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#425: Don't Be So Quick to Sign a Non-Compete Agreement

Posted By Mark Haas CMC FIMC, Friday, October 29, 2010
Updated: Monday, November 1, 2010
I have a client that wants me to agree to a "non-compete" agreement that would prohibit me from working with any of their competitors for two years. Should I agree to these terms?

It's is important to carefully evaluate upfront not only the specifics of what is being asked of you (i.e., the details and rigidness of what is being agreed to), but how potentially important working for these competitors in the future is for you. Are you in a field where there are only a handful of potential clients and many of these are specified as competitors of the client in question? Or do your potential clients number in the thousands and the client simply doesn't want you to share what you've learned from working with them with anyone else. It is critical to gain a thorough understanding of what is being asked of you by signing.

Second, consider what is behind the request. Is this just a common business practice for the person asking you to sign, or does it reflect a lack of trust on their part about you? In either case, there may be a conversation you need to have beyond the subject of the non-compete agreement to resolve some outstanding issues.

Tip: In general, you might avoid having to sign a "non-compete" agreement in your area of expertise by simply stating to your client (only if true, obviously), "I've never been asked to sign one before". Or, "I certainly am willing to sign anything that is reasonable, let me check with my legal advisor. We may want to reword this to our mutual satisfaction."

© 2010 Institute of Management Consultants USA

Tags:  client relations  communication  ethics  goodwill  legal  reputation 

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