”

He said the main concerns of brokers were whether the covenants were reasonable and if they were likely to be enforceable.

Grant Ellis, chief executive of Broker Network, added: “It continues to surprise me that how so many good quality organisations give poor attention to the detail of contracts. A little attention can make a lot of difference further down the line.”

‘ Suspicious minds, page 14