You have started a new job, or you are going into business for yourself. In the midst of this exciting time, you receive a certified letter from your former employer’s attorney demanding that you stop competing with your former employer, and threatening to sue you and your new employer or business.
Showing a lawyer’s proclivity for using two words when one would do, the letter will usually contain the phrase “cease and desist.” Or, the first time you learn that your former employer has any trouble with your new job or business is when a state marshal shows up on your doorstep and serves you with a complaint, which starts the process for your employer suing you about your new business. We will talk about the process once you are in litigation in another article.
The first thing to do after you receive a cease and desist letter is take a deep breath. Don’t immediately think you need to give up your new business, or that because you were sent this letter, you need to cancel that expensive lease you signed for your new office in Stamford. It doesn’t take a lot of money, or sound legal claims, to have a lawyer draft a scary letter, so don’t conclude from the letter that your former employer can do something to keep you from pursuing your new business. With a strategy that takes in account the legal risks and your employer’s motivation in sending the letter, you can greatly reduce the chance that your employer will be able to mess with your business. A Connecticut lawyer experienced with the law of non-competes, and their practical effect in the real world, can help you develop this strategy.
Now that you have taken a deep breath, what is the first question you, and your Stamford non-compete lawyer advising you about your new business, need to answer?
You may think this is the first question you need to answer is:
Is the non-compete enforceable?
This is not the right question you need to ask first.
The actual question you need to answer first is:
Why is your former employer sending the cease and desist letter?
Every lawyer who has experience working with Connecticut non-competition agreements knows that many employers have enforceable non-compete agreements but rarely enforce them, while other employers have weak non-competes, or no non-compete at all, but will still aggressively pursue former employees they believe are harming their business.
Since you have already received a cease and desist letter, you know the employer has some concerns with your new business, but sending a cease and desist letter does not necessarily mean they are planning on engaging in scorched earth litigation. Employers have many reasons for sending a cease and desist letter:
- Bluff and bluster: The former employer may know it legally has no grounds to keep you from opening your new business, but it may want to make you worried by having its lawyer send a cease and desist letter. A lawyer experienced in Connecticut law of non-competition agreements can usually quickly tell when even a scarily drafted letter is a bluff.
- Paranoia: When an important employee tells a company that she is leaving, but doesn’t say exactly what her new business will be, some companies will start speculating about all the awful things she can do to the company, and will act based on the speculation rather than the facts.
- Education: The former employer may just want to make sure you know what your obligations are so there is not a misunderstanding.
- It’s A Problem: The employer may sincerely believe it has the right to stop you, and intends to do everything it can to do so.
Each of these motivations require a different strategy determined by a close examination of the language of the non-compete, what your new business or job involves, and the business of your former employer. But once you have identified why the employer sent you the letter, you and your Connecticut non-compete attorney can come up with a strategy to avoid litigation if you can, or gear up to fight for your new business in the most cost-effective and efficient way if litigation is unavoidable. We will discuss how to avoid litigation, and what is involved in litigating a Connecticut non-competition agreement, in future articles on this site.