In a few months, I’ll hit the 7-year mark of having my own law firm. During that time, I’ve done one thing more than anything else: Defend poor and working class people against immoral, unethical, abusive non-compete agreements that are illegal restraints of trade. Here are the highlights of what I have learned.
- 50 million Americans or more are subject to or have been subject to bogus non-compete agreements. The estimates of how many people are subject to non-compete agreements are way too low. Just because you don’t hear about non-compete agreements in a certain business or industry doesn’t mean they aren’t there. They are.
- Non-compete agreements are everywhere. There used to be a time when non-compete agreements truly were limited to high-ranking employees and executives. Those days are gone. Non-compete agreements are at every level of every industry. Security guard, factory workers, foster parents, fast food workers, interns. There are millions of poor people and working class people who are struggling just to survive and provide for their families– but they’re blocked from taking better opportunities because of bogus non-compete agreements. Those are the most egregious examples. But non-compete agreements are used everywhere else: Sales people, doctors, engineers, mortgage loan officers, personal trainers. The fact that some of these people make more money than others does not change the fundamental, legal truth: The overwhelming majority of non-compete agreements are not being used to prevent unfair competition. They are being used to prevent ordinary competition. And that is illegal.
- If someone can start a company, go on Google, learn the business, find the customers, and easily compete against you, that means you don’t have any secret sauce, proprietary methods, protectable customer relationships, or extraordinary training. I hate to burst your bubble, but your real estate investment company, SEO firm, or private security guard company is not the greatest new thing since sliced bread. You do the same thing that hundreds if not thousands of other companies do. You just pretend like its special because (1) Your ego is fragile and you want to feel special and (2) Your afraid of fair, ordinary competition.
- America’s non-compete crisis was created by management-side corporate lawyers trying to create more work for themselves and generate more revenue. Non-compete enforcement is big business for lots of major law firms. These corporate law firms started pushing aggressive use of non-compete agreements back in the 1990s. Non-compete agreements were supposed to be the exception, not the rule. These corporate lawyers normalized the use of non-compete agreements. By doing so, they set up future non-compete enforcement cases and big revenue streams. Of course they’ll deny this and say that what they’re doing is in their clients’ best interests. Its not. But many companies have been sold this myth of non-compete agreements as necessary for risk management and protecting the company. It’s become business as usual.
- No matter how egregious the case is, no matter if its a factory worker, a janitor, a foster parent, or a security guard, there will always be a lawyer and a law firm willing to represent the company, file a non-compete lawsuit, bill the hours and get paid. If you doubt that, just take a look around. Somebody just sued a janitor on a non-compete agreement up in New Hampshire.
- There are hundreds if not thousands of lawyers throughout the country who have built entire law practices on suing poor, working, and middle class Americans on bogus non-compete agreements. These lawyers often are accustomed to filing lawsuits against people who do not have the resources to defend themselves. Many of these cases are filed in state court. Many of these cases are resolved very quickly. The corporate lawyer sues to enforce the non-compete. The defendant can’t afford to hire a lawyer, or, hires the only lawyer they can afford. Facing possible financial ruin, the defendant agrees to a settlement. As part of that settlement, the parties enter an “agreed order” resolving the case. The corporate lawyer writes that agreed order. The order, written by the plaintiff’s lawyer, contains pages of outlandish lies about how the company has established legitimate, protectable interests in confidential information, trade secrets, customers, training, etc. These lies are represented as the court’s “findings of fact”. Because the order is agreed, there is no opposition, and many state court judges throughout the country have literally thousands of cases on their dockets, they sign off on the agreed order without a second thought. The company now holds this “agreed order” up as proof that its non-compete agreements are 100% enforceable. They use to to intimidate workers from taking better paying jobs. And the corporate lawyer holds such cases up as examples of his handiwork; proof that he’s right; evidence that he’s a fearsome non-compete enforcer.
- Opposing counsel will never take you seriously until you metaphorically punch them in the face. I’ve litigated dozens of non-compete cases. I’ve been involved in hundreds of non-compete disputes. Every single time, without fail, opposing counsel shows up and tells me some version of the following: The non-compete is enforceable. It’s a simple breach of contract matter. They’ve done this before. They know what they’re talking about.
