Smooth Transitions : Rob Radcliff : Texas Non-Compete Lawyer & Attorney : Langley Weinstein LLP Law Firm : Dallas Employment & Employee Departures : Smooth Transitions Law Blog

From late 2008 through 2009 financial advisors were on the move.  Thousands of brokers left their positions with firms like Merrill Lynch, Wells Fargo and UBS.  Many transitioned to new brokerage houses enticed by lucrative signing bonuses and compensation packages.  Others were simply unsure of ever changing policies and compensation systems that resulted from industry consolidation such as the Merrill/BofA merger.

There were non-compete/non-solicitation lawsuits many of which were discussed here.  With the protocol in place, many FAs can transition to new jobs without the fear of a lawsuit.  Nevertheless, moving your business to a new employer is work.  Some clients are loyal to the institution, others simply don't want to move, and the former employer will put a full press on to keep the departing brokers' business once they announce their intentions to leave.

According to a recent Reuters' article , the recruiting seen over the last year will calm down in 2010:

Veteran recruiter Michael King, of Michael King Associates, said movement will slow because so many brokers are now tied to their firms, either with retention plans or because they accepted recruiting packages with long-term commitments.

"The big wave was last year, from the end of '08 through the first half '09. A lot of the people who wanted to move, moved," King said. "And many of the people who have not moved are already under contract."

Companies will still offer lucrative incentives to move, but the pool available to transfer appears to have dried up for now.  Of course, the pool will repopulate after the deals inked in 2009 expire and some brokers look for the best new deal. 
 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

The Conan O'Brien/Jay Leno imbroglio of the last couple weeks appears to be winding to an end.  According to reports from TMZ, Conan will receive a $32.5 million dollar payout but sit on the bench and not start a new show until September.  The rumor is he will start a new show with Fox.

There has been speculation that Conan had a non-compete agreement with NBC.  Jay Shepherd points out in his blog that it is unlikely the non-compete was governed by California law because it would be unenforceable:

And California, as many of you know, prohibits noncompetes. Section 16600 of the California Business and Professions Code makes employment-related noncompetes — like the one Conan reportedly has — void.

Unfortunately, his contract with NBC is not available on line, but let's assume Conan had an enforceable non-compete under Texas law.  (There are a whole bunch of reasons why it's not, but give me some latitude.)  What can Conan teach us?  Bottom line, negotiations never end.  Conan's failure at NBC actually created leverage for him in negotiations.  NBC wants Leno back in hopes that he will drive up ratings but is tied to Conan who waited for years for Leno's departure.  Conan isn't going to go back to the later time spot, who knows what his contract says about that.  So NBC elects to pay him off.  Much of the money is salary he would have earned in the interim anyway, and he agrees to stay on the sidelines for a few month.  Win win, or so it seems.

The typical employee is not Conan and the typical employer is not NBC.  But, when an employer is facing a departing employee with a non-compete that may be unenforceable it's time to think outside the box to see if some other type of resolution can be reached.  Maybe an agreement to stay away from certain customers or stay out of the industry for a shorter time - be creative.  The same goes for the employee.  This won't always be appropriate but it beats significant legal fees, expedited discovery, and  temporary injunction hearings. 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Non-compete agreements cover a range of businesses/industries from financial services, to food and beverage, dance studios, and even pet care.  It should come as no surprise that a lawsuit was filed by Surgical, Cosmetic, and Weight Loss Centers of America against a former employee that started work with the University of Texas Medical Branch - Center of Weight Loss Management.  The lawsuit was filed in Jefferson County, Texas.

The Defendant signed a three year noncompete that restricted her from working for a competing business that was within a 25 mile radius of her former employer.  Three years is a long time for a non-compete but Texas courts evaluate non-compete terms on a case by case basis - there is no bright line rule on the term of a non-compete.   The employer alleges in the lawsuit:

Defendant, while working for plaintiff, was provided material, substantive benefits which made defendant as a medical professional more marketable in the field of her expertise. . .

As previously discussed, a Texas non-compete agreement must be ancillary to an otherwise enforceable agreement.  Employers usually claim that some type of trade secret was provided to the employee.  It will be interesting to see what benefits were provided to the Defendant in this case that give rise to the non-compete.  Typically, employers fail in enforcing non-competes when they cannot establish that they provided the employer with the consideration promised, such as specialized training, access to trade secrets, etc.  Assuming the scope and duration of the non-compete are acceptable, an attack on consideration is one of the last lines of attack in Texas after recent rulings from the Texas Supreme Court.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Mike Leach's application for a temporary restraining order to permit him to coach Texas Tech in the Alamo Bowl on January 2 was mooted when Tech fired him on December 30.  Allegedly, the timing of the firing was based on Leach's contract that entitled him to $800,000 on December 31. Tech went on to beat Michigan State 41-31. Tech now begins the search for a new coach and Leach's lawyer has promised a lawsuit.

Even without the firing, Leach faced an uphill battle.  As discussed here previously, an applicant for a TRO must establish there is no adequate remedy at law and imminent harm, among other things.  Leach sought to prevent Tech from suspending him from coaching the football team because he essentially was deprived of due process.  The Petition provided:

8.  Mike Leach seeks that this Court enter an order restraining Texas Tech University from suspending Mike Leach from coaching the football team.

 

9.  It is probable Mike Leach will recover from Defendant after trial on the merits because Mike Leach has not committed any wrongdoing, he has not been informed of any rules or standards he violated, and his contract does not provide for suspension even if Defendant had shown a violation of a rule or standard, which it has not.

10.  If Mike Leach's application is not granted, harm is imminent because Mike Leach will be unable to coach his football team in practice prior to the Alamo Bowl and during the Alamo Bowl.

The claimed basis for the firing of Leach stems from his treatment of sophomore Wide Receiver Adam James following a concussion.  James' is the son of former SMU player and television analyst Craig James.  Leach reportedly had James confined to a shed as described in the affidavit of a Tech football trainer:

I walked Adam to the room, which was at least as big as a two-car garage . . .Inside the room there is an electrical closet. I looked in the closet and stated that there was 'no way that Adam would be placed in there.' I shut the door to the electrical closet, and it was never opened again. At no time during this practice was Adam ever placed in the electrical closet.

Regardless of what actually occurred, it seems unlikely a Texas court would have ordered Tech to permit Leach to coach in the Alamo Bowl.  Leach's claim that he would suffer imminent harm because he could not coach is unpersuasive.  An employer generally has the right to restrict or modify the duties of an employee, as Tech did with Leach.   In response to the TRO application, Tech took the decision away from the Court and fired Leach.

The Leach/Tech battle is a long way from over.  With a significant amount of money at stake, Leach, a lawyer himself, will continue his legal fight.  Stay tuned. 

• Email This
• Print
• Comments (1)
• Trackbacks
• Share Link