Archive for the ‘Litigation’ Category

Non-Compete Clauses: Yes, They Can Be Enforced

It seems to be a common misconception that non-compete agreements are not enforceable in New Mexico. When we talk about non-compete agreements, the first question to ask is: To whom is the non-compete being applied? If a vendor or other business with access to your trade secret information, such as your customer lists, you can certainly require a non-compete on such vendor or other business especially as it relates to using your trade secret or confidential information to compete against your business. If the non-compete is being applied to an employee, then it must be reasonable.

Reasonableness is the Key Factor

To be enforceable in New Mexico, a non-compete agreement must be reasonable in all respects. The geographic area in which a person is not allowed to compete must be reasonable. The time period during which a person is not allowed to compete must be reasonable. The activity in which a person is not allowed to engage must be reasonable. The consideration given in exchange for a person’s agreement not to compete must be reasonable.

Unfortunately, there is no hard and fast rule for what “reasonable” means. As a general rule, the less specialized a position is, the more lenient the terms of the non-compete agreement must be to be considered reasonable. For example, a global company that is one of only a few companies that supply a particular and very specialized product could conceivably prohibit its key personnel from working anywhere in the world for any of the few other companies that supply that product. On the other hand, it may be unreasonable to prohibit a part-time cashier in a retail store from working in any other retail store, even one located next door.

To make a reasonable non-compete agreement, a business should carefully tailor its non-compete agreements to prohibit competition that actually hurts the business. First, what particular work does the employee perform for the company that, if the employee performed the same work for a competitor would harm the company? A non-compete agreement should restrict the employee only from engaging in that particular work for a competitor, and the non-compete agreement should certainly specify that using confidential or trade secret information is prohibited.

How small can the restrictive area be? If your business relies on its convenient location to attract customers, the restrictive area in the non-compete agreement might be unreasonable if it exceeds the business’s neighborhood.

How long should the restrictive time duration be? If your customers are unlikely to follow a departing employee to another business after that employee has not been in the business for a few months, a restrictive time period of one year might be unreasonable.

Fair Consideration is Also Important

Like all agreements, non-compete agreements need to have consideration, which is a fancy legal term for some sort of compensation for the restriction of a non-compete. However, unlike other types of agreements, the courts will look into the sufficiency of the consideration for someone’s promise not to compete — that is, was the compensation paid for the restriction reasonable? If the seller of a business promises not to compete with the buyer, the courts will assume that the seller was sufficiently compensated for his promise with the payment for his business. No such assumption applies when the person promising not to compete is an employee. Offering an existing employee continued at-will employment in exchange for a promise not to compete is probably not adequate consideration. On the other hand, if an initial offer of employment is contingent on a non-compete agreement, the offer of employment might be adequate consideration.

Again, the key to having an enforceable non-compete agreement is to make it as least restrictive as absolutely needed to protect your business. There is usually no need to have an agreement that prevents a person from earning a living in his or her field, and the courts probably won’t enforce such an agreement anyway. Remember, the goal of a non-compete agreement is to protect your business from losing its customers – not to punish an employee who has the audacity to leave your company’s employ.

Business Law Southwest, LLC (BLSW). Business Law That Makes Business Sense. A Slingshot company.

Top 10 Tips on How to Win a Lawsuit

Let’s face it, no reasonable business leader wants to find themselves in a lawsuit. But, in certain circumstances, there are simply no other options. What is very common amongst many business leaders, is to underestimate the expense, hassle and emotional drain. Furthermore, what is probably the hardest issue to explain, is that even if all the facts and the law is on your side, “winning” is never certain. Furthermore, it begs the question, “What does winning really mean?” After all, if you’ve spent $100,000 suing someone for $50,000, even if the court decides in your favor, is it really a win?

If there are no other options to resolving a dispute other than a lawsuit, we’ve prepared these Top 10 Tips on how to win a lawsuit. Take these to heart, but remember that every dispute, business and situation is different.

1. Documentation, Documentation, Documentation

It is almost always the case that the prevailing party is the one that best documented its position prior to a dispute developing. This is the single greatest predictor of the “winner” of the dispute. In fact, having proper documentation available prior to the dispute can overcome almost all of the remaining tip below. The implication of this fact is that you must create and maintain documents reflecting the details of every action that may result in a dispute later. Of course, meticulous documentation of everything can be cumbersome and others may find it annoying, concerning, comical, or worse. Just know, you are protecting yourself every time you document things.

