A prospect wants me to sign a ‘non-compete’ clause. It's a sizeable contract but I am reluctant to sign a non-compete. I've never signed one before. Should I just tell them I won't sign it?
If you flatly state that you won't sign under any conditions, you are at high risk of losing the assignment and maybe that's acceptable to you. But there are other things you can do to handle this situation more effectively.
Start by determining, without being defensive or antagonistic, the rationale, history, and flexibility the organization that is behind their request for the non-compete. It may be that they have been recently burned by a consultant or just that they have a conservative legal counsel. Once you have the business reasons for their concern, explore alternatives with your client. Describe these alternatives in the form of scenarios they will accept, person to person. Don't get into the legal terms - those are for formalizing what you two agree to in business terms.
Then run this past your attorney. The clock is ticking, so act quickly. Find out what your attorney recommends in order to minimize your exposure and liability in time and dollars. Go back to the client with suggestions for revisions (or it may be that your attorney has recommended you not sign) and would like to talk to the client's attorney. The key in successfully resolving this situation is to maintain a highly cooperative attitude (in business terms) while making sure to limit your exposure and freedom (in legal terms). Tip:
Some non-compete clauses are unnecessarily restrictive and guard for every possible contingency. Given that your objective is to improve the effectiveness of the client's condition, consider framing your non-compete discussion in terms of how, given your professionalism and ethics, a non-compete is a constraint on that effectiveness. Make a strong business case for an appropriate non-compete, or none.© 2010 Institute of Management Consultants USA