No bad mouthing, no termination of L&L lawyers for 45 days: How the Delhi High Court resolved differences between Rajiv Luthra & Mohit Saraf

Even as Rajiv Luthra and Mohit Saraf failed to agree on the interim measures of the settlement that will see the latter's exit from L&L Partners, the Delhi High Court stepped in to split the difference (Rajiv K Luthra v. Mohit Saraf & Ors)..In its order passed on June 2, the Division Bench of Justices Rajiv Sahai Endlaw and Sanjeev Narula resolved the differences between the two parties as regards the manner in which lawyers will join either Luthra or Saraf, transfer of data belonging to the firm, and other issues..The Bench arrived at the following arrangement after the parties opted for the Court to resolve the issues they couldn't reach a consensus on..Claims of Saraf.The Court has clarified that Saraf will be entitled to only those claims which are in accordance with law. As per its earlier order, Saraf would be entitled only to monetary claims against Luthra and/or the Delhi and Mumbai offices of L&L Partners. The types of monetary relief he will be entitled to includes compensation and/or value of goodwill of L&L Partners. Once the payment of Rs 52 crore and bank guarantee of Rs 25 crore goes through, Saraf will not be entitled to reinstatement to the firm..Saraf shall be entitled to describe himself as an erstwhile Senior Partner of the firm. Both Luthra as well as Saraf shall be entitled to claim credit for all work done and accolades won by L&L Partners, from the date of inception of the firm till the date of payment of the amount and bank guarantee..Since Saraf is relinquishing his claim to be reinstated on payment of Rs 52 crore and bank guarantee, he will only be entitled to profits of the firm accrued till the date of this payment, and not thereafter..Transfer of data.The High Court has decided that it will not enforce any transfer of data, other than that belonging to a client who opts for the services of Saraf..Clients who want to transfer their business to Saraf's new entity may send a communication to L&L Partners asking for transfer of their database/files to Saraf. The existing firm shall immediately comply with the same and shall not retain or misuse any part of this data..Transfer of lawyers.The split is going to see a number of lawyers at the existing firm move out. During the hearings, the parties failed to see eye to eye on how exactly the transfer of lawyers would take place..The High Court has directed for the following arrangement:(i) Luthra shall not terminate the services/contract of any lawyer or staff of L&L Partners for a period of 45 days from the date of making payment of Rs. 52 crore and furnishing of bank guarantee.(ii) During this 45 day period or till the date such lawyers/staff opt to join Saraf, whichever is earlier, Luthra shall not reallocate the clients/work being done by the lawyer/staff to another lawyer/staff. He is also directed not to come in the way of the clients being serviced by the said lawyer/staff, if they are desirous of moving along with the said lawyer/staff.(iii) Clauses in the employment contracts of the said lawyers/staff prohibiting them from dealing with clients they serviced during the employment/association with L&L Partners, shall not be enforced during the 45-day period.(iv) However, if any lawyer/staff joins Saraf after the said period of 45 days, Luthra shall be entitled to enforce the said clauses, subject to the defence of the said lawyer/staff that he/she is not in breach thereof. .The electronic identities used by Saraf when he was part of the firm shall be blocked on the date of making payment and furnishing of bank guarantee. Similarly, the electronic identities/addresses of the lawyers/staff who opt to join MS shall be blocked from the date of termination of their contract/employment with L&L Partners..Act like a gentleman and an Advocate.Having witnessed first-hand the bitterness between the two senior lawyers over the course of the hearings, the Court has called upon them to bury the hatchet."...it is also directed that, both, RL and MS are restrained from doing any act, deed or thing harming the professional reputation or causing any unlawful loss to the other. The professional competition between them, agreed to in yesterday's settlement, shall be a healthy one, without denigrating the other.".Further, Luthra was urged to act like a gentleman and an Advocate when it comes to the choice agreed to be given to clients, lawyers and staff of L&L Partners. The Court added,"...both MS and RL, though in future shall compete for work and legal and paralegal talent, shall not indulge in unhealthy practices, commonly known as, bad mouthing.".The Court also directed Saraf to unconditionally withdraw the objections preferred by him before the Registrar of Firms regarding the changes in the constitution of L&L Partners before the income tax authorities, banks, etc..[Read order]