Non-compete agreements. Your opinion?

[maxlane]

This applies a lot to working as a "consultant" through an agency or even being employed by some company for some time. And as far as I know also even more often to being a hired CEO who has access to a lot of "secrets" that are vital to the company.

It is the non-compete agreement. Personally I feel I never ever want to sign such things because my personal take on it is that I never would want to hurt my clients anyway. Quite the contrary, I feel it could happen the other way around - I feel that these agreements that are so standard in most "employment" contracts are simply limiting. Of course, where I live, such an agreement has to be reasonable in order to even stand in court should the company try to act on it.

How would one go about negotiating a non-compete so that it does not limit future opportunities? Is it reasonable to just walk away if they refuse to change it?

 

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[EPerceptions]

I'd say look into it if it comes up. Fifteen or so years ago NC agreements were automatically invalid by law (in some locations) if they interfered with the person's normal way of earning income. In other words, a company could not demand that a freelance copywriter they hired will not write sales copy for other companies.

As with anything in business: be informed. Never sign something without reading it and never agree to something that completely screws you over.

P.S. I'm not a lawyer nor responsible for you, your actions or your reading comprehension levels...

 

[CommonCents]

I just enforced an agreement with an ex R&D employee who I found out got hired by a large competitor. Kept the person out of the business for 2 yrs, at a cost of 100k in legal expenses. Justice is expensive.

 

[Damage Inc.]

I just enforced an agreement with an ex R&D employee who I found out got hired by a large competitor. Kept the person out of the business for 2 yrs, at a cost of 100k in legal expenses. Justice is expensive.

Who paid the legal fees, the employee or the other company?

 

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[CommonCents]

Who paid the legal fees, the employee or the other company?

My company paid. The employee lied to the hiring company so they didn't know about the employment agreement. As soon as we sent them a letter they halted employment and later turned over "all" (probably most and redacted some juicy stuff) documents/emails. The ex-employee has little money, can't get at home equity, and would have filed for bankruptcy so we would have spent thousands to collect nothing. We left collections open in case employee wins the lottery. Oh, the employee did pay $1,000.

LESSON: the best money spent on legal is upfront. Getting the best agreements/contracts you can get upfront for a few hundred bucks, sure beats tens of thousands on the back end. We had a decent agreement and still had to spend to enforce however. Many entrepreneurs skimp out paying upfront for a solid agreement ( i have a time or two in the past) and craft their own, or let the other party pay to draft something. Big mistake.

Also, trust your gut feeling on people. If they don't seem trustworthy, or have good character, even an agreement won't prevent having major problems either.