I just resigned from an IT consulting company in Atlanta where I
signed a 3 year non-solicitation and a non-compete agreement that only
applies to the firms existing clients.

I am now starting a company in the same industry and I'm receiving
calls from former clients of my old firm to perform services.  I have
not solicited these clients, but did provide my future contact
information to them with no marketing, etc. upon leaving.

My question is that with the non-solicitation and non-compete for
existing clients is there any way that I can still deliver services
without getting into significant legal troubles and ending up in
court?  I know "significant legal troubles" is up for interpretation,
as anyone with deep pockets can sue, but I'd like to understand if
there's a way I can still perform services without getting into too
much hot water.

My old employer has threatened to file injunctive relief as
a scare tactic, but has not done so.  I have not performed any work
for clients yet because my gut says it's simply not worth the leagal
troubles that would ensue.  However, I also do not like having to toss
in the towel and forgoe this work.  Especially in cases where one
division of a large corporate conglomerate that never worked for my
old employer calls with work.

If I had to do it over again, I would have only signed the
non-solicitation.

When I departed I tried to suggest an agreement with my old employer
where a referral fee was paid between the two firms, but this was
quickly dismissed and not well received.

Sound and experienced leagal advice from an attorney on the pros/cons
to consider before proceeding with this decision would be appreciated.

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Request for Question Clarification by pafalafa-ga on 02 Nov 2005 08:54 PST

question3-ga,

Of course, the specifics of any answer depend entirely on the language
of the contract you signed, along with the particular jurisdiction
involved.

In general, though, a non-compete agreement means just that...no doing
business with clients of your ex-company, especially if that business
is similar in nature to the ex-company's business.

Much as you would like to get off the hook, it sounds as if your
former employer has you firmly on the hook!

However, as the comment below notes, we can only offer more concrete
feedback if we can find out some additional details about your
situation, especially where the contract was signed (city, state,
province, etc), and what the agreement actually says.

Let us know as much as you can, but bear in mind that Google Answers
is a public forum that anyone can view.

pafalafa-ga

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Request for Question Clarification by pafalafa-ga on 03 Nov 2005 14:25 PST

question3-ga,

There are limits to what we can do for you, without having the actual
language of the agreement to examine (and even with it, Google Answers
does not provide formal legal advice...see the disclaimer, below).

However, I can tell you generally, that many non-compete agreements
that end up in court are overturned (in whole or part) if the
agreements are found to be overly restrictive.

There are several criteria for what "overly restrictive" means, but if
the agreement prevents an ex-employee from earning a good living,
covers too long a period of time, or covers too large a territory,
then there's certainly a case to be made for overturning the
agreement.

All we can do, really, is check Maryland or Georgia law, and get back
to you with some relevant cases and precedents.  These would be useful
to have when speaking with a lawyer, but ultimately, you'll need to
speak with a lawyer if you want to challenge the agreement.

You could also try re-negotiating the terms with your ex-employer --
e.g. agree to a year, rather than 36 months -- and see how they react.

If you're interested in knowing some of the recent case law as an
answer to your question, let us know, and we'll see what we can do.

In particular, let us know where (which state) you would like us to explore.


Best of luck to you,

pafalafa-ga

Could you please post the language exactly as it reads in the
contract.  Also, does the contract have a choice of law provision,
i.e., does it say that it is governed by the laws of Georgia?

Oddly enough, the contract says that it is governed by the laws of the
State of Maryland.  That's where the company is headquarted.  Although
a technicality that will likely mean little, the agreement says the
employment and non-competition agreemnt is entered into as of x date
by the Company, a Georgia corporation and the employee.  I checked
witht he State and I know for the fact that the company is not
licensed as a corporation in Georgia.  Does that mean anything?

Because this is a public forum I'd prefer not to post the exact and
entire contract languuage.

I will though say that the non-compete language goes as follows...the
employee will not compete with the company by being employed or
serving on behalf of other firms that provide competing services to
any and all clients of the Company, which where clients for 36 months
from the date of employee termination.

The non-solication roughly says...the employee agrees that he will not
directly or indirectly attempt to solicit or develop business
relationships with respect to IT services or services related.

The term is 36 months for both clauses is 36 months from the execution
of the agreement.

If you follow the news between Microsoft and Google, you might have
seen that Google tried to move things to a California venue. 
California law is very favorable to the employee when it comes to
non-compete and non-solicitation.  If you are there, a letter from a
lawyer should keep the former employer at bay.

Three years might be considered an undue burden because it is
exceptionally long.     One or two years might be reasonable,
depending on how high up in the company you were.