Noncompete agreements protect employers' client information

When Brandon Dake and Andrew Wells left architecture firm Butler, Rosenbury & Partners in July 2004 to strike out on their own, they were bound by noncompete agreements.

Because of their status as shareholders, Dake and Wells were precluded from working with anyone on Butler, Rosenbury’s client list for two years.

Geoffrey Butler of Butler, Rosenbury said the noncompete agreement is important.

“When you buy into the business, you’re committing to be a part of this business for an extended period of time,” he said. “At the same time, you’re going to be privy to information – potential clients, projects we’re chasing – that could be used to benefit someone else.”

He added that the other employees – including staff architects – are not bound by the same agreements, in large part because the demand for good architects outstrips supply.

Dake and Wells formed Dake Wells Architecture and expanded into other sectors of the construction industry – a fact that Wells said led to the company’s increased work in new school construction.

“We had some contacts in the K-12 arena, and we used those to our advantage,” Wells said. “We’ve built now – in the first two years – a pretty healthy portfolio of K-12 work.”

Wells said he and Dake also do work for higher education institutions and churches – their projects while at Butler, Rosenbury included the Gittinger Music Center on the campus of College of the Ozarks near Branson and First & Calvary Presbyterian Church in Springfield. Dake Wells’ workload now is about 50 percent institutional.

Working with noncompetes

Dake and Wells honored an agreement that is fairly common, especially in industries that work with lists of clients or specialized techniques and training.

David Agee, an attorney with Blackwell Sanders Peper Martin, said noncompete agreements protect against two types of information: client lists and trade secrets.

“You’re not prohibiting the employee from competing against you in general,” Agee said. “You’re just trying to prevent them from using customer contacts or proprietary information to do so.”

Many noncompete agreements have geographic boundaries, though Agee said that is changing as Internet use increases.

“People now have businesses that compete far beyond traditional geographic boundaries,” he said. “If you look at what you’re really trying to protect – customer contacts and relationships and trade secret information – the geographic boundaries aren’t as applicable as they once were.”

He also said that some sectors lend themselves more to those agreements – especially sales.

Noncompete agreements must not overly restrict the employee’s ability to make a living, but not signing an agreement requested by an employer can lead to trouble for a worker.

“If they refuse, this is an at-will state, and that can be grounds for dismissal,” Agee said.

Violations can be severe.

Springfield-based Oxford HealthCare is pursuing damages against two former employees who violated noncompete agreements.

Pearl Copeland and LuAnn Helms left Oxford in 2000 to work for Integrity Home Care in Springfield. The Missouri Supreme Court ruled that the move breached their agreements not to work for competitors within a 100-mile radius of Joplin for at least two years. A lawsuit filed by the two employees to declare the agreements invalid was thrown out of court.

Moving on

With a strong portfolio on which to build, Dake Wells now can expand its horizons; its noncompete agreement with Butler, Rosenbury expired in July, corresponding with the company’s second anniversary.

The newly opened market should lead to more work in the future, Wells said.

“We’ve contacted some of our former clients to let them know that our noncompete has expired, and then as they have things that come up, we’d be happy to do them,” he added.

Former boss Butler added that he’s not too worried about the new competition; most of Dake’s and Wells’ work for his firm was for churches and cities – a sector where there isn’t a lot of repeat business.

Butler, Rosenbury’s size, he added, also helps.

“Ultimately we know we’ll lose some (employees), because the fit’s not right or they want to start their own business,” Butler said. “If they leave as great architects, at least we got the benefit of them being a great architect while they were here, and maybe they’ll appreciate what they learned here.”[[In-content Ad]]