Talking to Your Customers After You Quit the Company

[Norwayguy]

Regardless what his Non-Compete says or doesn't say, there is of course a moral issue.

Think about it... I am assuming your old employer paid you either a base or commission so that you work on bringing in "their" clients? #2, put yourself in their shoes; how would you feel if you paid me, gave me back office support and everything else and when I left I started taking "your" clients... Not good right?
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[quote=Norwayguy;305734]The only expert opion you will get is that of the Attorney you hire to review your contract....People on here are great but wouldn't it be nice to know what is and is not enforcable in your contract and what your down side is....You will get that from an Attorney.

Very true but the only thing you're missing is that even if an Attorney told you not to worry about it, it does not prevent me as your previous employer of suing you.

Sure, I may not get paid any damages, but are you aware of how much you will have to fork over just to attain a defense attorney?[/quote]

I agree with you...I was just telling the OP that the answers he gets he really are meaningless...

Sure you can sue regardless of what the contract states....However if the contract says there is an 18 month non-compete except in certain situations such as my last contract I had an 18 month non-compete if I was fired for cause it specifically stated the non-compete was invalid if I (forgive this layman term) resigned of my own free will....I didn't write the contract they did...Can they sue, you betcha would it get much further than a cease and decease letter, possibly the could take it further would they survice summary judgement...In my case no they wouldn't....Would it still be a major pain in the a$$..yes it would.

I also look at it a little differently...I associated with a firm as a licensed individual and was paid as an independent contractor and was paid commission only and had to develop my own clients...they recieved an override on every sale...I don't see as they paid me anything but as I provided them income.

That being said I have honored my previous contracts. I suggested the op contact an attorney to review the contract because what I or you or the poster think it says could definatly say differently. And personally if the contract allows him to do something after the contract is terminated then he should be aware of that and may want to avail himself of it...Because he only signed the contract they created it.

 

[FLInsa]

I agree with you...I was just telling the OP that the answers he gets he really are meaningless...

Sure you can sue regardless of what the contract states....However if the contract says there is an 18 month non-compete except in certain situations such as my last contract I had an 18 month non-compete if I was fired for cause it specifically stated the non-compete was invalid if I (forgive this layman term) resigned of my own free will....I didn't write the contract they did...Can they sue, you betcha would it get much further than a cease and decease letter, possibly the could take it further would they survice summary judgement...In my case no they wouldn't....Would it still be a major pain in the a$$..yes it would.

I also look at it a little differently...I associated with a firm as a licensed individual and was paid as an independent contractor and was paid commission only and had to develop my own clients...they recieved an override on every sale...I don't see as they paid me anything but as I provided them income.

That being said I have honored my previous contracts. I suggested the op contact an attorney to review the contract because what I or you or the poster think it says could definatly say differently. And personally if the contract allows him to do something after the contract is terminated then he should be aware of that and may want to avail himself of it...Because he only signed the contract they created it.

Uh, I think therein lies part of the issue facing many agency owners today when Producers leave especially if the expectations are not set forth in the beginning of the "transaction".

That is why for every Producer I hire, in plain english I tell them that "the clients you are bringing in are mine, not yours. I am paying you xxx to do that. Are you interested?"

I also tell them "if you want your own clients, you need to invest the $60,000 to $80,000 to get your own shop going. Still want to proceed?".

 

[Norwayguy]

Uh, I think therein lies part of the issue facing many agency owners today when Producers leave especially if the expectations are not set forth in the beginning of the "transaction".

That is why for every Producer I hire, in plain english I tell them that "the clients you are bringing in are mine, not yours. I am paying you xxx to do that. Are you interested?"

I also tell them "if you want your own clients, you need to invest the $60,000 to $80,000 to get your own shop going. Still want to proceed?".

Nothing wrong with that, Its upfront and plain...Are you talking about P&C because I can see the value of an Agency owner sub-contracting me for appointments I could not get on my own and paying me a split to provide that and the agency owning the clients....

On the L&H side I see it differently....but once again it all comes down to the contract, I feel the contract is exactly like your upfront frank discussion.

And you might have noticed in my posts that I have honored all previous contracts.

