Corporate Litigation

Corporate Litigation: Public Relations and Risk Management Considerations

As a business owner, it is essential to protect sensitive information, customer lists, and other valuable assets through the use of corporate agreements: non-competes, confidentiality agreements, and the like. Prevention is truly the best medicine in this case, and attorneys who are experienced in the business sector are likely to recommend executing these agreements whenever possible.

What happens, though, when an employee or other third party violates one of the agreements you have in place? A lot is at stake for you as a business owner. Your business is not just your livelihood, but also a large part of your identity. Of course such violations can stir up feelings of disappointment, betrayal, and insecurity. So what is the best way to proceed? Should you always take legal action when a former employee goes to work for one of your competitors, or a vendor discloses privileged information to another business similar to yours, despite the agreements you carefully put into place to protect yourself?

Some attorneys may be too eager to pursue litigation, driven by their own business interests instead of your own. Litigation can be time-consuming and unpredictable, which means it can be almost limitlessly expensive. Financial considerations are not the only roadblock, however. Corporate law attorneys should also emphasize to business owners that all potential litigation must be assessed to ensure that the benefits outweigh the risks. For example:

Business A, a veterinary hospital, has a non-compete agreement with Employee A, a kennel tech and the single mother of two pre-schoolers. When the employment relationship ended, Employee A immediately sought and obtained another job in the same field and the same geographical area, despite the non-compete she had previously signed, in order to put food on the table for her two children. Even though it is frustrating to lose an employee to a local competitor, the public relations consequences of suing a struggling single parent will almost certainly outweigh any possible benefit of restricting Employee A’s ability to work in the field.

Let’s say Employee B recently quit his job due to a hostile and discriminatory work environment. Unfortunately, Business B recently learned that its managers were treating certain employees less favorably based solely upon their race. After resigning, Employee B promptly disclosed several trade secrets during his search for a new job, violating the non-disclosure agreement he had entered into with Business B. Instead of charging ahead with litigation, a thoughtful attorney will investigate all of his potential counterclaims, which may be much more catastrophic to Business B and its owners than the confidential information that has already leaked.

The attorneys at CPLS, P.A. are here to offer assistance with 1) drafting and executing protective agreements between employers, employees, and other third parties, and 2) advising business leaders of the best course of action to take when an agreement is violated. Always take care to weigh public relations and risk management considerations against any potential litigation you are considering as a business owner. If you are interested in learning about my experience as a corporate law attorney assisting business leaders and entrepreneurs in our community, please email me at mcannon@cplspa.com or call me at 407-647-7887.

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