Many employers find themselves at a crossroads during the process of hiring, which underscores the importance of “Knowing Who You Are Hiring” in an attempt to minimize and mitigate the risk of litigation for hiring from a competitor. It is critical for employers to comprehensively understand the facts to effectively minimize and accurately evaluate the risk of litigation involving hiring from competitors. Most importantly, the hiring employer must take a proactive step towards knowing precisely whom they would be hiring. Key information the employer must know include, but is not limited to, (1) the current job title of the candidate, (2) the extent of the candidate’s knowledge of and exposure to competitively valuable information, such as trade secrets or other proprietary information, belonging to the competitor, (3) the candidate’s responsibility over relationships with key clients, (4) the candidate’s importance to the competitor’s business, and (5) the full scope of a candidate’s responsibilities to the competitor (geographically and/or substantively).
As a continuation of this series, we now move our discussion forward by hammering on the importance of “Knowing how Litigious the Industry is,” which is another thing the hiring employer may have to consider in an attempt to avoid, minimize, and/or mitigate the risk of litigation for hiring from a competitor.
Hiring from Competitors – Know the Litigiousness of the Industry
As a best practice and a way of effectively evaluating the potential risks of hiring an individual from a competitor, employers should take proactive steps to understand and know the litigiousness of the particular industry in which they operate. In this regard, it is advisable for employers to familiarize themselves with the general hiring customs of the industry in which they operate, especially if hiring from competitors is a frequent trend. One of the most critical things an employer should be aware of concerns the aggressiveness (if at all it happens) of competitors and other employers when seeking the enforcement of post-employment restrictive agreements and covenants.
In less-competitive industries, such as retail or advertising, employees are known to carry along their personal clients with them as they frequently move from one employer to another. While litigations are relatively rare in these industries, employers do not prioritize the enforcement of restrictive covenants. However, in hyper-competitive industries, such as insurance and technology, employers are known to jealously, proactively, and aggressively protect and guard clients and information. Accordingly, these industries are known to experience significantly high rates of litigation related to the breach of restrictive covenants.
One notable aspect regarding this issue regards how, with the aim of reducing litigation costs, competitors in industries, such as finance, collaborate and join forces to establish written protocols that govern how clients are solicited when brokers switch firms. Essentially, these protocols are aimed at subjecting brokers switching firms to sternly enforced client non-solicitation agreements.
With that, we have concluded this series by providing you with a list of twelve steps and things a hiring employer may take or do as a way of avoiding and reducing the risk of litigation for hiring from a competitor.
In addition to striving to be unusually motivated®, stay tuned for more legal guidance, training, and education in the series in progress and others to be introduced. In the interim, if there are any questions or comments, please let us know at the Contact Us page!
Always rising above the bar,
Isaac T.,
Legal Writer & Author.