May 7, 2010
Taking Customers With You When You Change Jobs
Taking Customers With You When You Change Jobs Cliff Ennico www.creators.com "For the past several years I have been employed by a local accounting firm. During this time I have developed close relationships with several of the firm's clients. A number of these clients have been dealing exclusively with me as opposed to the firm's partners, and I view them (rightly or wrongly) as 'my' clients. I am leaving the firm shortly to set up my own practice in the same town, and would like to notify these clients of my change in status, but I'm afraid the firm will sue me for 'stealing business'. I've never signed any sort of non-compete agreement with the firm. What are my legal risks here?" First of all, no business "owns" its clients or customers. People are free to use whatever service providers they like, and agreements that prevent them from doing so are often viewed as illegal "restraints of trade" and are struck down by the courts. Second of all, this situation is every employer's worst nightmare. You spend years training someone in the hopes they will help you grow your business, and the next thing you know they've quit and taken half your customers with them. Shame on this accounting firm for not requiring all of its employees to sign a "non-solicitation" agreement, in which the employee promises not to contact any of the firm's customers or clients for a period of XXX months after leaving the firm's employment for any reason. Unlike non-compete agreements (which prohibit ex-employees from working in the same field or profession within a certain geographic area), non-solicitation agreements are viewed as a legitimate effort by a business to protect its goodwill, and are often upheld by the same courts that routinely strike down "non-competes". Still, even though your firm did not make you sign a non-solicitation agreement, you may have some legal liability to your former employer if you blatantly try to steal its customers. To date, 42 states have adopted some form of a statute called the "Uniform Trade Secrets Act". If your state has adopted a version of the Uniform Trade Secrets Act, you are prohibited from stealing your employer's "trade secrets" and using them for your own benefit, even without a written agreement with the employer. In most states, a firm's client list would be considered a "trade secret" unless its content can be "readily obtained through some independent source". So if you download the firm's entire client list onto a computer diskette or CD and send a letter to everyone named on that list announcing the opening of your new firm, your old firm will almost certainly view that as a theft of its "trade secrets" and will sue you for that. However, taking out an advertisement in a local newspaper (or a local Chamber of Commerce publication) saying that "Joe Blow, formerly with XYZ Accounting Firm, has now opened his new office at ____________" probably will not be viewed as "trade secret" theft, as you are making a general solicitation to the entire community that is not targeting your old firm's clients (even though virtually all of them read the same local newspapers and trade publications). What about directly contacting clients with whom you had a personal relationship during your tenure at the accounting firm? While there can be no guarantee your firm will tolerate any solicitation of business, consider: limiting the solicitation to those clients for whom you are the "sole and exclusive" firm contact - if you do most of the client's work but the client plays golf with your boss every week, you are not the "sole and exclusive" firm contact and should avoid soliciting that client; waiting until after you leave the firm before sending any e-mail or written correspondence to that client with your new contact information; and not offering the client any discounts or "deals" you wouldn't give to someone who walks in off the street. Under no circumstances should you remove any client files, documents or other client-specific information from the firm when you leave, even if a client says it will follow you. Your solicitation to the client should include a "form letter" for the client to send to your old firm terminating the client relationship and requesting that all files be transferred to your attention. If the client owes any money to your old firm, be prepared to wait until that gets settled before you get the files. Cliff Ennico ( cennico@legalcareer.com ) is a syndicated columnist, author and host of the PBS television series 'Money Hunt'. His latest book is 'Small Business Survival Guide' (Adams Media, $12.95). This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state. To find out more about Cliff Ennico and other Creators Syndicate writers and cartoonists, visit our Web page at www.creators.com . COPYRIGHT 2006 CLIFFORD R. ENNICO. DISTRIBUTED BY CREATORS SYNDICATE, INC. Permission granted for use on DrLaura.com.

Posted by Staff at 1:49 AM