Beck Reed Riden LLP

50 State Noncompete Survey

rbeck@beckreed.com — Mon, 30 Apr 2012 09:30:06 +0000

Beck Reed Riden LLP is pleased to make available its updated 50 state (plus DC) survey chart of noncompete laws. The chart is a summary of employee noncompetition laws and applicable standards throughout the country.

The chart covers the following:

whether noncompete agreements are permitted in the state;
governing statutory authority, if any;
identification of the protectable interests (also known as legitimate interests or legitimate business interests);
the applicable standards for enforcement;
what, if any, industries or professions are exempt from noncompete agreements;
whether continued employment is sufficient consideration to support a noncompete;
whether the state follows the reformation rule (also known as “judicial modification,” the “rule of reasonableness,” the “reasonable alteration approach,” and the “partial-enforcement” rule), the blue pencil doctrine, or the red pencil doctrine (also known as the “all or nothing” rule); and
whether noncompetes are enforceable against at-will employees whose employment was terminated without cause.

The chart is available for download here.

This version was updated on April 29, 2012 to address several recent developments. First is an Illinois Supreme Court decision that both rejected the controversial notion that legitimate business interests are not necessary and now fundamentally changed the test for what will constitute a legitimate business interest in Illinois. Second is a Montana Supreme Court decision holding that there is no legitimate business interest in enforcing a noncompete against a former employee who was terminated by the company without cause. Third is the Texas Supreme Court’s second decision rejecting (and thereby overturning almost 20 years of Texas jurisprudence) the requirement that the consideration given by an employer for a noncompete must “give rise to” the employer’s interest in restraining the employee. Finally, the chart was also revised to correct (thanks to a note we received from a very helpful user of the chart) a typographical error in the reference to Wisconsin’s statute and that Wisconsin law remains undecided on whether a noncompete will be enforceable against a discharged employee.

Check back for periodic updates or email us at info@beckreed.com, and we will automatically send the latest updates as they become available.

Please note that the chart is not legal advice, nor is it a substitute for proper legal research and advice. It is provided for informational purposes only.

About Us

Beck Reed Riden LLP is Boston’s innovative litigation boutique. Our lawyers have years of experience at large law firms, working with clients ranging from Fortune 500 companies to start-ups and individuals. We focus on business litigation and labor and employment. We are experienced litigators and counselors, helping our clients as business partners to resolve issues and develop strategies that best meet our clients’ legal and business needs – before, during, and after litigation. We’re ready to roll up our sleeves and help you. Read more about us, the types of matters we handle, and what we can do for you here.

Russell Beck to speak at Pacific Coast Labor & Employment Law Conference

steveriden@gmail.com — Fri, 27 Apr 2012 17:19:14 +0000

Russell Beck will be a panelist at the 45th Annual Pacific Coast Labor & Employment Law Conference in Seattle, Washington.

Russell will appear on a panel titled “Getting the Most Out Of Non-Competition Agreements: Enforcement Experiences From the Bench, In-House and Around the Country.”

Hon. John P. Erlick, of King County Superior Court in Seattle will also be on the panel.

Russell is scheduled to speak on Thursday, May 3, 2012.

About us

Beck Reed Riden LLP is among the leading authorities in trade secret, noncompete, and unfair competition law, and our experience handling these matters is backed by our extensive employment law and business litigation experience. Our hand-picked team combines attorneys with complementary expertise and practical experience.

Russell Beck’s work in this area is well recognized; it includes:

Over sixteen years of working on trade secret, noncompete, and unfair competition matters
Authoring the book Negotiating, Drafting, and Enforcing Noncompetition Agreements and Related Restrictive Covenants (4th ed., MCLE, Inc. 2010), used by other lawyers to help them with their noncompete cases
Drafting and advising on the current bill pending before the Massachusetts Legislature to define, codify, and improve noncompetition law
Teaching Trade Secrets and Restrictive Covenants at Boston University School of Law
Founding and administrating the award-winning blog, Fair Competition Law
Establishing and administrating the Noncompete Lawyers and Trade Secret Protection groups on LinkedIn, with over 750 members around the world
Founded and chaired the Trade Secret / Noncompete Practice for an AmLaw 100 firm

In addition, Russell was honored for his work in this area of law in the June 2011 Chambers USA Guide, which included Russell in its “Notable Practitioners” section, adding that “Russell Beck of Beck Reed Riden LLP is regarded as ‘something of a leader in the noncompetition arena’ by peers.”

