Non compete lawsuit

[Cooper009]

I am a producer that left a large agency to join another large agency. Former agency is pursuing me for non compete issues, claiming I took confidential info with me in the form of emails I sent myself. I wrote a few accounts (that were not my accounts with the former agency) The new agency advised me to pursue the accounts. When the lawsuit hit, they say you are own your own because of those emails. I am stuck holding the bag. My state will not uphold the noncomp case, but in the mean time I have to rent an attorney at a very high price. ANY ADVISE???

[Big Dog]

urm....knowing which state might help.

Most non-competes in and of themselves don't hold up. However, it seems you're admitting that you forwarded e-mails to yourself, which could be considered a breach of confidentiality or trade secret.

[wlunday]

You'll probably get more of this...

I look at it as an agency owner. When I hired you to represent me to the community I agreed to pay you substantially (what ever that is). You agreed, because of the level of pay I allowed, that if you ever left my employ, you would leave my clients alone. By paying you and others a fair salary I PURCHASED the sole rights to these accounts.

You left and then stole them from me. I don't care if they were written by another producer here, we had a deal.

When I hire new producers I personally make sure they they fulfill the letter and intent of any previous agreement! It is an integrity thing with me, and it also shows me how well they can produce new accounts, without churning any old business from past employment. Try it, you'll like it!

Maybe your new bosses need to consider this, too.

Swymmer

[Young FL Agent]

Big Dog: As I mentioned in a prior post, I am setting up to leave a small agency and start my own. I have a non-compete agreeement and also have been told that by and large they don't hold up. I'm in FL and would be interested in anything you can share. I don't intend to call on any clients that belong to the current agency. However, I do plan to prospect in the same local area as that is going to be my main source of clients. I don't plan to be blatant and certainly don't intend to deliberately take anything from them so I didn't expect there would be any problems. Interested in your thoughts on this ubject. Thanks.

[LadyBroker]

As a California broker, I have had some experience with the non-compete clauses of my contracts. I am surprised that your new employer didn't better advise you on the nuances of your agreements...and keep in mind, you have one now with your new employer! In any case, the emails to yourself are certainly problematic. In California, you can take only the knowledge you carry in your brain....no business cards, no written documents, no renewal lists, nothing. You then are allowed one contact at your past clients, to advise them of your new business location and contact information. And they have to take it from there. If they do not contact you back, you are bound to not contact them again until your non compete expires. In my case, that is 2 years. And as I worked for one of the alphabet houses, I can tell you, they were quite vigorous in reminding me (and my new employer) of my contractual obligations.

Good luck.

[Cooper009]

Thank you for the feedback ( I think). I have realized that I made two mistakes here. 1st was being stupid and emailing myself any (regardless of the substance) information. The 2nd mistake was taking the advice of the new agency to activly pursue any accounts. As you can imagine I no longer see eye to eye with the 2nd agency. Does anyone think I should pursue the agency whom advised me to pursue that business or do I just take my medicine?

[Big Dog]

In your case, check the non-compete agreement to see what the specifics are. i.e. Does it prevent you from going after THEIR clients, or try to restrict you from prospecting in the same area. If the latter, then this won't fly with the courts. Courts have ruled that a non-compete can't prevent you from earning a living.

If it's the former, although there's probably nothing legally restricting you from going after your former agency's clients, play it safe...avoid them for at least a year.

[LadyBroker]

Big Dog, you are correct that the courts will not impede your right to make a living. However, a typical non-compete contract also carries a clause called Non Solicitation....this is where they will restrict your ability to contact your former clients. While the Non compete portion is not usually enforceable in California, the Non Solicitation is. I can't speak to any other state's laws. But if he is contacting former clients, then it is most likely he is in trouble. I am still surprised that his new employer encouraged this behaviour, especially as he describes them as a large retailer. If they are a good sized regional firm at least, they have a legal department that would advise him on acceptable business practices during his non compete period.

And Big Dog raises another good point - read your contract! Both your old agreement with your former employer, and your new agreement. While they won't hire you until you sign it, if you at least read it prior, you may be able to avoid situations like this in the future.

Good luck.

[wlunday]

What happened to Scott, the consultant? He used to encourage these ethical discussions. Must have got a real job! (Hee Hee! Just joking, Scott!)

Swymmer

[mica.cooper]

What I have seen, is that NCs stand up in if for example you are the manager of a gas station and you quit to work across the street, but not if you work 5 miles away on the other side of town. So it could keep you from prospecting in an certain radius around the agency, like maybe two miles, but not outside that.

It seems to fall to the judge to decide whats fair. No matter what the NC says, it all falls to that, what the judge says is fair.

I think it is totally corrupt and unethical to contact current customers of your former agent to solicit business. There is no price tag you can place on your reputation and it seems you just flushed yours.

Now if you were fired...and you have an honest beef with them, then all bets are off and get out the gloves. Most cases I have seen, the NC is null and void in that case.

I was once in a similar situation where I was unjustly terminated and the employer knew it. They ponied up a sizable amount of cash so that I would sign a new NC. Of course it also makes a difference in the amount of revenue you bring in, my work represented in excess of $1M/month which is unusual in the insurance biz.

[kevinraz]

Cooper, I don't think anyone has said this yet so I'll say it:

Hire a lawyer, now. Out of your own pocket. Might as well make it a good one. See what your former employer wants for damages or a settlement.

The longer you let this go the deeper you'll get in the muck. Get it done & past you as soon as possible.

[gregcw]

I am a producer that left a large agency to join another large agency. Former agency is pursuing me for non compete issues, claiming I took confidential info with me in the form of emails I sent myself. I wrote a few accounts (that were not my accounts with the former agency) The new agency advised me to pursue the accounts. When the lawsuit hit, they say you are own your own because of those emails. I am stuck holding the bag. My state will not uphold the noncomp case, but in the mean time I have to rent an attorney at a very high price. ANY ADVISE???

I had an employee that left to start her own agency. She even did this deceptively. She told me that she had found "something else" to do. Stongly implying that it was something other than insurance. She then went out to start her own agency, approached all of my companies for appointments - and got a few of them. Then sent letter to my insureds soliciting them and got few broker of record letters.

I did not have a formal non-compete with her and when I told her that what she was doing was still actionable based on "Trade Secrets" and that I would take action, she told her attorney, who wrote to me, that she was not working from a list, just her memory... I ended up having an ex-parte' encounter with her attorney, where I only told him that she must have had an excellent memory to have rememberd all of the PO Box addresses of my clients. The solicitations abruptly stopped and she then went out of business.

Needless to say, Cooper009, I do not have ANY sympathy for you and if your current employer really did encourage you to solicit your accounts I would recomment that you either find another agency to work for or another INDUSTRY to work in. The only advice that I can give is to enter into negotiaions through your attorney to mitigate or reduce the settlement that you have earned.

[scott]

wlunday, its nice to be remembered. Ive been busy writing - revised edition to my insurance consultants handbook and a book on bank insurance to be published in October.

Several interesting comments...

My addition:

--Cooper009 has learned something of the character of his new employer.

--Cooper009's new employer has learned something of Cooper009's character.

--There is always the option of buying the business from the former employer.

[jackweho]

Scott offered a very good summary; I would just add: old employer learned that they didn't lose much in an employee

[njexpat]

Be careful asking professionals for their honest feedback, as you may get just what you asked for.

Either buy back the rights to the accounts you've already been paid for, or honor your contract and leave them alone.