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WSJ: Why Signing a Noncompete Without Planning is Dangerous


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3/19/2015
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A December 13, 2013 article in the Wall Street Journal entitled "Getting Sued Over Noncompete Agreements" highlights some of the problems when parties sign off on noncompete agreements without adequate planning or forethought.

In particular, the article focuses on middle-aged business owners who sell off their business, and then, after their plans to form a different venture don't pan out, try to re-enter their former line of work, and then end up in costly litigation.

Here's the rub: In some instances, even if these people manage to wriggle out of their non-competes, the victory may prove hollow, because the legal fees they incur in defending the lawsuit may prove prohibitive.

As one of the interviewees for the article wisely observed, 

"If you're going to spend more in litigation than paying someone off," he says, "pay them off and move on."

As we've noted elsewhere, perhaps the biggest no-no for people who've sold their business is going back and immediately trying to poach your former clients. In New York, that's known as The Mohawk Doctrine.

Ultimately, the article doesn't really offer much in the way of concrete, practical advice.

But quite frankly, and in all fairness, that is rather hard to do, particularly given that different jurisdictions view noncompetes in radically different ways, with some jurisdictions, like California, all but invalidating them from the outset, and others, like New York, taking a more conservative approach. Moreover, even in the more conservative regions, the applicabiilty and enforceability of the non-compete agreements will vary widely, depending on the nature of the work and employee that is involved.



Category: Non-Compete & Employment Agreements

Jonathan Cooper
Employment Litigation and School Negligence Lawyer

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