Stephen Riden in Massachusetts Lawyers Weekly on preserving evidence

steveriden@gmail.com — Wed, 25 Apr 2012 15:10:53 +0000

The February 27, 2012, issue of Massachusetts Lawyers Weekly features Stephen Riden in an article about a company that was sanctioned after destroying evidence. The article is by Massachusetts Lawyers Weekly’s Managing Editor, David E. Frank.

The article focuses on a lawsuit involving dispute over the ownership and management fees of a hedge fund. While the lawsuit was pending, a Superior Court judge in the Business Litigation Session found that the CEO of the defendant company destroyed thousands of pages of evidence. The defendant company, for its part, argued that the destruction was inadvertent and, in any event, the discarded materials were either duplicative or irrelevant.

Nevertheless, the Court found that spoliation had occurred, and ordered the defendant to pay a portion of the plaintiffs’ attorneys’ fees and ruled that an adverse jury instruction would be given at the time of trial.

In the article, Stephen Riden comments that, while there are some appellate decisions in Massachusetts that define the parameters of what is a permissible sanction in this situation, the most comprehensive analysis of spoliation issues is most often found in lower court decisions.

‘By the time it gets to the appellate level, they’re looking at it from an abuse-of-discretion standard, so unless the judge has gone far afield of what an appeals court thinks is reasonable, they’re not going to issue an opinion to the contrary’ he said. ‘These are in-the-trenches discovery battles, and where you’re going to see the most well-developed analysis of the issues is in the trial court.’

Steve Riden frequently writes and speaks about commercial litigation issues, including social media and electronic discovery.

About Us

Russell Beck in New England In-House on noncompete agreements

steveriden@gmail.com — Wed, 22 Feb 2012 22:51:35 +0000

The February 29, 2012, issue of New England In-House features Russell Beck addressing noncompete agreements for in-house counsel in an article called “Are New England’s in-house counsel free to join competitors?”

Many companies ask new employees to agree to restrictive covenants as a condition of employment. These restrictive covenants can take a variety of forms, including the familiar non-compete agreements and nondisclosure agreements, as well as forfeiture agreements, no-raid agreements, and assignment of inventions agreements.

Unlike most employees, however, lawyers are generally not permitted to enter into noncompete agreements. Rule 5.6 of the Rules of Professional Conduct bars attorneys from entering into noncompete agreements. However, the language in Rule 5.6 leaves open the question whether in-house counsel are always prohibited from entering into non-competition agreements.

In his article, Russell Beck refers to the American Bar Association for an answer:

Despite those questions, the American Bar Association has determined that Rule 5.6 applies not just to outside lawyers, but to in-house counsel as well.

And, as the New Jersey Advisory Committee on Professional Ethics (relying on Virginia, Illinois, Connecticut, Washington and Philadelphia bar opinions, as well as cases involving outside counsel) assayed, “the overwhelming majority of jurisdictions in the United States follow the ABA’s approach and hold that restrictive covenants affecting lawyers, whether employed by corporations or private law firms, generally violate state ethical standards.

Thus, while it is clear that attorneys, including in-house counsel, are generally not permitted to enter into noncompete agreements, one possible exception is based on the role that the in-house counsel takes in his/her new company:

In contrast, it is only when the non-compete prohibits in-house counsel from taking a purely business role that the agreement would likely be enforceable.

Thus, for example, a non-compete that prevents in-house counsel from going to a competitor as a COO would likely be enforceable.

The rationale for that exception to the exception is that the individual’s status as a lawyer is irrelevant to the role and, therefore, client choice for legal services is not at issue.

Russell Beck concludes the article with a reminder that, although in-house counsel are generally free to move about without the burdens of a noncompete agreement, they are not free from all restrictions.

