Quick, can you name the number one song of 2014?<\/p>\n
I\u2019ll help you out. It was \u201cHappy<\/a>\u201d by Pharrell Williams.<\/p>\n But to be honest, I was not so happy in early 2014. I had just lost my job working for a Houston law firm. Fortunately, I had a good paying client who was being sued for violation of a non-compete. And the rest is history.<\/p>\n At the time I\u2019m writing this (the end of 2024), my Texas law practice has focused on the defense of lawsuits involving claims for violation of non-competes and\/or alleged misappropriation of \u201ctrade secrets\u201d for about ten years.<\/p>\n I put scare quotes around \u201ctrade secrets,\u201d because very rarely have my cases involved any actual trade secrets. But that\u2019s an issue for another post.<\/p>\n A little more background on me: From 1997 through 2014, I worked on a wide variety of business litigation matters in Texas. Some of those matters involved non-competes, and I was generally familiar with Texas non-compete law, but non-compete litigation was not my specialty.<\/p>\n Starting in 2014, my practice began to focus on litigation involving non-compete<\/a> and trade secret<\/a> claims. Today, my firm focuses almost entirely on defense of non-compete and trade secret litigation, plus providing \u201cpre-litigation\u201d advice to clients seeking to avoid such litigation. That means we\u2019re representing either the departing employee, the company hiring the departing employee, or sometimes both.<\/p>\n After about ten years of doing that, I\u2019ve learned some practical lessons. I could charge my hourly rate to teach these lessons, but I\u2019ve decided to share them with the world for free. Hey, business has been good, so why not.<\/p>\n Clients typically come to me with questions they want answered. Sometimes the client will even have very specific questions, like \u201cwhat is your success rate in defeating injunctions in the custom-built air conditioning hose industry?\u201d<\/p>\n Usually these are the wrong questions. But that\u2019s ok, because part of the value I provide is knowing the right questions.<\/p>\n Clients will often ask me \u201cis my non-compete enforceable?\u201d<\/p>\n It\u2019s understandable they would ask that. I asked the same question when I put out my first YouTube video as That Non-Compete Lawyer<\/a>. The question was, \u201cIs My Texas Non-Compete Enforceable?<\/a>\u201d<\/p>\n In that video I outlined how to analyze enforceability of a non-compete under Texas law, but at the end of the video I emphasized that it can cost a lot of money in legal fees to get the answer from a court. More about that later.<\/p>\n I was already hinting at the point that whether the client\u2019s non-compete is enforceable as written, in the abstract<\/em>, is not really that important.<\/p>\n Don\u2019t get me wrong, it is a relevant issue. But after ten years, I\u2019ve learned it\u2019s not as important as clients usually think it is.<\/p>\n There are a lot of reasons for this, but let\u2019s just say the more important thing is the practical question of what is likely to happen if your former employer tries to enforce the non-compete<\/em>?<\/p>\n That brings me to the next lesson.<\/p>\n Clients also tend to ask \u201cwhat am I allowed to do under this non-compete?\u201d<\/p>\n Again, it\u2019s totally understandable they would ask this, but as a practical matter, it\u2019s the wrong question. The more pertinent question is \u201cwhat is likely to happen if I go to work for a competitor and my former employer makes a stink about my non-compete?\u201d<\/p>\n In most cases, that question will be prompted by the former employer or its lawyer sending the employee a demand letter. Sometimes they will copy the employee\u2019s new employer on the letter. Sometimes they will call it a \u201ccease and desist\u201d letter, because they think that sounds more serious. I prefer the technical term \u201cnastygram.\u201d<\/p>\n The effects of a nastygram vary widely. The stiffness of the subsequent employer\u2019s spine is usually the determining factor.<\/p>\n Some subsequent employers have spines like noodles. The minute they hear the words \u201cnon-compete\u201d and \u201clawsuit,\u201d they\u2019ll drop the employee like a hot potato. (I know, mixed metaphors.)<\/p>\n Others with stiffer spines will take the opposite approach. Their response to a nastygram will be more like \u201ctell that former employer they can go f*** themselves, we\u2019ll hire whoever we want to hire, and we can pay lawyers too.\u201d<\/p>\n But most of the time, the new employer will be somewhere in the middle. They will back up the new employee they just hired, to a point.<\/p>\n The important thing for the employee to understand is that you have little, if any, control over this decision. And if the subsequent employer decides to drop you, there\u2019s virtually nothing I can do about that as your lawyer. I can argue Texas case law on non-competes backwards and forwards, but if the company that hired you decides to back out, I can\u2019t stop them.<\/p>\n Usually, the best you can do as an employee is to discuss the issue with the new employer ahead of time. They are not going to give you any formal written commitment, but you can at least try to get a general sense of whether they will back you up if there\u2019s a lawsuit, or a threat of a lawsuit. That informal commitment won\u2019t be binding, but it\u2019s better than nothing.