Case Study
 

Ladies and gentlemen, this is language from an actual non-compete agreement that was the subject of extensive litigation by one of our lawyers. If you can determine the actual meaning of the clause, please contact our firm administrator to receive your free gift:

 

“7. I agree as a condition of and in consideration for my employment with the Company that during my term of employment hereunder and for a period of three (3) years following the date of my termination of employment, I will not without prior written consent of the company: a) Contact, solicit, pursue, and/or take existing and/or future clients (that has been identified prior to my separation) for a period of three (3) years, either directly or indirectly (as a full or part time employee, agent, consultant, as a self-employed individual, partner or otherwise) with any business which is in competition with the business being conducted by the Company, or any of its clients, including but not limited to, any business support, engineering support and/or management & professional support services. This restriction shall apply within the State of Maryland, Commonwealth of Virginia, the District of Columbia, Alabama, Ohio, Hawaii, Nevada and/or within any other state in which the Company is doing business within three years prior to the date of my termination.”

 

It is of course a trick question. In an effort to draft the most expansive non-compete possible, the lawyer who drafted the non-compete rendered the clause nearly unintelligible. In fact, the Maryland Court of Special Appeals wrote this after reading the clause: “We do note, however, that section 7(a) is so poorly worded that it is nearly impossible to discern its meaning.”

 

Based on Mr. Liebeler’s analysis and litigation of the non-compete, the high level executive who had been shackled by this language, prevailed in his suit against his former employer who sought to enforce the non-compete. Click here for full opinion of the Maryland Court of Special Appeals.

 

Principles
 
  • Employers may require their employees to sign non-compete agreements that restrict the employee’s ability to compete directly with the employer after the end of the employment relationship.

  • An employer who attempts to make the non-compete too broad runs the risk that a court will invalidate the non-compete agreement.

  • Employers must narrowly tailor the non-compete with specific time, function, and geographic terms in order to withstand legal challenge by former employees.

  • Employers should periodically have qualified legal counsel review existing non-compete provisions to insure that they are enforceable given frequent changes in the law.

  • Executives and employees presented with a non-compete should consult with an attorney to assess scope and validity.

  • The law in each state is different and those differences affect drafting considerations and enforceability of the non-compete agreement.

  • Drafting, analyzing, and litigating cases involving non-compete agreements should be done by an attorney experienced and knowledgeable in this specialized field of the law.her agree to a settlement or not.  A mediation shares many of the same benefits of an arbitration and also allows for the possibility of the parties preserving their relationship after the resolution of their dispute.  Thus, if a dispute arises between two neighbors, or a vendor and his client or two parents, for example, trying mediation is an innovative way to resolve a dispute while continuing an important relationship thereafter. 

  • The lawyers at Lars Liebeler PC have decades of experience in assisting our clients through the processes of arbitration and mediation.

Genius is one percent inspiration and ninety-nine percent perspiration.

 

THOMAS ALVA EDISON

Noncompete