So, while you are almost certainly free to move from in-house job to in-house job, and to bring legal support staff of your choosing, you are not free from all restrictions. Confidentiality and conflicts rules and certain restrictive covenants will govern your transition.

Russell Beck’s complete article appears here.

About Us

We are widely recognized for our work handling trade secret and noncompete matters. Russell Beck’s work in this area is well recognized; it includes:

Over sixteen years of working on trade secret, noncompete, and unfair competition matters
Authoring the book Negotiating, Drafting, and Enforcing Noncompetition Agreements and Related Restrictive Covenants (4th ed., MCLE, Inc. 2010), used by other lawyers to help them with their noncompete cases
Drafting and advising on the current bill pending before the Massachusetts Legislature to define, codify, and improve noncompetition law
Teaching Trade Secrets and Restrictive Covenants at Boston University School of Law
Founding and administrating the award-winning blog, Fair Competition Law

Stephen Riden in Lawyers USA on the pitfalls of ‘frictionless’ social media

steveriden@gmail.com — Tue, 21 Feb 2012 21:23:42 +0000

Stephen Riden is featured in the December 2011 issue of Lawyers USA in an article about e-discovery and avoiding the pitfalls of frictionless social media. The article is reprinted here. The article also appeared in the January 9, 2012, issue of Massachusetts Lawyers Weekly.

The article is by Lawyers USA reporter Correy Stephenson. It focuses on how users of social media sites, like Facebook, may be unwittingly sharing a detailed history of their interests and purchases with other users. While it can be harmless to share songs from Spotify or articles from the Washington Post with Facebook friends, data shared over online social networks — like purchases from Amazon — can be a treasure trove litigants and their attorneys during the discovery phase of a lawsuit.

Stephen describes this so-called “frictionless” media as follows:

‘[It's t]he idea that people who are connected to Facebook are connected to everything else on the Internet,’ said Stephen D. Riden, a commercial litigator at Beck Reed Riden in Boston. ‘But it also means giving away information. I have several friends that on a daily basis, I know what articles they are reading – it’s a little creepy’

In the article, Steve Riden also talks about Facebook’s Timeline and how access to this level of information can help lawyers, which is not the intention of the typical user:

‘So much of the discovery process is just setting up a timeline and creating a chronology of events, when certain things happened and what was said and done,’ Riden said. ‘Technology that can do that automatically and is almost failsafe makes a lawyer’s job easier.’ The Timeline feature also serves as a reminder that what you do online is never forgotten and does not just disappear, Riden said.

In the article’s conclusion, Stephen notes that individuals who are already involved in litigation should refrain from discussing their circumstances online:

Riden said he warns clients about the ramifications of expressing their frustration with their legal situation online, and suggests that they put it all in a long e-mail which they can send to him. ‘It helps them vent and is protected by the privilege.’

Steve Riden frequently writes and speaks about commercial litigation issues, including social media and electronic discovery.

About Us

Russell Beck in New England In-House on Managing Legal Fees

steveriden@gmail.com — Wed, 25 Jan 2012 23:39:34 +0000

The November 2011 issue of New England In-House features Russell Beck’s guide for controlling legal costs, called “Prevent runaway fees with structured agreements.”

When companies hire a law firm to provide ongoing legal services, the monthly bills can be unpredictable. And unpredictable legal bills can wreak havoc on a company’s legal budget. In his article, Russell Beck offers one solution to the problem of runaway legal fees: the structured agreement.

I had been handling multiple cases every year, year after year, for a particular client. It was complex business litigation. Accordingly, as would be expected, in some years the fees were substantial, and in other years they were comparatively little.

I asked the client whether, for predictability purposes, it would prefer an option in which we agree on an annual fee (to be paid monthly on a pro rata basis) for all of its litigation in Massachusetts (and certain other states). Such arrangements have colloquially been referred to as having a firm “on retainer,” though more recently the term “portfolio billing” has been used.

The client’s reaction was a bit surprising. While it liked the idea of predictable fees, it had a concern — but not the one I expected. Its concern was that the law firm where I practiced at the time would be inundated with all types of small claims litigation that had, to that point, been handled in-house.

The complete article is here. For more information about strategies for containing legal fees, click here.