- Every single time this happens, I tell opposing counsel the same thing: I litigate lots of these cases. I can direct them to several of my own cases that definitively establish the non-compete agreement at issue is illegal and unenforceable. I can direct them to dozens of other controlling cases that, likewise, support my position. They really don’t know what they’re getting into. And every time, opposing counsel gets their knickers in a twist and tells me to “Stop posturing.”
- Apparently, none of these lawyers actually understand the meaning of the word “posturing.” I have told so many corporate lawyers: You’re wrong. You’re going to lose. And every single time it’s “Stop posturing.” We have gotten months, even years into litigation. Opposing counsel starts to realize that I’m slightly crazy. Opposing counsel starts to realize that I am morally committed to the case, no matter how many hours it takes, no matter how much money it costs me to litigate. There have been several cases where we have invested $100,000 worth of attorney time and $10,000+ of hard, out-of-pocket costs to defend a poor or working class person against a bogus non-compete agreement. And there have been a couple cases where it’s gone far past that: $200,000+ in attorney time, $20,000+ worth of case expenses. I’m sorry, but no other lawyer in America does that. I’m the only one. So when I tell you, “You can pay me my money now or you can pay me more later” I’m not joking. I’m dead serious. On numerous occasions, in the middle of the case, opposing counsel has brought up settlement. And I tell them point blank: “There’s a fee provision. We will prevail and you will owe us all of our attorneys’ fees. If you want out now, you agree the non-compete is unenforceable and you pay us $125,000 in fees.” The other side always flips out and rejects this out of hand. They call me crazy. Unreasonable. Unfair. Ridiculous.
- Look, I don’t care if you billed your client $75,000 for this steaming dumpster fire that you created. Our firm took a leap of faith, defended this poor person without charging them a dollar, we’ve got $125,000 in attorney time in the case, we’ve got a prevailing party fee provision, the non-compete agreement is unenforceable, and I will get my money. Pay now or pay more later. And every single time, opposing counsel explodes, “Stop posturing!”
- It’s not posturing when it’s true. Consider the evidence available: I already put $125,000 or $200,000 in attorney time and $10,000+ in out of pocket costs into the case. Do you think I did this for $10,000? Or $50,000? Do you think I’m going to tap out when I am straight up destroying you and, in the process, vindicating the rights of some poor person who has been beaten down and abused by the system? Don’t you realize this is what I went to law school for? Don’t you realize this is what I live for? What logic or analysis leads you to believe that I will ever stop? What logic leads you to assume that, after investing all of this time and money and effort, I’m just going to say, “Nah. Let me just stop savaging these people who deserve it. Let me just give up on this matter after investing $200,000 of attorney time and $10,000 in hard case costs. I’ve been litigating this case for a year and a half. But I guess I’ll just walk away. Why bother putting another 9 months into the case and winning at trial? At that point, we get an actual judgment holding the non-compete unenforceable and $400,000+ in attorneys’ fees. I guess it’s not worth it. I guess the other side and their lawyers have learned their lesson. I guess I should just accept $25,000 and be really thankful and go home.”
- ABE. Always Be Escalating. Like Mike Tyson said, everybody has a plan until they get punched in the face. You have to metaphorically punch your enemies in the face, especially in these cases. You’re representing poor people, working class people, middle class people. You’re representing people who have no way of affording serious counsel. Nobody with a middle class income can afford to pay for serious, sophisticated, dedicated, ruthless, go to the mattresses legal counsel. That costs big money. On the flip side, you’ll always be up against companies with deep pockets and more resources. The only way you win a fight where that’s the starting landscape is by taking the fight to your enemies. If you sit back and play defense, the other side will roll you. You’ll lose. You have to be ready to go from the jump. And you have to be in constant attack mode. At every step of the litigation process, you have to sit down with your team, evaluate any new developments and the current landscape. Predict the other sides’ possible moves. Box them in. Set traps for them. Revaluate the long-game and make sure you’re on pace to win the case at trial and on appeal if necessary. Establish the evidentiary record. And find the next escalation point. ALWAYS BE ESCALATING. Scour the available facts and evidence for any possible evidence you can find. Whenever possible, sue the other side. Sue them for wage and hour violations under the Fair Labor Standards Act. Sue them for defamation. Sue them for fraud. Sue them for breach of contract. Sue them for false advertising in violation of the Lanham Act (if you have standing). Sue them for antitrust if you’re a genius like that. But sue them for something, seize that leverage and ALWAYS BE ESCALATING.
