Legal Costs- Oh boy...

[ryanht13]

I may find myself on the defending side of a "misappropriation of trade secrets" lawsuit soon. Basically, a former employer is trying to use a confidentiality agreement as a non-compete.
The details aren't necessarily important, but I'm trying to run a cost-benefit analysis of fighting.

My current employer's attorney suggested that my current company is likely going to make me defend this on my own. The company has paid for several letters back and forth offering settlements, etc. But my former employer doesn't seem to want to back down. My former employer is a large company (Fortune 500), my new employer isn't. The attorney told me that my former employer is overreaching, but that "law is a game of Kingmakers."

I run the risk of being fired because I no longer become economically viable to my new employer.

What are my options?
What would something like this cost to defend personally?

[Jrr85]

I may find myself on the defending side of a "misappropriation of trade secrets" lawsuit soon. Basically, a former employer is trying to use a confidentiality agreement as a non-compete.
The details aren't necessarily important, but I'm trying to run a cost-benefit analysis of fighting.

My current employer's attorney suggested that my current company is likely going to make me defend this on my own. The company has paid for several letters back and forth offering settlements, etc. But my former employer doesn't seem to want to back down. My former employer is a large company (Fortune 500), my new employer isn't. The attorney told me that my former employer is overreaching, but that "law is a game of Kingmakers."

I run the risk of being fired because I no longer become economically viable to my new employer.

What are my options?
What would something like this cost to defend personally?

Where you are located will be relevant.  Also, it will depend on whether it's a "misappropriation of trade secrets" claim or violation of a non-compete as a claim.  If it's misappropriation of trade secrets, a common issue would be whether you say, downloaded a client list before leaving.  That means hiring experts to discuss electronic records regarding who accessed what and when; that's expensive. 

If it's just a question of whether a non-compete covers an activity you are engaged in, maybe that's a much simpler fact pattern without expert witnesses, and it can be resolved cheaply (cheaply as in still more than ten thousand dollars, but maybe less than 50 thousand dollars). 

[Aelias]

I've litigated these kinds of cases before, but from the plaintiff (i.e. former employer) side.  Obviously, how much it would cost will depend on the facts of your case, the lawyer you hire, and where you live.  Most of these cases move relatively quickly--the former employer seeks a preliminary injunction ("PI")/ temporary restraining order ("TRO"). But that doesn't mean they're cheap.  They're usually fact intensive and involve a lot of fact-finding, including communications with you and your new company. If the former employer wins their PI / TRO, you are in a compromised position and will be forced to settle pretty quickly.  If they don't win it, they'll start discovery and continue to litigate the case, for months or years. More likely than not, their appetite for this will outlast yours, as they have a point to prove to their other employees and their competitors--don't cross us, or it will happen to you.

As to cost, I would expect to be paying at least $200/hr for a decent lawyer (at least where I live)--and the quality of your lawyer can make all the difference in the world.  I'd also say that if you don't settle this soon, you'll probably be paying at least five figures in legal fees.

Frankly, there's not a lot of upside here for you, unless you have counterclaims you could make.  So, best case scenario, you win, the court releases you from your contract, and former employer goes away. Even then, you're still out the legal fees for your lawyer.  Worst case scenario, you fight this all the way to trial and lose, and then you have to pay your former employer's damages and your legal fees.

TL;DR - I'd definitely get a lawyer at least to review your case and give you a sense of your options.  But, based on the info in the post, unless you really want to fight this on principle, find a way to cut your losses and move on.  And then make more money than ever in your new job.

[ryanht13]

I reside in Texas.

I work in a commodities industry and emailed my client list to myself (stupid, I know).

However, my current employer's attorney said, and I agree with, this is easily accessible info. There are even links to the yellow pages on the top of the page. To reiterate, I did not sign a non-compete.

We have offered to destroy docs and provide an affidavit, as well as not to solicit any new customers for 6-12 months. Former employer still isn't backing down. Our attorney said they are trying to drive a wedge between me and my new employer, thus resulting in me getting fired.

Under normal circumstances, I would agree to just move on and find another job- but I doubled my already good salary with this new position. Any new job I got would be for half the money. And if I resurface, who's to say this issue won't come up again? My former employer is extremely diversified in the industry and touches almost all products and applications.

[ryanht13]

They haven't filed yet... there have been at least 8 letters exchanged. Is that a good sign?

[Jrr85]

I reside in Texas.

I work in a commodities industry and emailed my client list to myself (stupid, I know).

However, my current employer's attorney said, and I agree with, this is easily accessible info. There are even links to the yellow pages on the top of the page. To reiterate, I did not sign a non-compete.

We have offered to destroy docs and provide an affidavit, as well as not to solicit any new customers for 6-12 months. Former employer still isn't backing down. Our attorney said they are trying to drive a wedge between me and my new employer, thus resulting in me getting fired.

Under normal circumstances, I would agree to just move on and find another job- but I doubled my already good salary with this new position. Any new job I got would be for half the money. And if I resurface, who's to say this issue won't come up again? My former employer is extremely diversified in the industry and touches almost all products and applications.

I'd definitely pay for an attorney to look at it.  It should be pretty cheap to send a letter offering to destroy list and provide affidavit of destruction; agree to not use client list to develop new contacts (should be easy enough if it is already readily available), agree to not solicit clients for 6 months.  Then talk about availability of attorneys fees for bad faith assertion of claim for misappropriation of trade secrets.  Maybe talk about claim for tortious interference with contract (you need your own personal attorney, not your employer's attorney, to somewhat credibly make these threats).  I might even ask them for an explanation of what they think they could get from a lawsuit that is not being offered; i.e., if the alleged trade secret is never used, what monetary damages could there be. 

[ReadySetMillionaire]

I would call your local bar association and have them refer you to an attorney who specializes in this practice area. I imagine that at least a couple attorneys would meet with you for a free consultation.

FYI, I've been on both the plaintiff and defendant side of these things, and as someone else mentioned, these things move quickly. The former employer will move for a TRO and preliminary injunction, which is a mini-trial in itself. You'll want legal counsel for that because otherwise you'd get steamrolled and then have an injunction preventing you from competing for God knows how long.

Anecdotal story here: a colleague and I defended an individual who was fired without cause, and before coming to us, he went and did all sorts of things that violated his noncompete. He lost his TRO hearing and now is not able to compete in his entire industry until November 24, 2016 (this is a very niche industry but something he's really damn good at). In other words, because he didn't seek legal counsel until it was too late, he basically lost his opportunity to earn an income for almost 9 months. An attorney would have been a lot less expensive.

[LeRainDrop]

Also, FYI, everything that you have written here and the responses would be discoverable in your lawsuit.  That is, when your former employer's attorneys ask you to produce "any and all documents and communications regarding [the issue]," you have to print out a copy of this thread and give it to them.  This is not a privileged document, as none of us are your attorneys.

[Simpli-Fi]

I will go back and read this thread more closely, but did you sign an arbitration agreement with your previous employer?  Fortune 500 I'd expect so, because they don't want you to take them to court over disputes...however it works both ways, they must take you to an arbitration to resolve which is much cheaper than court. 

I was in a similar situation with 8 other counts thrown at me, to see what could stick...very dark time in my life and it lasted for over 15 months.  I have a very bad taste in my mouth for the justice system due to this and being selected on a 6 person jury in a criminal case during this time; and seeing who my peers are.

[ryanht13]

Does an umbrella insurance policy cover these legal costs?

[LeRainDrop]

Does an umbrella insurance policy cover these legal costs?

You'd need to read your policy to find out what it says.