About Us

Stephen Riden in Forbes on Ownership of Twitter Accounts

steveriden@gmail.com — Mon, 09 Jan 2012 16:14:22 +0000

Stephen Riden is featured in a November 17, 2011, Forbes story titled “Who Owns Employees’ Twitter Accounts?”

The article is written by Forbes staff writer, Kashmir Hill. It follows an earlier Forbes story covering a lawsuit filed by a company against its former employee for using a Twitter account after leaving the company.

In the lawsuit, the company, Phonedog, claims that its former employee, Noah Kravitz, established a Twitter account at the company’s request, and then used that account to promote the company’s services.

When the employee left, the Twitter account went with him. So the company sued and is seeking damages for the alleged theft of its trade secrets, i.e., the Twitter account and its followers.

In the article, Steve discusses the importance of addressing the use of social media accounts in the employee handbook.

It’s an interesting case, and illustrates the importance of employers and employees hammering out these details in advance. “It’s much cheaper to spell this out ahead of time than to litigate it after the fact,” says Stephen Riden, a partner at Beck Reed Riden LLP, who specializes in employment law. He points to Dell’s social media policy as a good example of this, calling it “forward-thinking.”

Click here to read more about the intersection of social media and employment disputes.

About Us

Beck Reed Riden LLP Has Moved

steveriden@gmail.com — Tue, 20 Dec 2011 23:05:36 +0000

Beck Reed Riden LLP has a new home. Our new address is 155 Federal Street, Suite 1302, Boston, MA 02110. All other contact information remains the same.

Our new office is near South Station and directly across the street from the Bank of America building.

About Us

Stephen Riden in Lawyers USA on Litigation Trends

steveriden@gmail.com — Thu, 15 Dec 2011 19:24:02 +0000

Stephen Riden is featured in the November 2011 issue of Lawyers USA in an article about the intersection of technology and litigation. The article is by Lawyers USA reporter Correy Stephenson.

The article focuses on the ways that courts and lawyers deal with new sources of potentially relevant information. For example, the widespread use of social media and embedded GPS technology represent a new avenue of pretrial discovery, with the potential to reveal minute-by-minute details about a litigant’s activities. The article is reprinted here.

Lawyers should be aware of the value of information from unexpected places, Riden said. In addition to the potential treasure trove to be found on social networking sites, he noted that apps with geolocation abilities can track a person without his or her knowledge.

For example, iPhones have “a stealth tracking feature that shows every place you have been,” Riden said, who pulled up his own information on his phone and was “shocked” at how accurate it was.

The article also addresses the the trend among judges toward a more nuanced understanding of electronically stored information, and its role in the courtroom.

As judges have become more sophisticated about electronically stored information (ESI), parties are having an increasingly difficult time convincing them that every single piece of metadata is needed in discovery, said Stephen D. Riden, a commercial litigator at Beck Reed Riden in Boston.

“Courts are more resistant to a soup-to-nuts request and will clip parties’ wings if they feel like they are being too aggressive.” Instead, lawyers should be prepared to tailor their ESI requests to the case at hand, he said.

Steve Riden frequently writes and speaks about commercial litigation issues, including electronic discovery.

About Us

Stephen Riden in Forbes on Social Media Employment Disputes

steveriden@gmail.com — Tue, 22 Nov 2011 20:21:54 +0000

Stephen Riden is featured in a November 14, 2011, Forbes story about a lawsuit filed by a company against its former employee for using a Twitter account after leaving the company. The article is written by Forbes staff writer, Kashmir Hill.

When the employee left, the Twitter account went with him. So the company sued and is seeking damages for the alleged theft of its trade secrets, i.e., the Twitter account and its followers.

Stephen Riden, a partner at Beck Reed Riden LLP, who specializes in employment law, says the case is ‘murky,’ in part because Kravitz included ‘Phonedog’ in his Twitter handle. ‘Employers usually address this in their employee manuals — whether an employee can include their name or brand in social networking accounts, and whether accounts are being set up for the company or the employee,’ says Riden. ‘It’s much cheaper to spell this out ahead of time than to litigate it after the fact.’

Click here to read more about the intersection of social media and employment disputes.

About Us