You’re a high level or very successful salesperson or other professional with a noncompete agreement or a nonsolicitation agreement, or the like. Your boss is a dysfunctional tyrant. You want to leave to start your own business. Or you’re a partner, LLC member, or shareholder of a small business and it is not working out. How do you form an exit strategy?
There is no one size fits all strategy, as each situation and set of legal documents are unique. I’ve represented a number of clients in these situations. Although I’m usually on the business owner’s side, representing these clients is rewarding because I help them to leave an intolerable, or at least undesirable, situation. They then become business owners and employers themselves.
Here’s the good news. You can make the leap from indentured employee to successful business owner. Although the first steps are hard, you will probably never look back. You’ll wonder why you didn’t do it sooner. Many of your clients will eventually do business with you. You’ll grow your business and get new clients. You’ll wonder why you ever feared that dysfunctional tyrant who you called your boss, and regret that he got rich on your talent and efforts.
Here’s the bad news. That dysfunctional tyrant may make it hard for you to leave. He may hire expensive lawyers to try to bury you in litigation fees and to get a court order to stop you from earning a living and feeding your family. You will incur some legal fees fighting this, and there is no guaranty that you will win.
I’m not going to lie and tell you that it’s easy, but if you believe in yourself and your abilities to do it better than that dysfunctional tyrant, I can promise that you can get through it, and be a whole hell of a lot happier in your life. I can also promise you that we can come up with a strategy for your situation which, as stated above, must be determined on a case-by-case basis.
No matter what your strategy, there are some basic do’s and don’ts for every employee (or partner, etc.) who is contemplating or planning on leaving to start another business or even to go to another employer. These are common sense, but people get them wrong in their zeal to succeed in their next endeavor. Basically, be honorable and treat your employer the way you would want and expect to be treated once you are the boss of your own business, even if the tyrant doesn’t deserve it.
Do continue to be loyal to your employer. Keep servicing the clients. Keep reporting to the boss. Do your job.
Don’t solicit or recruit clients to come with you while you are still on your boss’ dime. Although this is very tempting, and it would be comforting to know if your best clients will follow you, avoid the temptation. You owe your employer a duty of loyalty and good faith. Moreover, you will look like a dishonest sneak if it comes out in court that you were doing this.
Don’t steal any customer information, company trade secrets, etc. You can recreate your customer list from memory and using the internet (or you may have them socially networked anyway), so don’t do a bush league move and e-mail yourself a list of customers. If you do that, you become the bad guy, and the dysfunctional tyrant looks like the victim.
Don’t assume that non-competes and other restrictive covenants are not enforceable. Generally, they are enforceable. But there may be ways to work around them. You need to consult with a lawyer to understand what you can and cannot do, and what your risks are for doing it.
Do document everything that could support a claim against your employer. Sometimes the best defense is a good offense. If your employer is not paying you commissions, is doing something unethical, sexually harassing you, etc., etc., you may have a good legal or practical defense to get out of a non-compete.
If you’re an interest holder, such as a stockholder of a small corporation, a member of an LLC or a partner in a partnership, there are special considerations. You will need someone to review your company documents to see if there is any built-in exit strategy.
If you are ready to leave the dysfunctional tyrant, give me a call at 617.338.7000. Assuming I have no conflicts of interest (I represent mostly business owners, but none of them are dysfunctional or tyrants), I can discuss some of the options available to you.
By Adam P. Whitney.
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