 

[xrac]

Contracts that we voluntarily enter into should always be honored. Our word should be our bond. The Bible declares that a man is blessed if he....."sweareth to his own hurt, and changeth not."

The biggest issue is not legitimate contracts but spiteful vindictive employers who do not have legitimate contracts but who will do everything they can to harrass and impede employees who leave.

 

[Focus LTC]

Wow! We're quoting the bible now?

Whatever happened to doing what's best for the client? I always hear people on this forum talk from their high horse about how great and trustworthy and honest they are and how they always do what's best for the client, no matter what, even if they don't make any money...(these are the agents you have to watch out for because they are simply over compensating for their shadyness)

So what are the "honest agents" saying about the client now? You're saying screw them.

You're saying "Sorry Mrs. Smith I refuse to help you improve your family's situation because I'm afraid of some BS, unenforceable, non compete clause. So go screw yourself Mrs. Smith I will not willfully encourage you to change your plan although it's in your best interest because I'm a gutless worm whose loyalties lie with the insurance company not you... By the way Mrs. Smith, did I tell you to go screw yourself..."

This is the garbage that you're spewing from your ivory tower... This is the hogwash that gives insurance agents a bad name.

Packer01, I'm not telling you to or not to roll your book over. But I will say that if someone calls you and you can improve their situation, regardless of who their previous carrier was, you have a professional obligation to help that person.

 

[Crabcake Johnny]

I think this discussion needs to be defined. We're talking about one of two things:

A) Gaining 200 clients for ABC Agency then quitting and telling all 200 clients to come with you and buy new policies that ABC doesn't write.

B) Gaining 200 clients and letting them know that you're no longer with ABC Agency but you'll always be available as their agent to assess their situation and determine if moving to another carrier is proper.

 

[FLInsa]

Wow! We're quoting the bible now?

Whatever happened to doing what's best for the client? I always hear people on this forum talk from their high horse about how great and trustworthy and honest they are and how they always do what's best for the client, no matter what, even if they don't make any money...(these are the agents you have to watch out for because they are simply over compensating for their shadyness)

So what are the "honest agents" saying about the client now? You're saying screw them.

You're saying "Sorry Mrs. Smith I refuse to help you improve your family's situation because I'm afraid of some BS, unenforceable, non compete clause. So go screw yourself Mrs. Smith I will not willfully encourage you to change your plan although it's in your best interest because I'm a gutless worm whose loyalties lie with the insurance company not you... By the way Mrs. Smith, did I tell you to go screw yourself..."

This is the garbage that you're spewing from your ivory tower... This is the hogwash that gives insurance agents a bad name.

Packer01, I'm not telling you to or not to roll your book over. But I will say that if someone calls you and you can improve their situation, regardless of who their previous carrier was, you have a professional obligation to help that person.

Actually, you're supposed to say:

"Sorry Mrs. Smith, I no longer work for ABC Company and it wouldn't be right for me to take you away from them since you are their client. However, my non-compete will be up in X years and I can call you then!"

Try it.

I've and the reaction I get from clients are "wow, this guy is really ethical"......

 

[xrac]

Wow! We're quoting the bible now?

Whatever happened to doing what's best for the client? I always hear people on this forum talk from their high horse about how great and trustworthy and honest they are and how they always do what's best for the client, no matter what, even if they don't make any money...(these are the agents you have to watch out for because they are simply over compensating for their shadyness)

So what are the "honest agents" saying about the client now? You're saying screw them.

You're saying "Sorry Mrs. Smith I refuse to help you improve your family's situation because I'm afraid of some BS, unenforceable, non compete clause. So go screw yourself Mrs. Smith I will not willfully encourage you to change your plan although it's in your best interest because I'm a gutless worm whose loyalties lie with the insurance company not you... By the way Mrs. Smith, did I tell you to go screw yourself..."

This is the garbage that you're spewing from your ivory tower... This is the hogwash that gives insurance agents a bad name.

Packer01, I'm not telling you to or not to roll your book over. But I will say that if someone calls you and you can improve their situation, regardless of who their previous carrier was, you have a professional obligation to help that person.

Pardon me if the Bible offends you but it is a part of the way I think, talk, and conduct my affairs.

