client poaching from the poachee's perspective 1

[dgowans]

The client poaching discussion has been done many times, but I don't remember seeing anything from the client's point of view.

I received a call from people who were formerly at a place I've used when I've had the need to outsource design work. These people have left the first place for another company and are in the process of starting an engineering/design division of their new firm. I'd like your opinions on the situation. Do I entertain this new company as a potential design source? Do I notify the place they left and let them know what their former employees are up to? Do I really have any obligations to anyone else?

This discussion may be moot - if they're just in the process of starting up the engineering/design group at the new place they may not have capabilities that I'd require from an outside source. I'm going to meet with them just to see what they have going on but have no immediate needs for an outside design firm. If there's something about the situation that feels wrong I certainly won't send them any future work, but at the same time I'd be doing my company a disservice by not checking out a potential source.

 

[dtn6770]

What business merit would there be to telling a firm what it's former employees (FEs) are doing? They'll figure it out on their own if the FEs are in direct competition. They notification you describe has a name, gossip.

Who you do business with is up to you and your priorities. I certainly wouldn't exclude the FEs just because they're no longer at the original firm. If you question their abilities, don't use them.

 

[ewh]

As long as they didn't steal the original firms client list, I would give them the benefit of the doubt. I don't think you are in any way obligated to inform their former employers. Doing so may actually sour what could be a mutually beneficial relationship.
Meet with them keeping an open mind to the situation.

 

[whyun]

As a client, you have absolutely no moral or legal obligation to inform the original consultant or to stay with them.

All depends on your relationship with the original consultant and the capabilities of their new competitor. If my consultant was a good friend of mine or an old college buddy I wouldn't burn any bridges and take a chance at the unknown. If I know that this new firm has talents, I'd start giving them smaller jobs to try them out.

I've been on the consulting end so take my opinion for whatever its worth.

 

[michfan]

I worked at a place that was outsourcing cad work to a woman who had recently left a competing company. She still had a few months left on a non-compete agreement and my boss knew it, so they were trying to keep it very quiet.

Small town, everyone knows everyone, so I'm sure it got back to her former employers, and I'm sure she will never be welcomed back there should she wish to return to the first company.

My boss was acting unethically, in my opinion. Both were smaller companies that probably couldn't afford to sue the other for that type of behavior, so I know my boss wasn't really scared of anyone finding out. They were actually trying to keep it from the woman who did the shop paperwork, because she "has a big mouth", as my former boss put it.

I had another boss who scheduled meetings with competitors to discuss "the business" and he'd leave with their drawings stuffed under his coat.

What goes around, comes around. That kind of thing comes out eventually. I didn't stay at either company more than was necessary to find new employment.

But I don't see discussing future work with a start-up company as a problem, unless any of them have standing non-competes with their old jobs.

 

[LHA]

michfan, a CADD-Tech had a non-compete clause? Wow, that is unheard of in NE USA.

Engineering is the practice of the art of science - Steve

 

[michfan]

Yup. Around here it's pretty standard to give one to all employees. I get a non-compete and a "won't give away trade secrets" (whatever that's called, I know there is a word for it) everywhere I've worked. As if they have anything worth selling to the competition?

I've pretty much always worked in a manufacturing environment, though, so maybe that's why. Of my last four or five jobs, only one didn't have me sign anything before starting, but they would have you whiz in a cup whenever they felt like it, even the office people. Like they paid us enough to afford drugs...

Oh, non-disclosure. I think that's what it's called.

 

[MiketheEngineer]

How do think new companies get started...

Somebody figures he/she can do it faster/bigger/better/cheaper, etc and breaks away.

As long as there is no compete clauses, stealing, etc... feel free to check them out as a source....

You can be sure their "old" company knows what's going on - unless they are plain dumb -- and that would be good enough reason to split!!

 

[JStephen]

You don't have to steal a client list to know who you've worked with before. If you've been consulting as en employee for someone else, you're probably going to contact some of those same people if or when you go out on your own or to a competitor. The problem with this comes in when you start arranging that before you've left the first company.

If you aren't aware of any specific legal or contractual problems, I'd just consider the new group as another supplier. Depending on the setup, they may or may not have brought the capabilities of the first employer with them.

 

[bvanhiel]

michfan,

Non-disclosure and non-compete are two very different things. A non-disclosure is an agreement to keep secrets secret. A non-compete prevents you from working for or as a competitor for some period of time in some specific locale. Non-compete's are not rock-solid, and are frequently not upheld by the courts.

-b

 

[dgowans]

After having met with the people at their new facility I'd be comfortable using them should the need arise. Not only have they mentioned numerous times that they left all their contacts, business cards, etc. at the company they left, I wasn't contacted about the new business until it was established. Thanks to JStephen for bringing that point up - I hadn't thought about that.

