Key Employees Leaves and Become Our Competitors, Ripping Off Your Identity

Author Richard Solomon is a conflicts and crisis management lawyer with 50 years of experience in business development, antitrust and franchise law, management counseling and dispute resolution including trials and crisis management.

One of the crisis situations I frequently deal with is key employees/affiliates who decide to leave and rip off the system of the firm they just left. There are two ways to deal with this. Both are good in certain circumstances. Most firms always do both, no matter what. Face it. Lawsuits are lucrative and clients are so upset at this moment that it is easy to get expensive litigation projects underwritten. There are usually covenants not to compete and NDA agreements in place that on their face appear to be breached. On the other hand, knowing when and how to deal with this without big budget litigation is where Tamerlane Group beats the competition most of the time.

The sophistication lies in parsing the situation in search of functional weaknesses of the departing cabal. When you find the functional weaknesses, knowing now to exploit them to bring down their new enterprise is where value lies.

I have heard so many stories about how it would have been less injurious simply to let the cabal get away with their plan than to pay for the litigation approach. In many instances there is no realistic remedy other than litigation. When that is so the metrics will tell you to do that.

Most firms, and all large firms, don‘t know how to find these metrics because they have only templated response resources calculated to maximize fee revenue. Frequently you can cure a two million dollar problem with a five million dollar lawsuit or series of lawsuits. You can sue each member of the cabal separately for their individual acts of treachery (if you can find a bona fide separate claim against each). Often because of geographic spread of the challenged conduct, you could sue them in different courts in different states to make it just as expensive for them in at least relative terms. If money is no object and you don’t mind paying for overkill, that may be what you want. However, most companies I know would rather find the under hundred thousand dollar effective remedy if it is available, saving the mother lode in reserve for use only if that proves to be the only thing that might work.

Each of these cases is fact specific. There is no one size fits all scenario other than the big lawsuit agenda. Litigating people into poverty frequently leaves you with painful hindsight. If you are a large, publicly held company and are therefore not spending your own money, that is usually the call. These days, however, the firm being ripped off is usually not the large mega firm with extremely deep pockets. In those situations insights are needed to fight the good fight with non litigation tactics.

These other than litigation tactics often include ways to make the defecting pirates come after you In ways that you know you can easily fend off. There are often choke points where the offenders can be made to feel pain and that can be really debilitating for a start up company without a war chest. Finding these choke points and knowing how to exploit them is where expertise comes into play.

Often the cabal can be frustrated into failure through effective communications campaigns. The big firms hate this because they don’t know how to do it and fear rebound risks they are unable to assess. But the name of the game is to find what works starting with the less than thermonuclear campaign.

Ask the firm you are thinking of using about their history in dealing with this situation and what they found useful in those other cases. If you ask this you will probably find that the firm you are considering has no or very little history to share with you. Ask them to give you a proposed war plan. A competent law firm can do that in less than one day. That should reveal their ability to mount effective conventional tactic campaigns instead of massive litigation. These things happen so fast that you have time to try more than one approach if you know what the approaches are and how to act rapidly. Most of the time taking too long to come up with a multivariate campaign leaves only big budget litigation as a usable weapon. Frankly, that is just ignorance at work. Tactical sophistication is what is needed. Throw weight is always available if tactical moves fail to accomplish the thwarting of the cabal.

The next time your key people decide they can leave and take your “proprietary” secret sauce stuff with them, call the experts rather than the whole bloody tank corps.