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Information taken by a leaver: what actually left, and what it is still worth

Somebody has resigned and something has gone with them: a customer list, a pricing file, a folder of drawings. The instinct is to write to them at once and demand it back. That letter usually fixes the other side's account of events before you know your own.

Two things are assumed at this stage and both are commonly wrong. The first is that what you believe was taken is what you could show was taken. The second is that everything the business treats as confidential is confidential in law. The distance between each pair is not visible from inside the business.

There is also a clock, though not the one people expect. The clock that matters is the rate at which the information itself stops being worth anything, rather than anything set by a court. It starts on the day the person walks out and it does not wait for a decision.

What actually left, as opposed to what you believe left

An owner in this position can almost always name the file. Naming it is a long way from establishing that it was copied, when, by whom and where it went, and a claim in England and Wales rests on the second of those, not the first. Suspicion, however well founded, is not a case, and a business that acts on suspicion alone tends to find itself arguing about its own conduct rather than the leaver's.

The picture is often recoverable in part. What can be established is usually narrower than the suspicion, and occasionally a good deal wider. It is not unusual to find that the material of real value moved well before the resignation, or that the leaver is the second person to have taken it. None of that appears in the resignation letter, and none of it is apparent to a business working from what it believes it has lost.

Not everything the business calls confidential is protected

Employees in England and Wales owe real duties in respect of their employer's confidential information, but the law draws a line that businesses find uncomfortable. On one side sits genuinely confidential material: the costed price list, the formulation, the terms on which particular accounts are supplied. On the other sits the general skill, experience and knowledge a person acquires by doing a job competently, which belongs to them and which they carry to the next employer.

A customer list sits awkwardly across that line. The compiled list, with its contacts, its order history and its margins, is ordinarily capable of protection. The fact that a salesperson remembers who their customers are, and that those customers rather like dealing with them, ordinarily is not. Businesses that have been genuinely hurt frequently describe the second of those whilst believing they are describing the first, and the difference is not a technicality: it decides whether there is anything to enforce.

How the material was handled before it left also carries more weight than owners expect. Information that everyone in the business could reach, that was never marked, never restricted and freely circulated by email, is harder to present as a secret than the same information kept deliberately. That assessment is made afterwards, on how the business actually behaved, not on what the staff handbook said it did.

The value decays, and that changes the question

Confidential information is not property in the way that stock is property. Its protection derives from its being confidential, so it weakens as it spreads and it is gone once the material is genuinely public. That is the legal decay, and it is slow. The commercial decay is faster, and it is the one that ought to drive the decision.

A customer list is a photograph of your business on one particular day. Contacts move roles, buying patterns shift, terms are renegotiated, and a competitor working from last quarter's list is working from something progressively less useful. Price files age the same way. Other material does not age at all: a formulation, a design, source code, the identity of a supply route that took years to secure. Which kind you have lost determines whether you are protecting an asset or chasing a fading advantage, and those two things justify very different expenditure.

This is the calculation that gets skipped, and it produces the most avoidable outcome in this area: a business that spends heavily to recover something which had ceased to be worth having by the time the argument was over. Relief from the court in England and Wales is aimed at restraining what remains rather than at undoing what has already been used, and where the decay is fast that distinction decides how much is worth spending.

Covenants sit alongside the confidence claim, not above it

The employment contract is produced early in almost every one of these matters, and its restrictive covenants (the clauses limiting where the leaver may work, which customers they may approach, and which colleagues they may recruit) are read as though they settle the question. They rarely do.

Covenants are enforceable in England and Wales only so far as they go no further than is reasonably necessary to protect a legitimate business interest, and reasonableness is judged against the position when the contract was made rather than the damage being felt now. Clauses drafted widely to be safe, applied identically to everyone regardless of role, or never revisited when a junior joiner was promoted into a senior position, are the ones most often found to reach too far.

The confidence claim and the covenant claim are separate arguments resting on different facts, and they succeed or fail independently. A business with weak covenants is not without remedy, and a business with immaculate covenants still has to show what left. Covenants also carry a clock of their own: they run for a stated period from departure, so an application made late in that period asks the court to restrain a shrinking remainder and is worth correspondingly less. Deciding which of the two arguments your situation actually supports is a judgement made on documents most owners have not read since the day they were signed.

Pursuit, containment, and the cost of each

Two responses are available. They are less alternatives than a question of weighting, and the weighting is a commercial decision wearing legal clothing.

Containment is everything done to make the information matter less: securing systems, reaching the accounts most exposed before somebody else does, changing what can be changed, and re-anchoring relationships that were being held by one departed person rather than by the business. It is unglamorous, it produces no vindication, and it is frequently the higher return, because what costs a business money in these matters is customers leaving rather than files being copied.

Pursuit is the claim, and its costs run well beyond fees. It obliges the business to prove, to a stranger’s satisfaction and on a timetable other people control, things it has always taken for granted. The work of doing that falls on the few people who understand the material well enough to explain it, who are ordinarily the same people running the part of the business that has been damaged.

The leaver's new employer is frequently relevant to how these matters resolve. Handled badly, you have given a competitor a grievance and your former employee a cause to rally behind. Handled well, a matter that looked like litigation is often resolved without proceedings at all.

When not to act

Some of these situations justify no claim at all, and saying so is not defeatism. Where what left was a list of names anyone could have assembled, where the leaver has gone somewhere that does not compete with you, where the covenant would not survive being read aloud, or where the material was already stale on the day it went, litigation buys very little that the business did not already have.

Undramatic outcomes close a large proportion of these matters: material returned, deletion confirmed, an undertaking given about what will not be used. They are available precisely because they do not require anybody to prove anything to a court, and they are frequently a better result than the one that would have been fought for.

Choosing not to pursue is a legitimate commercial judgement and frequently the right one. What is worth avoiding is reaching it by default, some months later, because nobody was prepared to say plainly at the outset that the material had already stopped being worth the argument.

This guide is general information about how these matters usually run. It is not advice, and nothing becomes advice until terms are agreed in writing. Brandleys Legal Ltd delivers reserved legal activities alongside regulated partners.