Author Topic: Advice Sought For Doing Business With Former Employer's Client(s)  (Read 882 times)

AK

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Hey Fellow MMMers. I am self-employed and have a good relationship with my former employer and a great relationship with my former boss. I told my boss that I don't plan on doing any business in their industry and don't want to take any business from them. However, this past week, one of my former employer's clients reached out to me about doing some work for them since I worked with them previously. We met Friday and this individual said they want to work with me because of the great work I do. I told them I can definitely do the work but have reservations doing it and I'll get back to them next week. The person said let them know what it'll take to get the deal done so they seem very interested.

Reservations

1) I don't want to damage my relationship with my former employer / boss.
2) Go back on my word.
3) There's a non-compete clause in the employee agreement that I signed so don't want to get sued. I'm meeting with a lawyer on Monday to review the document to see if there's any legal liability there. I'm confident that there's not but want to confirm.

Other Considerations

- This prospective client has deep pockets, is decent to work with, and could be a good long-term client.
- I'm having dinner with my old boss next week and will discuss this with him.
- The prospective project would be small but could see it leading to more work.
- My former employer gave me a lead that didn't pan out but appreciative they referred the lead to me.
- I have other work so declining this won't affect me financially.

Currently, I'm leaning towards declining the engagement out of potentially damaging relations with my former employer but haven't decided. What do you guys think? Are there any other considerations / potential consequences I'm missing here?

Thanks,
AK

maizeman

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Re: Advice Sought For Doing Business With Former Employer's Client(s)
« Reply #1 on: March 19, 2017, 09:24:48 AM »
That's a hard situation to find yourself in. It's a hard situation, and the positive feelings from having someone seek you out specifically based on the quality of your previous work is probably also making it harder to decline. The easiest outcome may be if your lawyer advises you that there is no way around the non-compete clause in your contract.

Is the project you'd be doing even in the new field/niche you are trying to establish now that you've left your former employer? If not I would suggest adding "potential to lose focus and spread yourself too thin" to the cons list. 
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AK

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Re: Advice Sought For Doing Business With Former Employer's Client(s)
« Reply #2 on: March 19, 2017, 04:44:59 PM »
That's a hard situation to find yourself in. It's a hard situation, and the positive feelings from having someone seek you out specifically based on the quality of your previous work is probably also making it harder to decline. The easiest outcome may be if your lawyer advises you that there is no way around the non-compete clause in your contract.

Is the project you'd be doing even in the new field/niche you are trying to establish now that you've left your former employer? If not I would suggest adding "potential to lose focus and spread yourself too thin" to the cons list. 

I offer general development services on a particular technology platform and am not currently catering to any specific industry. This organization uses that platform in part to run their business. In short, it would be part of the niche.

wanderin1

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Re: Advice Sought For Doing Business With Former Employer's Client(s)
« Reply #3 on: March 19, 2017, 09:09:16 PM »
 From your description, there are good reasons to say “No:” this project leads you away from your strategic focus on new industries, and threatens an excellent relationship/referral source.

But before you say “no” to the client, have that chat you mention with your former manager. Because it’s  likely you could have a conversation that would end up with the manager telling you to go ahead with the work, and the two of you developing a relationship of mutual referrals.  You are becoming a niche specialist, so you’ll start winning lots of this very specific work. You’ll also start to hear about projects outside of your specialty that you can refer to them.

In your sit down with the manager, start by  explaining that a former client reached out to you, asked you to do the work, but that you’re reluctant—not just because of the non-compete—but out of your personal sense of not wanting to disrespect your past relationship or hurt your future one.  A small percentage of folks hearing something like this will be too unhappy or “non-competey” to go further. But the majority, even if momentarily unhappy with the client, will understand this as an opportunity to broaden a constructive relationship with a colleague who has just proven themselves technically in demand and honest to a fault.

VeggieGirl

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Re: Advice Sought For Doing Business With Former Employer's Client(s)
« Reply #4 on: March 19, 2017, 10:45:52 PM »
Even if you're legally in the clear to work with this previous client, be upfront and ask/tell your former boss about the offer. Especially if you have a good relationship, say you don't want to ruin it and just wanted to make sure it's ok with them.

SeattleCPA

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Re: Advice Sought For Doing Business With Former Employer's Client(s)
« Reply #5 on: March 20, 2017, 06:35:44 AM »
For what it's worth...

If your former employer's noncompete is reasonable and something you previously agreed to, it seems pretty unethical to breach that agreement.

Ask yourself this question: If in a few years, the same situation occurs again only you're the employer with an employee who has signed a noncompete... are you okay if that employee takes a client from you?
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AK

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Re: Advice Sought For Doing Business With Former Employer's Client(s)
« Reply #6 on: March 20, 2017, 07:35:20 AM »
For what it's worth...