<\/p>\n Ok, let\u2019s say you have that discussion and the subsequent employer doesn\u2019t immediately fold under pressure. What then?<\/p>\n My firm will often get hired by the employee at the nastygram stage. Usually, in those situations our goal is to try to work something out and avoid a lawsuit. That could mean providing assurances the employee didn\u2019t take any confidential documents, agreeing the employee won\u2019t do business with certain customers, or anything else needed to resolve the dispute.<\/p>\n If that doesn\u2019t work out, and there\u2019s a lawsuit, clients will usually want to know if the law is on their side.<\/p>\n Again, that\u2019s an understandable and not entirely irrelevant question.<\/p>\n But if ten years of litigation practice has taught me anything, it\u2019s that my opinion on what \u201cthe law\u201d is doesn\u2019t mean much. That\u2019s because I\u2019m not the one who gets to decide.<\/p>\n No, a judge will decide, of course. (Or in some cases it could be an arbitrator, but let\u2019s go with \u201cjudge\u201d for simplicity.)<\/p>\n More specifically, a judge will decide whether to grant an injunction<\/a>. An injunction is essentially a court order telling you not to do something; there is also a short-term form of injunction called a \u201ctemporary restraining order.\u201d Your lawyer can explain the procedural nuances.<\/p>\n The injunction could say, for example, that the employee is not allowed to work for the subsequent employer until the employee\u2019s non-compete expires. Or it could just say the employee is not allowed to use the employer\u2019s confidential information, or that the employee can\u2019t do business with the customers she serviced when working for the first employer. Or anything else the judge thinks is reasonable.<\/p>\n In one case, the judge granted an injunction putting the ten best customers off limits. Why ten? Is there something in the Law of Non-Competes that says ten is a reasonable number of customers to restrict?<\/p>\n No, of course not. It\u2019s just a number the judge picked because it seemed fair.<\/p>\n The practical lesson: The injunction can say whatever the judge wants it to say<\/em>. And usually that will be whatever the judge thinks is fair under the circumstances.<\/p>\n Here\u2019s what else ten years of focusing on departing employee litigation has taught me about the judge:<\/p>\n Furthermore, how the judge feels about non-competes is often hard to predict, even after you know which judge was assigned to your case.<\/p>\n The best prediction model I can give you is a bell curve. On the left end are the cases where the judge denies an injunction entirely. On the right side of the curve, you have the cases where the judge completely bars the employee for working for the new employer.<\/p>\n But most cases are in the middle, where the judge will grant a more limited injunction that allows the employee to continue working for the second employer, but with some limitations.<\/p>\n The thing to understand is that while the extreme results are less likely, your result could be anywhere on the curve. I\u2019ve had results on both ends.<\/p>\n For example, I had a case in Tarrant County where the judge entered an order that literally put my clients out of their jobs and effectively required them to change careers.<\/p>\n I won\u2019t say who the judge was (editor\u2019s note: it was Judge Josh Burgess), but when I cited a whole line of Texas cases holding that the non-compete at issue was too broad, his response was that those were not Fort Worth cases. What he was really saying was that he didn\u2019t care what the case law said, if you signed a non-compete you\u2019re stuck with it.<\/p>\n So my clients were hit with an onerous injunction. (To add insult to injury, Tarrant County was not even the proper venue for the lawsuit in the first place, but I digress.)<\/p>\n Can you appeal that decision? In theory, yes. But in most cases an appeal will do you no good, because (1) you will probably lose the appeal (for reasons), and (2) in most cases the appeal will take so long that it won\u2019t do you any good as a practical matter.<\/p>\n The bottom line: the biggest factor is who the judge is, and what that judge thinks about non-competes generally.<\/p>\n Notice I said biggest factor, not the only factor. The employee\u2019s conduct is also an important factor, for better or worse. In other words, your conduct can shift the bell curve in either direction.<\/p>\n If you\u2019re the departing employee, you can\u2019t control how your new employer will react to the threat of a lawsuit, and if there\u2019s a lawsuit you can\u2019t control who the judge will be, but you can<\/em> control your own actions. And your actions can have a significant impact on the judge\u2019s decision.<\/p>\n The best thing you can do to reduce the risk of a decision against you is to have a \u201cclean exit.\u201d<\/p>\n For an example of a messy exit, read the opinion in Winsupply E. Houston v. Blackmon<\/em><\/a>, No. 4:21-cv-01387, 2021 WL 5504756 (S.D. Tex. Nov. 22, 2021). That was a difficult case for the defense, because the key employee who left the plaintiff was not careful to have a clean exit.<\/p>\n The lawyer for the company that hired the employee described her departure as a \u201cmessy transition.