When Bankers Defect, Clients May Not

Investment Dealers' Digest reports that it's getting harder for bankers who jump ship to transfer their book of business. Nowadays, bulge-bracket institutions often have multi-level relationships with important clients, from corporate issuers to private equity funds. Some services valued by M&A clients, like access to capital and idea generation, aren't always transferable, IDD says.

Another impediment is so-called "garden leave" - non-compete clauses that bar departing bankers from contacting clients for up to six months. The prevalence of these agreements "shortens the appetite for recruiting," Gary Goldstein, president and chief executive of the headhunting firm the Whitney Group, told the magazine.

These shifts may help explain why Perella Weinberg Partners got off to a slow start in the deal tables, despite filling its ranks with M&A stars. Fortune Magazine said recently that Perella Weinberg has landed only a few significant M&A mandates since launching in June 2006.

Client-facing professionals, on Wall Street and elsewhere, have always been legally and ethically bound not to solicit business for themselves or new employer while still working at their old firm. In recent years, however, a growing number of firms have imposed new , tougher non-compete agreements as a condition of employment.

That makes it imperative for anyone in a transactional or sales role to obtain reliable legal advice before jumping ship. If a successful transition depends on bringing your Rolodex with you, then an employment agreement that prevents you from telling current clients or counterparties about your new venture may place a high hurdle in your path. A good attorney may help you steer around the obstacles, or avoid driving over a land mine.