The AFH restrictive covenant case, formally cited as AFH Independent Financial Services Ltd and another v Baker and another [2026] EWHC 1674 (Comm), has delivered a set of findings that any firm buying financial advice businesses should study with care. The judgment, handed down in the Commercial Court, arose after adviser Samantha Baker left AFH Independent Financial Services Limited (AFH IFS), prompting a significant number of her clients to follow her to the firm she subsequently joined, Regentia Lifestyle Planning Limited.
According to Citywire, AFH alleged that Baker broke a restrictive covenant by taking 121 clients with her to Regentia Lifestyle Planning after her departure. The contractual framework governing those covenants was complex, spanning multiple agreements and group entities, and the judgment ultimately turned on questions that acquisitive firms routinely underestimate: whether covenants are enforceable at all, and whether the conduct alleged actually amounts to the breach pleaded.
What the AFH restrictive covenant case tells us about covenant enforceability
The first lesson from the case is structural. Covenants entered into between one group company and an individual will not automatically be enforceable by other group companies, even when contracts state that they should be. Careful drafting and a clear understanding of the relevant law are required at the outset, before the acquisition completes, not after a dispute arises.
Consistency of drafting across multiple agreements is equally important. Any ambiguity in the contractual provisions will be construed against the party seeking to rely on them. Where an acquisition involves additional bolt-on contracts or several parties, each document must work coherently with the others. Gaps between documents create the very ambiguities that defendants will exploit.
The Court also drew a meaningful distinction between non-dealing and non-solicitation covenants. Non-dealing covenants are less likely to be held enforceable than non-solicitation covenants, and all covenants must be no more onerous than is reasonably necessary to protect a legitimate business interest. Because that test is always fact-sensitive, applying a standard-form covenant to every acquisition may not provide the protection firms assume it does.
The narrow interpretation of solicitation and the case for gardening leave
Perhaps the most operationally instructive findings concern what actually constitutes solicitation. AFH had expressly instructed Baker to inform clients that she was leaving after she handed in her notice. The Court found that instruction did not itself amount to solicitation by Baker. Where a client then made a clear, independent decision to follow Baker to her new firm, Baker’s subsequent conduct in facilitating that move was also not treated as solicitation, because the client’s decision had already been formed.
That narrow reading has a direct consequence for firms managing departing advisers. Gardening leave should be a serious consideration whenever a key adviser resigns, precisely because the range of conduct that courts will treat as solicitation may be interpreted restrictively. Allowing an adviser to work out their notice and communicate freely with clients substantially narrows the remedies available should relationships transfer.
The case also serves as a reminder of procedural discipline. The judge noted that Baker may have breached her duty of fidelity to AFH, but AFH had failed to plead that cause of action in the proceedings, so no finding was made on it. A separate hearing on whether Baker misused AFH’s confidential information in speaking to clients remains outstanding. For acquiring firms, that gap underlines the importance of identifying every potential cause of action before commencing proceedings, not only the most obvious ones.
Alan Hughes, a partner at Foot Anstey, who analysed the judgment, draws a clear practical conclusion: acquisitive firms should periodically review their entire approach to restrictive covenants, stepping back to ensure that the whole contractual framework fits together coherently. The AFH restrictive covenant case is a timely prompt to carry out that review before, rather than after, the next acquisition completes.