\u201d U.S. District Judge Eskridge, an astute judge and all-around decent guy, rejected that characterization as too charitable to the employee. See id<\/em>. at *7. I know this well because I was the lawyer who argued it was just a \u201cmessy transition.\u201d<\/p>\n Anyway, a messy exit is not what you want if you\u2019re the employee, or the company hiring the employee. You want a clean exit.<\/p>\n But how?<\/p>\n First, you need to understand that everything<\/em> you do on a computer or phone or other electronic device leaves a trail, so if your exit is not clean, the company will<\/em> find out.<\/p>\n Imagination is the only limit to the bad things an employee can do on the way out, but let me give you some examples of common things you should not<\/em> do if you are an employee who wants a clean exit:<\/p>\n This is not an exhaustive list, but you get the idea. The way people usually go wrong is taking or keeping company documents after leaving, soliciting company customers or employees while still employed, or both.<\/p>\n The problem with a messy exit is that it significantly increases the likelihood that a judge will think it\u2019s fair to enter an onerous injunction against you. It\u2019s just human nature. I can argue the case law to the judge all day, but if you did stuff that looks sneaky and underhanded to the judge, it will impact how the judge sees the case.<\/p>\n Luckily, there was a happy ending to the \u201cmessy transition\u201d case, because we successfully persuaded the judge the plaintiff had failed to show the harm at issue was \u201cirreparable.\u201d See id<\/em>. at *8-9. But you can\u2019t count on that.<\/p>\n Speaking of counting, if you get sued for breaking a non-compete, get ready to start counting the dollars you will spend on legal fees.<\/p>\n How much will have to spend?<\/p>\n I\u2019m tempted to say \u201cif you have to ask, then you can\u2019t afford it,\u201d but that\u2019s a little too snarky.<\/p>\n The answer is that it depends in large part on the law firm you hire. If you hire a BigLaw firm, look out. Don\u2019t be surprised if the fees get into six figures within a few months.<\/p>\n Don\u2019t get me wrong, I\u2019m not bashing the big firms. Many of the best lawyers are in BigLaw. (I cover this in depth in Should Clients Pay a Premium for Big-Name Law Firms?<\/a>) But they\u2019re in BigLaw because that\u2019s where the big money is. And they wouldn\u2019t make big money if the bills were not big.<\/p>\n A solo or small firm lawyer will usually cost less. As a rule of thumb, you should be prepared to spend at least $10,000 for the initial temporary injunction stage of a non-compete lawsuit. I explain at my video How Much Does a Texas Non-Compete Lawsuit Cost?<\/a><\/p>\n Now let me be blunt for a moment. If writing a check for $10,000 is a financial hardship for you, then you should probably not be playing at this table. That may sound harsh, but it\u2019s the reality.<\/p>\n Truth is, if you can\u2019t afford that, then your former employer will be in a position to try to bully you into submission, because they can afford to pay lawyers and you can\u2019t.<\/p>\n And believe me, they know this. So if you expect to be in a non-compete dispute, start building up your rainy day fund now.<\/p>\n That brings me to the number one song of 2024. \u201cLose Control<\/a>\u201d by Teddy Swims. That\u2019s what you don\u2019t want.<\/p>\n The bottom line is that if you want to have any control over your destiny, you\u2019re gonna need gas in the tank and money in the bank.<\/p>\n _______________________<\/p>\n Zach Wolfe (zach@zachwolfelaw.com<\/a>) is a Texas trial lawyer who handles non-compete and trade secret litigation at Zach Wolfe Law Firm (zachwolfelaw.com<\/a>). Thomson Reuters has named him a Texas \u201cSuper Lawyer\u201d\u00ae for Business Litigation every year since 2020. <\/em><\/p>\n These are his opinions, not the opinions of his firm or clients, so don\u2019t cite part of this post against him in an actual case. Every case is different, so don\u2019t rely on this post as legal advice for your case. <\/em><\/p>\n<\/div>\n\n","protected":false},"excerpt":{"rendered":" Quick, can you name the number one song of 2014? I\u2019ll help you out. It was \u201cHappy\u201d by Pharrell Williams. But to be honest, I was not so happy in early 2014. I had just lost my job working for a Houston law firm. Fortunately, I had a good paying client who was being sued […]<\/p>\n","protected":false},"author":1,"featured_media":33619,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[97],"tags":[22413,13604,5200,22414,3210,3862,1003],"dealstore":[],"offerexpiration":[],"class_list":["post-33618","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-legal","tag-departing","tag-employee","tag-lessons","tag-litigation","tag-rodeo","tag-ten","tag-years"],"yoast_head":"\n1. Clients usually ask the wrong questions<\/strong><\/h3>\n
2. The most immediate risk to the employee is that your new employer will get scared and fold.<\/strong><\/h3>\n
3. The next most immediate risk to the employee is drawing a judge who likes non-competes.<\/strong><\/h3>\n
\n
4. A \u201cclean exit\u201d is the best way for an employee to reduce the risk of an injunction.<\/strong><\/h3>\n
\n
5. Money changes everything.<\/strong><\/h3>\n
![\"\"](\"https:\/\/fiveminutelaw.com\/wp-content\/uploads\/2020\/05\/Head-Shot-Casual-300x240.jpg\"\/)
![\"\"](\"https:\/\/fiveminutelaw.com\/wp-content\/uploads\/2020\/05\/Head-Shot-Casual-300x240.jpg\")
<\/p>\n