If your former employer's noncompete is reasonable and something you previously agreed to, it seems pretty unethical to breach that agreement.

Ask yourself this question: If in a few years, the same situation occurs again only you're the employer with an employee who has signed a noncompete... are you okay if that employee takes a client from you?

I'm fairly certain the non-compete no longer applies since it was part of my "employee agreement" and didn't specify you won't compete for X number of years after termination or within Y geographic location. However, you make a valid point and that's one of the reasons I'm very reluctant to pursue this.

Even if you're legally in the clear to work with this previous client, be upfront and ask/tell your former boss about the offer. Especially if you have a good relationship, say you don't want to ruin it and just wanted to make sure it's ok with them.

From your description, there are good reasons to say “No:” this project leads you away from your strategic focus on new industries, and threatens an excellent relationship/referral source.

But before you say “no” to the client, have that chat you mention with your former manager. Because it’s  likely you could have a conversation that would end up with the manager telling you to go ahead with the work, and the two of you developing a relationship of mutual referrals.  You are becoming a niche specialist, so you’ll start winning lots of this very specific work. You’ll also start to hear about projects outside of your specialty that you can refer to them.

In your sit down with the manager, start by  explaining that a former client reached out to you, asked you to do the work, but that you’re reluctant—not just because of the non-compete—but out of your personal sense of not wanting to disrespect your past relationship or hurt your future one.  A small percentage of folks hearing something like this will be too unhappy or “non-competey” to go further. But the majority, even if momentarily unhappy with the client, will understand this as an opportunity to broaden a constructive relationship with a colleague who has just proven themselves technically in demand and honest to a fault.


My relationship with my former boss and my former employer are important to me and I don't want to ruin / strain it. I could see myself working there again.

I'm thinking of ways that it could be a win-win for my former employer and myself. For example, I provide technical oversight on the project and they implement the design. This allows us both to get some business where there wasn't any. If the potential client or my former client wouldn't go for this, I'll walk away.

You are right that I'm honest to a fault and am getting better at holding things back but it's an ongoing "dilemma".

Thank you guys for the constructive feedback and making me think about the situation in different ways.

Ocinfo

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Advice Sought For Doing Business With Former Employer's Client(s)
« Reply #7 on: March 20, 2017, 07:55:21 AM »
Maybe your old company would subcontract the work to you? Would solve all issues.

Who knows, old company might actually want you helping client because since you left they haven't been able to replace you and it's upsetting the client to the point that unrelated work is in jeopardy. As long as you're honest and legally in the clear you'll be fine.

Wanted to add that I see this all the time and most people understand as long as you're not a jerk. I've had offers to go from a company developing a concept to a contractor advising the customer (either as my own company or working for another company) and no one would have held it against me. Basically doing the same work but getting paid through a different channel is pretty common in my field.

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« Last Edit: March 20, 2017, 08:01:26 AM by Ocinfo »

bwall

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Re: Advice Sought For Doing Business With Former Employer's Client(s)
« Reply #8 on: March 20, 2017, 03:36:37 PM »
hmmm.... I think that slavery is over, at least in some parts of the USA. So, I wouldn't worry too much about the non-compete.

You didn't say where you lived, but as a general rule, they don't hold up in California. I have an employee in CA and I asked him to sign a non-compete (and he did), but as my lawyer told me; 'the state of California won't prevent someone from working in their field'. In fact, not honoring non-competes is one reason that Silicon Valley is such a worker's paradise:

http://www.vox.com/new-money/2017/2/13/14580874/google-self-driving-noncompetes


AK

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Re: Advice Sought For Doing Business With Former Employer's Client(s)
« Reply #9 on: April 01, 2017, 07:27:41 AM »
Update: Before speaking to my former employer, I spoke to a lawyer about the old employee agreement. The lawyer said overall the employee agreement is pretty generous compared to many others. With regards to the non-compete, the lawyer said it's too broad and a judge wouldn't enforce it and the lawyer interpreted it as only applying while being employed. Still, the lawyer said that the former employer could still sue and make things a headache for you.

My old boss rescheduled dinner to a later date so my old boss said to reach out to the CEO directly. I emailed the CEO and mentioned the situation and asked if we could meet in person to discuss. The CEO agreed and we met the next day. The conversations went well and the CEO thanked me for being honest and keeping things above board and gave me the green light to proceed on my own. The non-compete didn't come up and the CEO gave me tips and considerations about how to engage with the client. Overall, it went very well and was very pleased with the outcome.

At dinner, my old boss said similar things and basically said good luck.

Currently, the client and I are in contract negotiations and the work should start in the next few weeks after things are signed and ironed out.

VeggieGirl

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Re: Advice Sought For Doing Business With Former Employer's Client(s)
« Reply #10 on: April 01, 2017, 08:47:12 AM »
Awesome to hear everything worked out. :-)