Non-solicitation agreement, Ledgerway Partners

Non-solicitation agreement for clients, staff and duration

A non-solicitation agreement restrains the approach, not the work. This one lets an accounting manager join a competitor the day after he leaves, and stops him approaching the clients he handled or the colleagues he managed for twelve months, with a six month window in which he also cannot accept work from those clients.

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Non-solicitation agreement · Ledgerway Partners and D. Ofori · NS-2027-11Page 1 of 3
Non-solicitation agreement · Ledgerway Partners and D. Ofori · NS-2027-11Page 2 of 3
Non-solicitation agreement · Ledgerway Partners and D. Ofori · NS-2027-11Page 3 of 3
Non-solicitation agreement

Made on 16 June 2027 between Ledgerway Partners of 3 Quarry Street, Halewood, called the Firm, and Daniel Ofori of 71 Alder Road, Halewood, called the Employee, on his promotion to client manager with effect from 1 July 2027.

12 months
Restraint period
6 months
Acceptance window
None
Non-compete
$3,000
Payment for it
1. What this agreement does
1.1
Relationships, not employment
The Firm invests years in a client relationship before it is profitable, and a client manager is handed those relationships rather than building them from nothing. This agreement protects them for 12 months after the Employee leaves, in exchange for the promotion and a payment of $3,000 made within 14 days of signing.
There is no non-compete in this agreement
The Employee may join a competing firm the day after he leaves, open his own practice across the road, and do the same work for anyone who is not a restricted client. Only the approach to particular clients and colleagues is restrained, which is the narrowest restraint that protects what the Firm actually needs to protect.
2. What the words mean
2.1
Restricted client
A client of the Firm that the Employee worked on, supervised work on, or saw confidential fee or engagement information about, in his final 12 months. A client he never touched and knew nothing about is not restricted, however large it is.
2.2
Restricted employee
A person employed or engaged by the Firm at manager level or above in the Employee’s final 12 months, whom he managed or worked with directly. Administrative staff and people he never worked with are not covered.
3. Clients
3.1
Not approaching them
For 12 months after he leaves, the Employee will not approach, canvass or solicit a restricted client for accounting, audit, tax or advisory services, whether for himself, for a new employer or for anyone else, and will not ask another person to do it for him.
3.2
Not accepting work for six months
For the first six of those months he will also not accept that work if a restricted client approaches him unprompted. After six months he may accept it, provided he did nothing to bring the approach about. Six months is deliberately shorter than the 12, because refusing a client who chooses to move is a heavier restraint than not chasing one.
4. Colleagues
4.1
Not recruiting them
For 12 months after he leaves, the Employee will not approach a restricted employee to leave the Firm, and will not help a new employer to do so, including by identifying who to approach or passing on contact details.
5. Restricted and not restricted
Restricted for 12 months
Not restricted at all
Approaching a restricted client about the services above
Working for a competing firm, anywhere
Accepting work from a restricted client in the first six months
Accepting it from one who approaches after six months
Approaching or recruiting a restricted employee
Hiring a person who answers a public advertisement
Using the client list or fee data to target clients
Using the general knowledge and skill he has learned
Asking a colleague to make an approach for him
Telling former colleagues where he now works
6. Information, remedies and general
6.1
Client lists and confidential information
On his last day the Employee returns or deletes client lists, fee schedules, working papers and contact exports, and keeps nothing on a personal device or account. This obligation has no end date and is separate from the 12 month restraints.
6.2
What the Firm has to show
To enforce a restraint the Firm must show that the client or colleague was restricted as defined, and that the Employee made or caused the approach. A client leaving of its own accord, without any approach, is not a breach and is not evidence of one.
6.3
Severance, survival and general
If any period or category is held unenforceable, it is reduced to the largest enforceable version rather than struck out. These obligations survive the end of employment. This is the whole agreement about restraints and may be changed only in writing signed by both parties.
For Ledgerway Partners
Name
:
Position
:
Date
:
Employee, Daniel Ofori
Name
:
Date
:

Section by section

What each section is for, so you can keep the ones you need and drop the rest.

