Non-Competes and Solicitation

Apr 17, 2019

  1. Beth Thornton
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    Beth Thornton New Member

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    I was wondering how a non-compete holds up in situations similar to the following and first I have to give everyone an idea of how I've always handled my clients. I am a fairly new agent and write about 80% commercial. I target high premium accounts. And, believe it or not, I am pretty close almost to the point of being "friends" with nearly all my clients. They all have my cell phone number and know they can call me anytime they like. As a matter-of-fact, it got to the point that none of them ever call the office I worked out of. - this was not my intent, it just worked out that way.

    I have now let the captive agency I was with to go independent. I have a strict non-compete/non-solicit agreement which I have signed with a captive that you don't want to fool around with.

    Here is my dilemma; Many of my clients are beginning to call my cell phone. Some of them with questions about their renewals and their premiums going up etc. I have told them to contact the agency and none of them are happy about this because they are used to dealing with me alone, any time they wish for whatever. Just last week one of my clients asked me to go to check out a house they were looking at buying before they made a final decision - these are the types of relationships I build with clients. When telling them they need to call the other agent at my former agency, they are not wanting to do so.

    I even have one client that speaks Spanish and got them because I was the only agent in the office that speaks conversational Spanish. She is all upset and wants to follow me where I'm at now. Two of my other clients told me that they'd just as soon go somewhere else and this is why. I had a gift for NOT selling on price. So although our rates were high, they chose to do business with us because of me. I am not trying to brag, I just abhor selling on price. Everyone else in my agency sells on price and our prices are high. The few that have called me so far are going to shop elsewhere. At least that's what they told me and I know a couple of them definitely will.

    I feel like I'm abandoning them. However, I do not wish to deal with a lawsuit or any of the repercussions of breaking or attempting to break a strict non-compete.

    Long story short (which has already been too long - lol) Does anyone know if there is anything, laws, etc., that allow you to keep a client that insists on staying with or that is going to take their business elsewhere anyway. Or are we all just going to lose these clients on both ends?? Also, the non-compete states that the agency itself does not need to pursue me, the "big ole" captive "captivator" may purse me for breaking the agreement on their own.

    Any input into this matter would be greatly appreciated. Thanks
     
  2. Beth Thornton
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    Beth Thornton New Member

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    I meant to say, I have now "left" (excuse the grammatical and spelling errors, I was in a hurry)
     
  3. fed up
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    fed up Guru

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    Read your NO COMPETE. what is the timeline? It cannot be indefinite. A NO COMPETE cannot be put in place that keeps you from making a living. It probably says you cannot solicit business for a period of 1-2 years from current customers but IF they call you, you are NOT soliciting business. Don't take all of the business in one swoop. Do NOT call or advise any previous customers and advise any that call you about your situation. Let the customer decide and perhaps keep their coverage with the old company until the non-compete is completed. Ask them for referrals since you are being upfront about your situation
     
    fed up, Apr 17, 2019
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  4. Beth Thornton
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    Beth Thornton New Member

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    That's good advice "Fed Up". My non-compete is for a year unless the agency takes action within that year then may extend. up to two years. I haven't called a soul. I really feel like I'm a hard enough worker that I can get my own clients and don't need to take anything from anyone, even if I have earned their business on my own. I paid for and provided all of my own leads. As a matter-of-fact, my background is marketing, specializing in Internet marketing and I was Google partner, so I built and optimized the agencies website and now they are getting a few leads a month from my efforts, even with me gone. I worked a "commission only" 1099 and even paid for my own ads. And, any networking events, etc., that I used to acquisition clients. I've even brought in a couple of clients and given them to other agents and had them ranking for certain keywords that brought traffic to the website. These rewards will be reaped long after I'm gone.

    The only issue I'm experiencing is abandoning clients that say they want to come with me and not getting into trouble for saying "alright, come with me".

    Thank you
     
  5. fed up
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    fed up Guru

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    Commercial coverage is pro-rated so, unless their policy is up for renewal, there is no hurry about changing agents or carriers. Make sure that any previous customer writes a letter or email to you requesting information or quotes and keep copies of all correspondence.
     
    fed up, Apr 17, 2019
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  6. BADTROUT
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    BADTROUT Guru

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    Standard Disclaimer... This isn't a forum full of attorneys, nor am I, therefore, none of what's said here should be construed as legal advice... I'm just a guy having a conversation here is all...


    Ohio is a state that recognizes that non-compete agreements with employees or independent contractors are valid and enforceable means for employers to protect their economic interest as long the agreement is reasonable. So what does this mean to you... It means that the contract you have IS, in fact, enforceable, especially if written by the corporate attorneys a typical captive has in their arsenal. There are several factors that determine if the agreement is "reasonable" in Ohio...

    1. Is no greater than is required for the employer’s protection of a legitimate interest
    2. Does not impose an undue hardship on the employee, and
    3. Is not injurious to the public.
    The good news is that your former employer bears the burden of establishing the reasonableness of the agreement.

    SO look at the length of the agreement, if it is reasonable, then when the clients contact you say "I am so excited to be continuing on with you but I won't actually be able to be your agent until..." By your license @Beth Thornton you can consult for sure, and you come off as a consummate professional. Bide your time and prepare properly. The ones that are renewing or looking for a change now, I wouldn't necessarily turn those ones away, but I wouldn't regimentally pursue them. Most of the actual lawsuits you read about are the ones that are in active pursuit of the client base, and seldom is it the passive client contacts you type agent.

    You have as @fed up said many things in your favor. With proper documentation as suggested, and the fact that you were 1099 and bore much of the marketing expense, I would like to think you would be in the clear. Best of luck to you!
     
    BADTROUT, Apr 17, 2019
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  7. fed up
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    fed up Guru

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    Now go in and block access to the website Joking.....maybe. I set up an agency's twitter, facebook, and internet presence. When I left, I deleted my access to these accounts and I might have fat-fingered the access for all. Agency owner emailed me a few days after I left and said he could not access his accounts. OOPS
     
    fed up, Apr 17, 2019
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  8. InsCommentary
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    InsCommentary Guru

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    There's no way to know without reviewing your noncompete. In general, "noncompetes" are unenforceable it they essentially prohibit you from making a living. More enforceable are nonpiracy agreements. I'd encourage you to check out the articles on this at www.agencyconsulting.com or reach out to Al Diamond there.

    The only option (if it is one) I can think of is to tell your customers that you no longer work at that agency, that they "own" the business, not you, and that they might try to call the agency and tell them that they want YOU as their agent and that you did not solicit their business...they're doing this unilaterally and are asking that the agency not prohibit them from soliciting YOU.
     
  9. BADTROUT
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    BADTROUT Guru

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    Now that's a twist I really like... if the customer approaches the agency its nearly impossible to imagine the agency wanting to keep them hostage... creating bad blood is bad mojo, so I would imagine a good many would shrug their shoulders and let 'em go. good stuff, thanks!
     
    BADTROUT, Apr 17, 2019
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  10. somarco
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    somarco GA Medicare Expert

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    Years ago I fought a non-compete and won.

    Sued by former employer 1 month before the NC was to expire. Six month legal battle ensued. My attorneys (GA and IL) both said the NC was not valid as worded and my former employer had no grounds for suing.

    Didn't matter. Still spent $20k proving I was right. Case dismissed with prejudice.

    And no, I did not get my $20k back.

    All this back and forth about what is a legal NC and what isn't is garbage. Whether you fight or not you will incur legal fees. Just depends on how much you want to spend to prove you are right.
     
    somarco, Apr 17, 2019
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