Why Should I Hire a Lawyer to Help with my Non-Compete
*This is a transcript of the Facebook Live video from 3-16-18 Click here to watch the video.
Well the first reason is these are economic financial considerations. When I’m on the enforcement side of these situations, one of the first things I ask the client is, “All right, how badly is this guy going to hurt you? How badly is this woman going to hurt you?” And if not, you’ve got to really consider the cost of enforcement versus the value that you’re going to get. Sometimes the value is just in making sure that people know that you’re going to enforce the agreement, and that can have a very, very high value that’s hard to quantify.
Second of all, when you’re trying to defend against these, you want to try to negotiate with the other side and see if there’s some restrictions that you can live with that benefit the employer to the extent where they will agree to modify the terms of the agreement. And that’s done by the lawyer understanding the compelling business interests involved, understanding both the background of the company, the background of the employee, and understanding how what you want to do going forward will affect the enforcing company. And so, after having long conversations about all of that with the client, a lawyer can advise you on what kind of deal can be struck.
If you can’t work out the situation with the enforcing company, then you may have to litigate it. And that is a big consideration for a lot of people. You have to really consider, “All right, this new job, this new venture that I want to go into, is it worth the cost of defending a lawsuit or bringing a lawsuit for declaratory judgment?” In other words, going to the court ahead of time and saying, “I want to compete and I want the court to tell me that my agreement doesn’t preclude me from competing.” You have to make sure that that’s cost justified. And if it is, if you have a valuable opportunity, then you want to probe very carefully that compelling business interest. If you’re enforcing, you want to establish that compelling business interest with copious evidence. And if you’re defending, you want to show that whatever the compelling business interest is is not really all that compelling and that there’s no equity in enforcing the agreement.
And the way I usually try to frame that debate is in unfair competition. If I’m on the enforcement side, I want to tell the judge, “Look Your Honor, it’s unfair for this worker to go work for company B or to set up their own company because they’re going to have an unfair competitive advantage because of their previous relationship with my client.” Conversely, if I’m in a defense standpoint, I want to look for ways that I can argue, “Look, we don’t have an unfair competitive advantage.” And frequently it turns on whether they’re going to be able to compete globally or whether they just can be restricted from certain customers. And frequently that is the … Or maybe specific service lines or products that were involved. And so you can frequently work these things out if both sides are willing to really put their business hats on and look at it from a dollars-and-cents standpoint rather than just getting all worked up about everything that led up to the departure, which oftentimes is very, very relevant from a litigation standpoint but may not be relevant in terms of everybody getting on with their lives and not spending their time in the depositions and in courtrooms.
And so let’s take those two things separate. Let’s talk about enforcement and then let’s talk about defense. How do I enforce a non-compete agreement? Well the first thing that a lawyer’s going to do is contact the other side and remind them of their obligations. If you know that the employee is starting their own business or if you know that they’re interviewing for a particular job or been hired by a particular company, you would put everybody on notice that, “Hey, this employment agreement exists. It has a restriction and we intend to enforce that agreement.” Frequently you can resolve it at that point. You engage everybody in negotiations and you tell them, “Look, we’re going to enforce this agreement,” and frequently everyone says, “Well we don’t want a lawsuit, we don’t want this expense and trouble so we’re going to back off of this.” That’s why I say the existence of the agreement makes it very, very valuable.
If the conduct persists, then you want to look at an enforcement proceeding. And you want to make sure that you have all of your ducks in a row. I recommend engaging an investigator to interview witnesses to really determine exactly what is going on because frequently you’re operating in the thaw of the war. My client gets reports that after employee A, let’s call him Mr. Adam, Mr. Adam leaves the employment and you hear vaguely he’s working for company B. And now, all of a sudden, we start to lose customers. And some of them have relationships with Mr. Adam, some of them don’t. And everyone begins to think, “Well, this is all because Mr. Adam is soliciting customers.” Well you want to start making some inquiries. You want to find out what’s really going on because you’re going to have to prove not just that the agreement exists but that he’s violating it.
And that can be tough to do because you have to involve customers and former customers in that conversation. And sometimes clients don’t want to do that. So you’ve got to think through that. You’ve got to understand what the person is doing and who they’re doing it with.
Once you do that, you put your complaint together, you file it in court, and then you’re going to go to a hearing on an injunction. In other words, have a court order the worker to stop doing whatever it is that they’re doing. And that hearing is going to be very, very important. Frequently the defendant will want to conduct discovery or you may want to conduct discovery, do depositions. Depositions are a question and answer session with a lawyer under oath with a stenographer who takes down everything that’s said. It creates a record. You may want to subpoena documents from the other side. And you really want to be prepared for that first hearing in front of the judge on what we call a preliminary injunction, almost as if this is the trial. Because frequently it all gets resolved at this stage because that’s when everybody figures out what’s going on.
And so once you begin that process, it starts rolling down the hill, I can be tough to reverse it. So you’ve got to be prepared for the long haul when you’re enforcing an agreement like this. I also always advice clients not to look for money. If there are money damages, you want to pursue those money damages, but your first primary goal in an enforcement proceeding is to stop the offending behavior. And once you stop the offending behavior, then you can assess whether or not you really need to continue after money damages. And the longer the conduct persists, the longer the case goes, frequently the more damages that are incurred. And both sides have to take that into consideration as the case moves forward.