Parties and summary
The firm and the employee, with the period, the acceptance window and the payment.
1. What this agreement does
The relationships being protected, and a callout confirming there is no non-compete.
2. What the words mean
Restricted client and restricted employee, both tied to his final twelve months.
3. Clients
Not approaching restricted clients, and not accepting their work for six months.
4. Colleagues
Not recruiting restricted employees or helping a new employer to do so.
5. Restricted and not restricted
A two column table pairing each restraint with what remains permitted.
6. Information, remedies and general
Returning client data, what the firm must show, and severance and survival.

Clauses in this document

How to adapt this agreement

For a partner rather than an employee, expect a longer period and add a clause dealing with clients who followed them in, since a partner who brought a book usually negotiates to take part of it out. For a sales role, define restricted client by territory or account list rather than by who did the work, because sales coverage changes faster than client relationships do. For a business with genuine trade secrets, keep this document and write a separate confidentiality deed, rather than stretching a non-solicit to cover information it was never designed to protect.

Why a restraint gets read down

Australian courts start from the position that a restraint on trade is void, and enforce one only so far as it protects a legitimate interest. Client connection and a stable workforce both count. Simply keeping a former employee out of the market does not. Three things decide whether the clause survives: how long it runs, how widely it is drawn, and whether the person actually held the relationships it protects. That is why the periods and the client list are written narrowly here rather than generously. Cascading wording, which offers the court a shorter period or a smaller class if the first is too wide, is standard drafting for the same reason.

What makes this document work

It states what it does not do, in a callout

The employee may join a competing firm the day after he leaves, open his own practice across the road, and do the same work for anyone who is not a restricted client. Saying that out loud makes the rest of the document easier to sign and easier to defend.

Restricted is defined by contact, not by the client list

A restricted client is one he worked on, supervised work on, or saw confidential fee information about, in his final twelve months. A client he never touched is not restricted however large it is, which keeps the restraint tied to what he actually knows.

A two column table settles the arguments in advance

Five pairs, from approaching a restricted client against working for a competing firm, to asking a colleague to make the approach against telling former colleagues where he now works. Most non-solicit disputes are about one of those five lines.

Questions people ask

What is a non-solicitation agreement?

A restraint that stops a departing employee approaching particular clients or colleagues for a period, without stopping them working in the same industry. It is narrower than a non-compete and is generally easier to enforce, because it protects a relationship rather than shutting someone out of their trade.

How long should a non-solicitation period be?

Long enough for the business to introduce a replacement and no longer. Twelve months is common for a professional services relationship billed annually. This agreement also uses a shorter six month window for accepting unprompted approaches, because refusing a client who chooses to move is a heavier restraint than not chasing one.

What is the difference between soliciting and accepting work?

Soliciting is making the approach. Accepting is answering one the client made. This agreement restrains both for the first six months and only soliciting for the remaining six, which recognises that a client has its own right to choose an adviser.

What carve outs should a non-solicit have?

General advertising that is not aimed at particular clients, a client who approaches unprompted once the acceptance window has closed, hiring someone who answers a public advertisement, using the general knowledge and skill learned on the job, and simply telling former colleagues where you now work.

What does the employer have to prove to enforce it?

Under clause 6.2, that the client or colleague was restricted as defined, and that the employee made or caused the approach. A client leaving of its own accord is not a breach and is not evidence of one, which is the safeguard that keeps the clause from being used as a threat.

Does a non-solicitation agreement need to be paid for?

It needs consideration like any contract. Here the employee is promoted to client manager and paid $3,000 within 14 days of signing, and the agreement ties the two together. A restraint added mid employment with nothing new given in return is the weakest kind to try to enforce.

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