2. Being a Reasonable Person

Being a reasonable person is not always an easy thing to control. But, striving to be reasonable, both before a dispute and after it has erupted, is essential to prevail. This general rule will be reflected more specifically in other concepts below. It is nonetheless important to consider your reasonableness at all stages. “Bouncing” ideas off friends, colleagues and/or your attorney can often reveal whether you are compliant with the ideal, or not. Furthermore, there are strategic reasons to potentially be willing to compromise or even willing to lose a battle or two, in favor of the greater war.

3. Consistency

In your conversations, e-mails, texts, and other documents, having a consistent position is essential should a dispute later arise. Taking different positions as they suit your needs, even about seemingly inconsequential details, can be a significant detriment to the later assessment of your truthfulness. To the extent you are able, be consistent, even if maintaining that consistency is detrimental to position. So long as you still have a valid position (below), you will be well served by doing so.

4. Having a Valid Position

Of course, at some point a lawsuit turns on the merits of the dispute. If your litigation starting position is not viable, you are exceedingly likely to lose. As you have probably heard throughout your life, it is important to pick your battles. See #2, Being a Reasonable Person above. While we lawyers are happy to accept your money, you would be wise to listen to the professionals you hire, and back off on untenable positions.

5. Not Exaggerating Damages

Even valid claims can be severely eroded by taking an overly aggressive stance regarding the damages caused by the other party(ies) offending behavior. Juries and judges do not react well to ridiculous and disproportionate damage claims. Basically, trying to make a mountain out of a molehill may prevent you from even recovering for the molehill.

6. Preparation

Even well-trained lawyers fail at times, so it should come as no surprise that even meritorious lawsuits suffer the same issues. Almost always, the root of the problem can be found in a lack of preparation by the litigants and/or their attorneys. Hiring the right counsel can alleviate this risk, as can your own diligence in making sure that lawyer or legal team is adequately informed and reminded of salient issues.

7. Pre-Trial Motions

Many lawsuits can be resolved favorably prior to a trial with proper pre-trial motion practice by an attorney or litigant. And, if nothing else, this practice can narrow issues and hone the case for trial. Not every case requires pre-trial motions as part of the lawsuit, but it is exceedingly rare that it would not be beneficial.

You should also interpret this to mean, “only a fool represents him or herself.” Only licensed attorneys have the training and experience to know all the arcane civil procedures and criminal procedures of the US Jurisprudence system. If you try to represent yourself, especially against a party that is represented by counsel, you are in for a very frustrating experience. You could very-well lose your case, without even going to trial. If you do lose your case, you may be barred from trying again.

8. Knowing Each Witness’ Testimony

At trial, one of the best things to have on your side is knowing what the trial will “look like” ahead of time. Lawyers often say that the best practice is to never ask a question when you are unsure of the answer. One of the tools often at the litigant’s disposal is taking depositions of, and/or interviewing, all of the witnesses prior to the trial. It can be costly at times, but taking advantage of this process aids in ultimately prevailing at the end. Combined with the following two factors, you are on the best footing for success.

9. Obtaining Corroborating Documents

Oftentimes lawsuits boil down to “he said / she said” disputes. These disputes do not easily lend themselves to proving a party’s position absolutely through evidence. However, even in these situations, there are steps that can be taken to enhance the likelihood of the judge or jury taking your “she said” over the other side’s “he said”. In addition to adhering to many of the principles above, uncovering and obtaining documents that match your version, even to a small degree, can shift the weight to your side. If both “stories” are equally plausible, the one corroborated with documents, even if only slightly so, can often carry the day.

10. Examining Every Piece of Evidence

Finally, it is extremely important that the litigant or her attorney examine every piece of potential evidence and analyze how it fits the theory they are advancing. If the evidence is supportive, obviously you will want to highlight it. If, however, the evidence is damaging, it is important to have a plan for neutralizing its impact as much as possible. It is impossible to do these things, if you’re unprepared and unaware of what all of the evidence represents.

In Summary

Obviously, no blog article can provide a complete picture of what it will take to win every lawsuit. But, hopefully, you are armed with some concepts to keep you focused on the correct items. And, if you learned nothing else, make sure you document everything. You owe it to yourself, even if you’re not currently facing a lawsuit, to put the right processes and systems in place in your business, to create business records that can be referred to if and when you ever do face a lawsuit. Even mundane tasks, such as taking possession of something, should be signed for and documented as a recurring business record.

