The partnership agreement can limit which clients the departing team members can solicit and what confidential information the they may take if the whole team doesn’t move. An article in today's Wall Street Journal touches on this issue. As the article states, if there is no partnership agreement, the Protocol for Broker’s default provisions take over. However, if there is a partnership agreement, it trumps the Protocol if the entire team does not move. The exception is that a partnership agreement cannot prevent someone from taking certain client information for those clients whom he or she introduced to the team or for soliciting those clients.
So why did the one Merrill Lynch partner stay? One reason could be—and this is just speculation—that Merrill Lynch offered the one hold-out partner a sweet deal to stay to try to solicit the clients from the departing brokers. Remember, if one team member stays the partnership agreement will trump the Protocol. Depending how the partnership agreement is drafted, this could prevent members of a team from soliciting clients they have serviced for many years. Be careful when drafting a partnership agreement regarding what rights you are giving away or retaining. Think of it like a pre-nup. And, be wary of the firm insisting it has a say in what happens if someone wants to leave the partnership. Talk to you lawyer early and often.