Can a Firm Sue an Entire Team That Resigns Together?

The short answer: Yes. When a team resigns together, the firm it leaves can sue, usually for breach of the non-solicitation and confidentiality terms in the advisors' agreements, and sometimes, against the new firm, for raiding, an organized effort to hire away a group of its people. Where both firms belong to the Protocol for Broker Recruiting, registered representatives who follow it to the letter have a safe harbor for taking five pieces of client contact information, but the Protocol is written about registered representatives and their client information and says nothing about non-registered staff or about recruiting colleagues, so client associates and recruiting within the team are a common flashpoint. A court can grant a temporary restraining order quickly, sometimes before the team has been heard. How any claim fares depends on the agreements, the Protocol status of both firms and how the resignation is carried out, which is why the team's attorney plans the sequence before anyone resigns.

A team that leaves together moves partners, junior advisors and staff on the same day, and every one of them signed something. What else changes at that size is in what changes when your team produces $5 million or more. This guide informs in general terms; the legal calls belong to the team's own counsel.

What claims does a firm bring when a team leaves?

Firms usually file several claims at once, most resting on each person's agreements. In a 2025 federal appeals decision about two advisors and two operations employees who resigned on the same day to start their own firm, the old firm's complaint combined federal and state trade secret claims, tortious interference with business relations, breach of the duty of loyalty and breach of contract, and it filed an emergency motion for a temporary restraining order at the same time. The agreements in that case called client information a trade secret and barred soliciting the firm's clients for two years after leaving.

What does raiding mean?

The Protocol's opening paragraph says it does not bar or otherwise affect the old firm's ability to bring an action against the new firm for raiding. It never defines the word. In the 2025 decision, the court quoted commentary noting that authorities have had difficulty agreeing on a definition, read raiding as a competing firm luring employees away, and held that the Protocol's raiding exception applies only to firms. The individuals who left could not be raiders under it, and the firm they formed for themselves had not raided their old employer.

The same court still upheld the injunction against the individuals, on their agreements.

What does the Protocol protect, and where does it stop?

Where both firms are signatories, a departing registered representative may take the name, address, phone number, email address and account title of the clients they serviced, and nothing else. The resignation goes in writing to local branch management with a copy of that list, and the list delivered to the branch also includes the clients' account numbers, which the representative does not take. Solicitation may begin only after the representative has joined the new firm, and the old firm stays free to enforce restrictions on soliciting clients before the representative leaves. If the representative and the new firm both follow it, the Protocol says neither has any monetary or other liability to the old firm for taking that information or for soliciting those clients. More detail is in the Protocol for Broker Recruiting explained.

It stops in four places that matter to a team:

• Either firm outside it. The safe harbor applies only when both firms are signatories, and a signatory may withdraw at any time. If either side is out, the agreements and state law govern the whole departure.
• An agreement that overrides it. In the 2025 case, each agreement said its own terms controlled over the Protocol. The court read that language to control, and upheld a preliminary injunction on it, even though the firm had joined the Protocol before the agreements were signed.
• Part of the team staying behind. If the entire team does not move, the team or partnership agreement governs which clients each departing member may take and solicit, though it cannot stop a member from taking contact information for, and soliciting, the clients they introduced to the team. Without a written agreement, a member who produced on the team for four years or more may take contact information for, and solicit, all of the team's clients; one with less than four years is protected only for the clients they introduced.
• Raiding claims against the new firm, which the Protocol leaves untouched.

What the Protocol means for who owns the clients is in do you actually own your book of business.

Why are staff and junior advisors the flashpoint?

The Protocol is written about registered representatives and client information. It says nothing about non-registered employees, and nothing about recruiting colleagues. A client associate's or operations professional's position comes from their own agreement. In the 2025 case, the two operations employees had signed agreements with provisions largely identical to the advisors', and the injunction was upheld against them as well.

Registered junior advisors are covered by the Protocol, where it applies, for the clients they serviced, but it does not address how they came to leave, and if one stays behind, the team-agreement terms above decide who may take which clients. Timing, registration and pay for staff are in what happens to your team when you move firms.

What is a TRO, and how does FINRA Rule 13804 work alongside the courts?

A temporary restraining order is a short court order made before a full hearing. In federal court, a judge may issue one without notice to the other side only if sworn facts clearly show immediate and irreparable injury before that side can be heard. An order issued without notice expires within the time the court sets, no more than 14 days, unless extended for good cause or by consent, and the firm must give security in an amount the court considers proper to cover costs and damages if the restraint proves wrongful. State courts follow their own rules. How this plays out for a single advisor, including garden leave and notice clauses, is in can my firm sue me for leaving.

Disputes between FINRA member firms and their associated persons that arise from their business generally must go to FINRA arbitration under Rule 13200. Rule 13804 lets a party to such a dispute ask a court for a temporary injunctive order, provided it files a statement of claim with FINRA requesting permanent injunctive relief at the same time. If the court issues an order, a hearing before three arbitrators on permanent relief begins within 15 days, and the legal standard for granting or denying that relief is the one of the state where the events occurred, or the one set by an enforceable choice-of-law agreement between the parties.

What do teams do before resigning to reduce exposure?

What follows describes common practice, and each item is a question for counsel:

• Every agreement on the team is read: partners, junior advisors, client associates, any team or partnership agreement, and any clause placing the agreement above the Protocol.
• Protocol status is checked for both firms close to the resignation date.
• Client information leaving with the team is limited to what the agreements and, where it applies, the Protocol permit. The Protocol does not treat it as a violation for a representative, before resigning, to give a prospective firm information about the business, other than account statements, that does not reveal client identity; the agreements may still restrict it.
• Resignations are in writing, in an agreed order, and client contact waits until each advisor has joined the new firm.
• When and by whom staff are told is decided with the attorney.

Who sits at the table for that planning is in who should a $1 billion team talk to before a move.

What happens after a TRO?

A federal order issued without notice is followed by a preliminary injunction hearing set at the earliest possible time. On the FINRA side, the arbitration panel hears the request for permanent relief and, after a full and fair presentation of the evidence, may bar the parties from seeking to extend the court's order or direct them jointly to move to modify or dissolve it. A later hearing on damages, if needed, goes before the same panel.

Clients keep a protection of their own. FINRA Rule 2140 bars member firms and their people from interfering with a customer's request to transfer an account when the representative changes firms, where the account carries no lien for money owed or other bona fide claim, and it names seeking a court order that would bar or restrict a customer's written transfer request as prohibited interference. What a given order restricts the advisors from doing is a question for counsel.

Every practice is different. The specific answer comes from a confidential conversation: the best deal we can win for your team through our relationships and our record of past deals, and how culture, technology, support and service compare at the firms that fit, including the one you are at now. Request an introduction.