As they say in the legal business, if you didn’t document it, it never happened.

Business Law Southwest, LLC (BLSW). Business Law That Makes Business Sense. A Slingshot company.

How to Evaluate and Respond to a Subpoena

Receiving, or “being served”, a subpoena can be a troubling and confusing event. The first thing to do is not panic nor react. Take a deep breath — this article will give you a high-level overview of what a subpoena is, explain how to evaluate it and how to respond to it.

Types of Subpoenas

Subpoenas may be issued by many different entities, including courts, prosecutors, law enforcement, attorneys, administrative bodies, and grand juries, just to name a few. Regardless of their source, a subpoena is essentially a court order and should be treated seriously. Subpoenas come in many “flavors”, but generally conform to two broad categories: 1) a subpoena for appearance; and/or 2) a subpoena for documents and “things”. Each has its own peculiarities and will be discussed separately below.

In addition to the type of subpoena, there are other aspect of the subpoena to consider when evaluating how to respond. First, it is important to consider the source of the subpoena. How you will respond may vary based on the issuing entity. For instance, the manner in which you respond to a grand jury subpoena may be drastically different that how you would respond to a subpoena issued by one of your friends in a civil dispute. Related to this concern is a consideration of the type of proceeding that forms the basis of the subpoena. Particularly, even the basic distinction between a criminal vs. civil matter may be of huge significance. Second, for our discussion here, your role in the proceeding may be of grave importance. If you are the target of a grand jury (i.e. suspected of committing a crime), your reaction may greatly differ from being served a subpoena as the custodian of routine business records.

Subpoena for Appearance

A subpoena to appear somewhere is exactly that: it is in an order for your appearance in a certain location on a particular date/time. Typically, unless the subpoena also includes a request for documents and “things” (discussed below), the reason for such a subpoena is to obtain your testimony in some manner of legal proceeding. Common proceedings are:

  • Grand jury presentation – to allow the grand jury to consider your testimony related to possible criminal charges, usually against someone else.
  • Deposition – to obtain testimony to be used in a civil case, again usually involving other parties.
  • Trial – may be civil or criminal, but require your testimony in court.
  • Administrative proceeding – there are myriad entities that issue such subpoenas, including licensing bodies, oversight committees, taxing authorities, etc.

When your testimony is the object of a subpoena, it is important to evaluate the expected scope of that testimony and any risks to you or company that may be exposed through that testimony. It is almost always advisable to seek legal advice before deciding how to respond.

It is necessary to evaluate the timing of any subpoena demanding your appearance. There are almost always legal rules governing the type and extent of inconvenience that may be asserted on the target of a subpoena to appear. Things such as length of required notice, scope of geographic inconvenience allowed, and total time investment expected of you, are all considerations that vary depending upon the nature of the subpoena. You attorney can assist you in evaluation the propriety of a particular subpoena, and steps to take if the subpoena is improper in some fashion.

Subpoena to Produce

While a subpoena to appear and testimony is always concerning, a subpoena to appear and ALSO PRODUCE documents and “things” can be even more daunting. Often such subpoenas are far-reaching in scope, even impermissibly so. When ordered to produce documents, the first thing to evaluate is the extent to which such documents are in your possession or control. Oftentimes, a subpoena may instruct someone to produce documents they do not have. However, in many situations, a legally sufficient response may require a party to actually obtain records for production elsewhere, so long as they are in the party’s control. Moreover, there are often options for how to respond to such subpoenas. If you are unsure regarding the scope of your obligation in such a situation, it is imperative that you seek legal advice. Failure to produce documents when subpoenaed may result in contempt sanctions, as many subpoenas are no different than explicit court orders. And, failure to respond to a court order is obviously a serious matter (and may even be criminal in limited circumstances).

Consideration for Liability

As a final consideration for the purpose of this article, it is indeed necessary to evaluate your role in the relevant proceeding. Most importantly, you must consider your potential liability and consequences to you (or your organization) for appearing to provide testimony, procuring and producing records, or doing neither of these things when facing a subpoena. As everyone knows from television and movies, there occasions when we each have the right to remain silent, and failing to do so may be used very effectively against you. And, even if you have done nothing wrong, it can nonetheless be exceedingly important to protect your and/or your business’ privacy. Guidance of a trusted attorney is your best protection when served a subpoena.

Business Law Southwest, LLC (BLSW). Business Law That Makes Business Sense. A Slingshot company.

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