A few weeks ago, we discussed realities of recovery of attorney’s fees in litigation. This post attempts to narrow that focus on post employment covenants. Under Texas Law, a party can recover its reasonable and necessary attorney’s fees for a breach of contract under Texas Civil Practice and Remedies section 38.001. A non-compete agreement or non-solicitation agreement is a contract. So, prevailing wisdom is that like any other contract, an employer seeking to enforce post employment covenant can recovery its attorney’s fees, especially when the contract calls for fees.
There is however a line of cases emerging from some courts of appeals that says otherwise. The rationale behind these cases is that since the legislature did not provide for recovery of attorney’s fees in the non-competes statute, they are not recoverable.
The courts of appeals are not in unison and the Texas Supreme Court has not addressed the issue. So, what to do? Make sure to specify for the recovery of attorneys’ fees in non-compete/employment agreements. Eventually the Texas Supreme Court will address the issue. Be prepared to confront this argument from both employers and employees.