Before your accounts get raided, you should consider doing some advance planning. There should be a strategy in place to give you a chance to stop unfair competitors and former associates from taking your accounts. You should be in a position to show that any unauthorized transferring of your client accounts is an obvious violation of company rules.
Are you aware that agencies can collect very substantial damage awards from competitors, even when 50% of shareholders leave and transfer accounts that they have personally produced?
- When departing associates start to raid your accounts, you should study the unique forms of injunctions available to stop the exodus.
- Before it happens to you, decide what you really consider to be your agency's important proprietary material. That's what you have to protect.
- Company proprietary information that is truly important should be identified in a written policy memorandum, reminding everyone in-house that it is confidential. Have employees sign off, acknowledging they understand. Even 'partners' should sign.
- Customers files, renewal information, customer lists, and any records containing such information should be kept in a secure manner, locked at night. At the very least, it should be stated in writing that such security is the company's intention. It is not easy to enforce such rules, but you should be able to show a court that you tried.
- Maintain a written policy that forbids removing customer information and files from company premises; warn against copying them except on an individual-account basis, as needed.
- Be able to show that your company restricts access to files to those who need them to perform their duties. Have a sign-out prohibiting copying of important documents without approval of some company person in a responsible position.
- Adapt a rule prohibiting copying of important documents without approval of some company person in a responsible position.
- Have an instruction sheet to give to departing personnel, expressly reminding them of their continuing duty to keep company information confidential. Try to get departing employees to sign the form; this practice will help you even if some other employee or associate who has not signed tries to abscond with your accounts.
- Have your counsel determine which forms of covenants not to compete, when combined with trade-secret agreements, would have a reasonable chance of being enforced - even against a former employee.
- In advance, a complete plan should be developed to save your agency's business from being raided by unfair competitors and former friends.