- Never let the other side relax. Never let them sleep sound at night. Make them have nightmares about you. Keep coming at them. Constant barrage. Every single day. Create problems for them. Learn how you can create massive, ugly problems for the other side with a relatively small investment of time. You spend 10 hours putting something together. You drop it on the other side. And it causes them 200 hours+ worth of chaos, research, investigation, etc. Obviously, the smarter you are, the more advanced your skill set is, the better that ratio. And when you’re up against opposing counsel who have no idea what they’re doing, or, get outside of their wheelhouse but pretend like they’ve still got the case under control– You’ll get a fantastic ROI in terms of inflicting damage. You’ll spend 10 hours on something and inflict 300++ hours of chaos and attorney time on the other side. I’ll give you a real life example: I put together a federal lawsuit against the other side for false advertising in violation of the Lanham Act. It took me less than 8 hours to review the facts, research some law and draft the complaint. It took the other side $50,000+ in attorneys’ fees to attempt to understand the law and write a motion to dismiss. The court denied their motion to dismiss and sustained my Lanham Act case. Why? Because I was right. It was a legitimate case. They were wrong. That’s the sort of ratio you want. In one single day of work I just cost them $50,000 and chaos. And I won.
- Consistent with the foregoing: Play to collapse and destroy your adversaries. Never go halfway. Never litigate the case to where it’s 80% over, the other side is on the brink of collapse, they’re increasing their offer and begging to settle… Never get to that point and relent, take your foot off their neck, ease up on the pressure, and let them breathe. Never do that. Relatively speaking, these are not big dollar cases. My sexual assault case against Walmart– That’s a big dollar case where we are seeking millions in damages. These are poor and working person non-compete cases. We’re generally talking about some wages or relatively small damages for the employee and then attorneys’ fees. Let’s say the total dollar range at issue (including fees) is $100,000 to $300,000. This isn’t a huge sum of money. But nobody voluntarily writes you a check for $200,000. Particularly no company represented by corporate lawyers who are trying to save face and justify their own existence and justify how/why they got their client involved in a completely unnecessary non-compete quagmire. Nobody is paying you $200,000 out of the goodness of their heart. They’re only going to pay you if you collapse them and force them to pay you. 80% over means you’ve still got 20% more work to do. 80% destroyed means 20% alive and kicking and, therefore, still dangerous. You must play until you break your opponents and fully collapse them.
- True story: I settled one of these cases where there the employee didn’t have any valuable claims and the money was all attorneys’ fees. I gave the employee $25,000 of MY FEES. That’s right. I gave them $25,000 of my own money. I wrote them a check for $25,000 because I just wanted to help them out. I’ve donated some of my fees to clients numerous times. But yeah, I’m the bad guy.
- Many courts do not understand how non-compete law works. In certain jurisdictions, trial courts routinely get reversed in non-compete matters. In certain jurisdictions, courts have created various pro-non-compete legal doctrines. That’s a problem where the state’s non-compete law exists in a statute. But it’s undeniably true. So in many of these cases, you will need to execute perfectly or you will lose. You have to make 100 perfect moves and the other side only has to get 1 thing right. It’s absurd. It’s messed up. But that’s how it is. There are many judges who are philosophically pro-non-compete. This problem is particularly acute in certain jurisdictions. If you’re in one of those jurisdictions, you cannot afford to make a single mistake.
- Every once in a while, you’ll be a year or more into one of these cases, handling it for free, fighting the good fight, doing righteous work. And some bad facts will come to light. And maybe those bad facts aren’t dispositive, but they create a problem. They make the employee look bad. They could give the court a reason to rule against you. They could change the odds from 90/10 in your favor to 70/30 or worse. In those cases, you get your client out of the non-compete and walk away. You do whatever you can to get them the best deal possible and you forget about ever getting paid. You eat the fees and costs. I ate $200,000 of fees and costs in a situation like that. It sucks. But life goes on. And I never let the occasional disaster deter me from my mission. Matthew 25:42.
Jonathan Pollard is a competition lawyer based in Fort Lauderdale. He has appeared in or on the New York Times, the Wall Street Journal, the Guardian, Bloomberg, Inc. Magazine, FundFire, PBS News Hour and more. His office can be reached at 954-332-2380.