Thanks to all for your replies.

 

[dik]

A non-compete agreement must be worth something. I made the error of signing one and after I left the firm an excellent opportunity arose that I couldn't take advantage of. When I left the firm, I didn't have any trade secrets or additional skills as a result of my employment there... but I had signed this agreement. I would only consider signing a non-compete agreement if there was some financial benefit for the duration of it.

Dik

 

[bvanhiel]

dik,

Whether it was enforceable or not, it kept you from pursuing that opportunity. That's why they made you sign it. Would it hold up in court? That depends on what state you're in. Their illegal in CA, and other states take a dim view of them unless they are very constrained in scope.

http://en.wikipedia.org/wiki/Non-compete

-b

 

[dik]

Even in Canada, the courts take a dim view of them, in particular, if they prevent someone from earning a living.

I'd not sign another one except for an ongoing consideration for the duration of it. Even I make mistakes <G>...

Dik

 

[michfan]

Yes, bvanhiel, I know they are two different things, and I've signed both at most of the places I've worked. My job changes involved actually changing industries so I've never been against signing either one - and the duration of the non-competes have usually been 6 months, which really isn't a huge length of time, in my opinion. Typically my positions, and the industries I've chosen, haven't put me in a situation where I'd learn many "trade secrets".

I'm in a mid-sized town that pretty much has 2 precasters, 2 steel truss manufacturers, maybe 3 wood truss manufacturers, etc. Among the smaller companies everyone knows when you leave to work for the competition or when you strike out on your own...I have to say, though, with smaller companies, especially the ones I've worked for, you tend to know the financial situation of the company you've left and you have some idea whether they'd put forth the effort (time, money, etc.) to sue you should you decide to go work for the competition, assuming you signed a non-compete.

Most of the companies I've been with wouldn't have the financial resources to take you to court. Even the multi-national company I used to work for didn't sue when several people there were offered positions with the competition and left the company. And these were major, well-known companies that everyone would recognize. And as others have noted above, I doubt any court would have upheld that non-compete agreement I signed after the company started laying everyone off to relocate south of the border.

Ethically, I try to never put myself in a position to be able to offer any "trade secrets" to the company I'm working for, and so far it's never been an issue.

 

[bvanhiel]

michfan,

I misread your earlier post. It sounded like you were confusing the two, but the mistake was mine.

-b

 

[Ashereng]

I am a consumer, and my favorite baker had an employee leave to open a new bakery, and they call me to let me know they opened a new store (I'm in the book).

Why wouldn't I go to the new bakery and check it out?

Why would it matter if I mentioned to my old baker that there is a new store? I would think that they would figure it out sooner rather than later, if they didn't already know before I did (seeing as how they are in the biz, as they say).



"Do not worry about your problems with mathematics, I assure you mine are far greater."
Albert Einstein
Have you read FAQ731-376 to make the best use of Eng-Tips Forums?

 

[itdepends]

I had a rather ironic "non compete" clause once. Basically it was "though shalt not work in this industry for X years after leaving our employment".

It was a new industry/technology- and at the same time the company was advertising for new recruits- preferably with previous experience- talk about double standards.

 

[Slowzuki]

In my province of Canada, non-competition clauses are very weak. If they are too strong, a judge simply throws out the whole agreement. They are only upheld when reasonable.

So if I work in a field that any mechanical engineer could work in, and I part ways, my employer has no claim to a non-competition clause.

However, if I work doing something exclusive and received special training from my company to perform my job, a non-comp agreement could probably be enforced if it said I couldn't do the same job within the province for 1 year. This presumes no other company does this job also in the province. (I live in a pretty small province, a larger one would have to use a smaller area in the agreement)

A recent example was a locksmith who quit and started a new company in the next city over (contrary to his non-comp). His former employer sued but lost the entire non-comp because the judge decided it was unreasonable to try and prevent this guy from setting up shop 1.5 hours drive away. So immediately after he set up shop in the same city. Original employer would have been better off to leave him alone.

 

[planedr]

Non compete clauses are very weak everywhere especially when you get into professions. Most companies would do better with trade or business secret issues than non compete clauses. If you are trained for a specific work the courts will not block you from practicing. The main caveat is unless you are compensated for the non compete period. Then it will be upheld 9 times out of 10.

As for the question at hand. Why worry? Try the new shop out and see if they are any good. Maybe the persons involved were held back by the structure of the former company, maybe not.

As long as they are not using proprietary data or clearly intelectual property of the other comapny why worry.

Now if the other companies boss is a golf buddy