Non-Compete AND Non-Solicit

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Dec 3, 2006 5:17 pm

A bank I have been in talks with provided me with a copy of their Employment Agreement in advance.


Not only does it include a non-solicit, which I expected, but also includes a non-compete for ANY type of financial services business within a 25 mile radius.


This seems like overkill.  Is this standard? 


I intend to have an atty. review this, but is this type of thing enforceable?


Dec 3, 2006 6:52 pm

It's pretty standard from what I've seen, but that doesn't mean you can't try to negotiate different terms.  Sad thing is, I've seen worse (much bigger protected territories, etc.)  It's really a problem considering thet fact that they agreed verbally to segregate clients that you brought with you under a different number for non-compete purposes.  If they choose to enforce that, you would have the clients you brought, but would have to move at least 25 miles away to service them.  This is just another example of a bank saying one thing and then trying to slip something past you in the fine print.


Have your attorney review this and then let the negotiations begin.  I would think long and hard about joining a bank that was unwilling to at least set a reasonable expiration date for a non-compete to expire.


As far as enforceability, that's a mixed bag, but one of your most likely defenses is gone since you've had the opportunity to review the contract prior to employment.


Having said all of this, please remember that this is only my amateur (non-lawyer) opinion...your attorney may advise you something materially different.  Listen to him/her and good luck.

Dec 4, 2006 8:44 am

Thank you.  Unfortunately there is a temporal limitation (period of 1 yr).


I can see a non-solicit, but I cannot see a non-compete like this.  It effectively prevents me from making a living unless I move or even worse, have my clients driving to my "new" office out in the boonies. (I intended to bring some of my brokerage clients to the bank, but if I left, I would not be able to service them in a reasonable location).

Dec 4, 2006 9:20 am
newrookie:

Thank you.  Unfortunately there is a temporal limitation (period of 1 yr).


I can see a non-solicit, but I cannot see a non-compete like this.  It effectively prevents me from making a living unless I move or even worse, have my clients driving to my "new" office out in the boonies. (I intended to bring some of my brokerage clients to the bank, but if I left, I would not be able to service them in a reasonable location).



I would tell the fellas at the bank that you bring too much to the table to be bound by a contract with such absurd restrictions, and that you are going to explore other options.  That as happy as you are at your current position, this is not an improvement.  See how they react.

Dec 4, 2006 12:42 pm
joedabrkr:


I would tell the fellas at the bank that you bring too much to the table to be bound by a contract with such absurd restrictions, and that you are going to explore other options.  That as happy as you are at your current position, this is not an improvement.  See how they react.



I am in complete agreement with Joe on this.  (Two people agreeing on anything is a shockingly rare occurrance on this forum, by the way).

At a minimum, you should expect them to put the exclusion on your current clients in writing.  If they whinge about it, point to the clause in their written contract saying there are no verbal contracts.

You should also seek clarification on the 25 mile limit. Does it apply to the client, office or your home?

Finally, you will probably not win this negotiation if you're unwilling to walk away from a bad deal.  If they aren't taking your need to negotiate seriously, then walk away and see how far they let you go.

Dec 4, 2006 1:23 pm

I was able to resolve the issue to my satisfaction -  thank you all for your comments.


I was well prepared to walk away and stood my ground.  They realized this, wanted it to work and made concessions that I can live with.


They are restricting the non-compete to the town the bank is in only, instead of the 25 miles, and also restricting to another bank with an investment program.


Not perfect, but I can live with that.  My main concern was having the option of going indy maybe somehwere down the road.  That being said I am going into this with a positive attitude that all will work out and I will be there a very long time.


Dec 4, 2006 4:56 pm

I agree...not perfect, but at least better.  It just goes to show that these things are not as set in stone as banks would like you to believe.


Although I didn't hear you say it, I'm assuming that you've had your attorney look this over and get involved in the process.  If you haven't, don't sign it until he/she takes a look at it...there's plenty of "fine print" that can easily be missed, only to later bite you in the kiester...


...and I commend your positive attitude.  You need to protect youself, but you also want to convey a desire to make a substantial contribution to your potential employer.  that being said, understand that things can and do change.  The first thing you should do financially is put yourself in a strong financial position so if things do later go downhill (new management, mergers, changing grids, etc.), you will be well positioned to go independent.


Good luck.