Author Topic: Non solicitation agreement and starting a new company  (Read 706 times)

frugalnacho

  • Walrus Stache
  • *******
  • Posts: 5055
  • Age: 41
  • Location: Metro Detroit
Non solicitation agreement and starting a new company
« on: February 09, 2021, 08:11:41 AM »
I am unsure if this is the best forum for this question, or if I need to actually consult a lawyer.

I am considering starting my own environmental business.  I worked for 12 years in the industry, then about a year after an acquisition by another company I ended up leaving and going to other environmental positions for the last 2.5 years.  My roles for the last 2.5 years are completely unrelated to the original niche job I did for 12 years.  When the company was acquired back in 2017 we all had to sign a non solicitation agreement, that basically says we can't steal confidential data, and we can't poach current employees, and we can't poach clients, etc. for a year after we leave the company.  This all makes sense as they don't want all the employees to just revolt and immediately start their own competing company.  I don't know the full legality of it, but no one has attempted to challenge it yet.

So how to no solicit agreements work?  Surely I could start my own competing business and poach former employees, and poach former clients, since I've been away for 2.5 years. But if I partnered with a former employee who is still under a no solicit agreement (for 1 year after he leaves his current employer), would we run afoul of the agreement if I was the one soliciting, even though he would be an owner of the company?  I've heard a number of people in the industry say this is legit, and I've seen it play out multiple times, but it always seems a bit shady.  On the other hand it also seems like just putting a no solicit agreement in the onboarding process completely stifles anyone from ever starting their own competing firm without leaving the industry for 1+ years.

KarefulKactus15

  • Handlebar Stache
  • *****
  • Posts: 1283
  • Location: Southeast
Re: Non solicitation agreement and starting a new company
« Reply #1 on: February 09, 2021, 08:55:59 AM »
I don't have experience personally, but many non compete agreements can't be enforced and are more of a scare tactic.

I have 3 friends that all got challenged on non compete at different companies. They all won. Some non competes are laughable.  "So and so can't do anything anywhere for the rest of their lives except work for us"  - lol

I will say - data theft is real and enforceable. So if you have downloaded or taken a client list or anything from your ex employer that is a problem.... Any digital property is theirs.

But with anything - consult a lawyer of you are really worried or your startup is worth suing to stifle competition.

frugalnacho

  • Walrus Stache
  • *******
  • Posts: 5055
  • Age: 41
  • Location: Metro Detroit
Re: Non solicitation agreement and starting a new company
« Reply #2 on: February 09, 2021, 10:57:17 AM »
We originally had a non-compete agreement, and everyone in the company was up in arms about it because the way it read no one was able to even leave and join a competitor.  The entire agreement was ridiculous, and everyone pushed back hard on it, rightfully so.  I doubt it was even valid, and was mostly just a scare tactic.

But then they changed it and took out the non-compete clauses.  Now it's just a non solicitation agreement.  But I don't know how enforceable that is.  And I don't know what technically counts as solicitation.  If my partner quit, started a firm with me, and then immediately called his former clients that would clearly be in violation of the no solicitation agreement (if that's enforceable).  But what if he quits, starts a firm with me, and then I call his former clients?  I should be allowed to call anyone I want, but if me and him own the firm, am I still allowed to do that, or am I bound by his non-solicitation agreement?  Part of the pull to convince clients to go with us would definitely be that not only am I an owner, but also that Joe is an owner as well. 

I know I'll probably need to consult with a lawyer about this, but was hoping to gather some general information from mustachians.  We obviously haven't fully planned this out, and are just brainstorming ideas.  I guess I'd like to get a gauge on how plausible it even is, and what kind of legal trouble we might run into before we start seriously considering it. 

 

Wow, a phone plan for fifteen bucks!