Am I misreading your post or do you really think it is ethical to enter into a written legal agreement and then to violate what you agreed to?

 

[Norwayguy]

Am I misreading your post or do you really think it is ethical to enter into a written legal agreement and then to violate what you agreed to?

Xrac, I know your post wasn't directed at me...But I want to answer it anyway...Definatly honor your contract. However Non-Compete is just that that you will not compete against the firm...I know having looked over some of my contracts that included in that clause is that I would not contact my clients for a period of time. I would definatly honor that.....But if the agency owner who has created this contract does not via the contract preclude you from doing something, then you by excluding yourself from something you are not legally bound too are short selling yourself.

I was talking with another agent recently and he was bemoaning how since he had been so focused on 1 product niche when he left his former employer he had been struggling. I had him drag out the contract and after reading it I told him to see an attorney (I don't give legal advice) but the contract had a non-solicitation clause ie don't steal existing customers...it also had a non-compete clause that was enforcable ( I always assume they are enforcable) if he was fired for cause but there were clear exceptions to that clause and based on how he left the previous firm it didn't sound like he was bound by that section...I emailed me a couple days later and according to the attorney I was correct no poaching of customer for 18 months but he could compete for new business all he wanted.

My last firm had a similar contract and I decide to compete against them in my local area. They saw one of my stuffers and I got a threatening phone call from the agency owner...I told her that I did not have a non-compete to read the contract and if she wanted to continue this discussion to do it in writing...I received a cease and desist letter, forwarded it to my attorney who sent a letter with a copy of my contract to the other lawyer essentially saying. You don't know what your talking about heres the contract pound sand. That was the end of it. Could the owner still want to sue...probably...but my lawyer told me and forgive the laymans terms the other attorney would have to have reasonable grounds that I had violated the contract or wronged the other person to be able to file suit...

 

[FLInsa]

Xrac, I know your post wasn't directed at me...But I want to answer it anyway...Definatly honor your contract. However Non-Compete is just that that you will not compete against the firm...I know having looked over some of my contracts that included in that clause is that I would not contact my clients for a period of time. I would definatly honor that.....But if the agency owner who has created this contract does not via the contract preclude you from doing something, then you by excluding yourself from something you are not legally bound too are short selling yourself.

I was talking with another agent recently and he was bemoaning how since he had been so focused on 1 product niche when he left his former employer he had been struggling. I had him drag out the contract and after reading it I told him to see an attorney (I don't give legal advice) but the contract had a non-solicitation clause ie don't steal existing customers...it also had a non-compete clause that was enforcable ( I always assume they are enforcable) if he was fired for cause but there were clear exceptions to that clause and based on how he left the previous firm it didn't sound like he was bound by that section...I emailed me a couple days later and according to the attorney I was correct no poaching of customer for 18 months but he could compete for new business all he wanted.

My last firm had a similar contract and I decide to compete against them in my local area. They saw one of my stuffers and I got a threatening phone call from the agency owner...I told her that I did not have a non-compete to read the contract and if she wanted to continue this discussion to do it in writing...I received a cease and desist letter, forwarded it to my attorney who sent a letter with a copy of my contract to the other lawyer essentially saying. You don't know what your talking about heres the contract pound sand. That was the end of it. Could the owner still want to sue...probably...but my lawyer told me and forgive the laymans terms the other attorney would have to have reasonable grounds that I had violated the contract or wronged the other person to be able to file suit...

Ok, let me jump in because I think this may help someone out there.

Just last week I met with my attorney (whom I have on a monthly retainer) and we discussed Non-Competes for about 20 minutes.

Norwayguy, regarding your friend's case and your case, my attorney told me that an agency owner can put anything they like on the Non-Compete, but the real question is will it hold up in court?

For example, the Non-Compete I was having my guys sign said that they could not work (period) within 50 miles of one of my locations! When my attorney read that he looked at me and started laughing and said "a Judge would never go along with this because how is the person signing this going to survive/make ends meet....".

So we removed that clause from the agreement.

What I've learned from him so far is that Non-Competes are intended to keep your existing clients (whom you invested your own money to obtain) from being poached on by vultures and not intended to drive people into poverty.