Non-solicitation clause when I'm in the same industry

[naimison]

What is the name of your state (only U.S. law)? NC

I acted as a consultant for a CA company for a few months. They were bought out and merged with another company, at which point I was let go during the transition. I had a fairly standard non-solicitation clause to my agreement:
The Consultant agrees that during the Consulting Period and for a period of twelve (12) months thereafter, the Consultant will not directly or indirectly: (i) influence or attempt to influence Company customers, vendors, distributors or any other third parties engaging in business with the Company to divert their business to any competitor of the Company, or (ii) solicit, recruit or hire any employee, consultant or agent of the Company for the purpose of being employed by the Consultant or by a third party engaged in the same business as Company.

The problem is, for the 10 years before (and during) working with this company I had my own business working with the many of the same clients and industries that passed thru their client funnel. I've expanded and rebranded my business since being let go, but since I'm still in the 12 month period, I'm concerned that reaching out to new clients may run the risk of accidentally connecting with the new parent company's clients.

How do I keep myself out of legal hot water when there is so much risk for cross-over during marketing/prospecting? I don't know who most of their actual current clients are.

 

[quincy]

What is the name of your state (only U.S. law)? NC

I acted as a consultant for a CA company for a few months. They were bought out and merged with another company, at which point I was let go during the transition. I had a fairly standard non-solicitation clause to my agreement:
The Consultant agrees that during the Consulting Period and for a period of twelve (12) months thereafter, the Consultant will not directly or indirectly: (i) influence or attempt to influence Company customers, vendors, distributors or any other third parties engaging in business with the Company to divert their business to any competitor of the Company, or (ii) solicit, recruit or hire any employee, consultant or agent of the Company for the purpose of being employed by the Consultant or by a third party engaged in the same business as Company.

The problem is, for the 10 years before (and during) working with this company I had my own business working with the many of the same clients and industries that passed thru their client funnel. I've expanded and rebranded my business since being let go, but since I'm still in the 12 month period, I'm concerned that reaching out to new clients may run the risk of accidentally connecting with the new parent company's clients.

How do I keep myself out of legal hot water when there is so much risk for cross-over during marketing/prospecting? I don't know who most of their actual current clients are.

You will need to have your entire contract personally reviewed by an attorney in your area but most non-compete provisions in contracts formed in California will be unenforceable.

Here is a link to information from the American Bar Association on California's laws on restrictive covenants and trade secrets:
https://www.americanbar.org/content/dam/aba/events/labor_law/2013/03/employment_rightsresponsibilitiescommitteemidwintermeeting/4_orrick.authcheckdam.pdf

 

[naimison]

I'm actually not under a non-compete. Only a non-solicitation clause. My main concern is unintentional solicitation of their clients without realizing it is one of their clients (I have no way to find out beforehand).

I'm wondering how I should handle that sort of scenario and what sort of legal trouble there could realistically be if I accidentally reach out to one of theirs...or the client reaches out to me.

 

[quincy]

I'm actually not under a non-compete. Only a non-solicitation clause. My main concern is unintentional solicitation of their clients without realizing it is one of their clients (I have no way to find out beforehand).

I'm wondering how I should handle that sort of scenario and what sort of legal trouble there could realistically be if I accidentally reach out to one of theirs...or the client reaches out to me.

You didn't read the ABA information provided, did you?

The information accessed through the ABA link addresses non-solicitation clauses. I suggest you read the information in the link and, if you do not understand what you read, your questions can then be addressed.

Again, though, you will want to have your entire contract personally reviewed by an attorney in your area.

 

[naimison]

My mistake. I thought you mis-understood when you responded with "non-compete" instead.

The document looks very helpful and alleviates some of my concerns. I'll check with a lawyer on it to be sure.

 

[Silverplum]

You didn't read the ABA information provided, did you?

The information accessed through the ABA link addresses non-solicitation clauses. I suggest you read the information in the link and, if you do not understand what you read, your questions can then be addressed.

Again, though, you will want to have your entire contract personally reviewed by an attorney in your area.

86% do not.

 

[quincy]

naimison, I think you are smart to have an attorney review your contract in its entirety.

Unless there are legitimate business interests to protect (like trade secrets, which can include client lists) and/or the restrictions on competition are minimal, any contract, agreement or clause in a contract or agreement that works to restrict a person's ability to work and earn a living can be awfully difficult to enforce in court.

86% do not.

I suspect you are right. At least maybe 14% will benefit from the information provided.

 

[jdbofky]

Courts do, however, make a distinction between employment non-compete / non-solicitation clauses and those between independent businesses. As a consultant, I'm guessing that naimison was not an employee under the law, but rather an independent contractor. As such, the law is not nearly so clear under California's generally employee friendly laws.

 

[quincy]

Courts do, however, make a distinction between employment non-compete / non-solicitation clauses and those between independent businesses. As a consultant, I'm guessing that naimison was not an employee under the law, but rather an independent contractor. As such, the law is not nearly so clear under California's generally employee friendly laws.

If naimison does not want to find himself wading in legal hot water, he will want to have the contract personally reviewed in its entirety by a business law professional. The review should be based on the specifics of naimison's employment with the California company.

I suspect that if naimison continues to operate his own business in North Carolina as he has done it for 10+ years, the contract with the non-solicitation clause, signed when he was employed as a consultant for a few months with the California company, is unlikely to cause him problems.

But facts and specifics matter.