Noncompete Agreements?

[Willie]

Originally posted by Anthony Blackburn@Sep 30 2004, 11:11 AM
My understanding has always been that non-compete clauses or contracts are generally unenforcible, as they are seen by courts as an inhibition to commerce and bad for the economic well being of a given area. That being said, there is also a concept of intellectual property and company owned proprietary information. If the company identifies certain things as it's intellectual property or it's proprietary information, such as client lists and client relationships that the company has formed, if you utilize those things after you leave a company, they may be able to sue you for "stealing" company property. I'm no attorney, but that makes sense to me.

Now time for the real world....

Ever since there has been an appraisal industry, appraiser's have worked for companies, left those same companies and taken clients with them. As the owner of a company with a number of appraisers working for me, it has happened in the past and it will continue to happen in the future. It's a fact of appraisal life. I personally feel if you want to build your own appraisal business, do it on your own, and not on the back of the company that trained you.

My dad's group just told an associate, if he left, they would seek injunctive relief against said associate. The fellow leaving had signed a non compete, just a year ago+-.

They have never done this in the past. They asked the associate over and over if he was happy and what could they do to make his practice better. He would always respond with everything is great, and you can do nothing to make things better, as all is fine.

Then one day he sends in his own lawyer with a bunch of grievances. They were bogous, and the partnership decided to rock his world, because he pulled the trigger first, without them suspecting a thing was wrong. I know for a fact, had he been upfront with them, they would have let him out of the agreement. They let others out, and back in, with no lawyers involved. But when he pulled the lawyer out, he shot himself in the foot, and is screwed for practicing in the community.

I'm sure he'll beg and cry, and they'll work something out, a compromise. The point is be careful what you sign, as you likely will be held to it. Even if not enforceable, the person you sign it with, can bad mouth you to every single client, show them the document, tell them what an SOB you are, and what SOB's the lawyers in the courts are, and have a good time doing it. It will have the same effect.

 

[Anthony Blackburn]

The nice thing about a non-compete clause or contract is just maybe the person signing is will think it's enforcable. If 10 people sign it, and 5 think it's enforcable and continue working and don't steal clients, then your risk of appraisers leaving and taking clients is reduced by half.

Seems to me anyways

 

[Robert Dunkle]

In 1999, just after I was licensed, I worked for a "sweat shop" who felt that they had an ingenious way of doing business that was considered proprietary. After about two months on the job as an employee, they come up with a VERY general non-compete agreement that we would not do any work on our own or for any other appraisal firm in northeast Oklahoma for 18 months. Obviously, this would have been unenforceable and all the other employees signed because of that. However, I left the firm because of the following reasons:

1. They were the ultimate "skippies" who never met a number they couldn't reach. In the 2 1/2 months I was there, the shop did over 300 appraisals and I knew of one that did not come in at "estimated value" or above. The owner did all the adjustments and signed the reports, we just did the field work and typed up the report, lesss adjustments.

2. I have a ranch and was not about to leave the northeastern Oklahoma area seeking a job. Even if it were unenforceable, I am old enough to have learned that you never know what might happen in a court of law, so I never sign anything I don't 100% intend to complete as worded. Besides, I have spent far to much money on attorneys just in the normal course of business, without signing agreements that I did not intend to honor.

3. As I told them, unenforceable or not, if I signed such an agreement, I would have made the statement that I would not compete. If I make such a statement, they don't need it in writing because my word is sufficient.

My advice is to go on down the road, contact the clients that you want to contact, except the ones that you have developed a relationship with at your employers expense ( have some honor ), and it may surprise you what honesty and class will net for you!

 

[Tony in Ohio]

Shawn, I am in NE Ohio and went through a non compete situation a couple of years ago. 2 seperate lawyers told me that non-competes are enfeforceable and are enforced every day.

One lawyer was my official representitive, the other was my neighbor, a corporate litigator who estimated 25% of his work involved non competes, although in cases of multi million dollar nature.

I will try to summarize my understanding of the stuff.

If you sign a non compete and break it, you can be sued, of course anyone can sue you for anything, it does not mean they will win.

I was told judges generally uphold no competes if....

A) They are not to so broad as to keep you from working. So, a year or so for one or two clients sounds enforceable to me.

B) If you recieved compensation for "marketing" or something that built a relationship with said client. I was in a fairly unique position in the appraisal industry as I had been a "manager" and recieved some salary. Part of my responsibilities for that salary was to try to bring in new clients. Thats a biggy, because judges interpret it that you are taking away something that you were paid to do.

C) It causes significant harm to the company you left. Rather vague there.

And finally, you have to consider that it costs money to sue. Will they sue you if you do break the non compete?

I lived by mine and it was tough. In some ways I am still paying for it today. On the other hand, I can sleep at night (when I am not worried about the bills), My Mentor gave me some good training not only in appraisals, but also about business, and I would be stuck behind some desk kissing corporate booty right now if it was not for him. It seems like the least I could do in not picking his pocket on the way out. Sure he made lots of money off me when I worked for him but h*)(, thats what employers do. Also, once you are out on your own for a while, you will find he was not making as much off you as you thought.

I don't know how any of that fits into your situation and I recoment you get a legal opinion on your situation if you decide to go ahead with the non compete, but I wish you luck.

 

[Terrel L. Shields]

We had a computer tech who tried to get his hirelings to sign no compete contracts, but that got busted to a negoiated, cannot print adverstise within 25 miles of his office nor contact clients he worked for. Was free to work for anyone else in the same area if they were not clients of the former company....so i was told.

 

[Lonny Hogan]

Tell them you will sign the noncompete in exchange for a fee in the amount of the value of the potential business. If they will pay you $10,000 in exchange for signing the agreement then do it. When they tell you are being ridiculous, you can smile and hand them back their noncompete form and say "exactly."