When a business partner decides to take clients and start their own business, it can feel like a significant betrayal and a serious threat to the stability and success of your current business. In Florida, as in many jurisdictions, there are legal and practical steps you can take to address this situation. The specific actions you can take depend on the circumstances, including the legal structure of your business, any agreements you and your partner may have signed, and the specific actions your partner has taken. Here are some tips on navigating this challenging scenario.
Legal Considerations
Review of Agreements
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- What to Look For: Examine partnership agreements for clauses that outline the process and repercussions for dissolution, breaches, and competition. Look for non-compete and non-disclosure agreements that specifically restrict your partner’s ability to start a competing business or solicit clients. Assess client contracts for any exclusivity clauses or provisions that may have been violated.
- Key Questions for Your Attorney: Ask how enforceable these agreements are in Florida, what specific breaches have occurred, and what remedies are available to you.
Non-Compete Clauses
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- What to Look For: The duration, geographic limitations, and scope of the business activities restricted by the non-compete clause. Florida Statute § 542.335 requires such agreements to protect legitimate business interests, including substantial relationships with specific prospective or existing customers.
- Key Questions for Your Attorney: Inquire about the likelihood of enforcing the non-compete clause against your partner and the process for doing so. Discuss potential defenses your partner might raise and how to counteract them.
Non-Disclosure Agreements
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- What to Look For: Details regarding what constitutes confidential information, the duration of the NDA, and any breach penalties. Verify if your partner had access to trade secrets or proprietary information that is now being used competitively.
- Key Questions for Your Attorney: How can you prove the information was confidential and that a breach occurred? What remedies are available, and what evidence is required to support your claim?
Duty of Loyalty
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- What to Look For: Evidence of your partner using partnership resources for their benefit or directly competing with the partnership before its dissolution. This could include soliciting clients while still a part of the business.
- Key Questions for Your Attorney: What constitutes a breach of the duty of loyalty in Florida? How can you demonstrate that your partner’s actions damaged the business?
Theft of Trade Secrets
- What to Look For: Unauthorized use of business secrets that are not generally known to the public and derive economic value from being confidential. This includes client lists, business strategies, and proprietary processes.
- Key Questions for Your Attorney: What constitutes a trade secret under the Florida Uniform Trade Secrets Act (FUTSA)? How can you prove the misappropriation or unauthorized use of these secrets?
Practical Steps
- Gather Evidence
- What to Gather: Communications with your partner that suggest their intent or actions to compete, any evidence of them soliciting clients, financial records showing a loss of business, and documentation of the proprietary nature of the information they took.
- Communicate with Clients
- How to Approach: Contact clients professionally to express your commitment to their satisfaction and the ongoing value your business provides. Avoid disparaging your former partner, as this can backfire legally and reputationally.
- Seek Legal Counsel
- What to Do: Find an attorney with experience in business disputes and partnership law in Florida. Prepare all relevant documents and evidence for your consultation.
Conclusion
Discovering that a business partner has taken clients to start their own venture is a challenging and stressful situation. While daunting, it is not insurmountable. By understanding your legal rights and options and gathering and seeking professional advice, you can take steps to protect your business and potentially recover damages. Each situation is unique, so personalized legal advice is invaluable. If you have questions or need advice on your partnership dispute, contact the experienced attorneys at Hoyer Law Group.
