Gruntled Employees

The rising noncompete tide

FinancialWeek's Frank Byrt has a great piece on the rise of noncompete litigation directed at top executives: "No place like home: Companies blocking more execs from jumping to competitors" (registration required, maybe). Frank's jumping-off point is the recent high-profile litigation between TJX and Pier 1. In that dispute, Alexander Smith left his job as a group president at TJX to become Pier 1's CEO. TJX fired off a lawyer-letter warning Smith that he was violating his noncompete agreement. Pier 1 then made a preemptive strike by seeking a temporary restraining order to prevent TJX from interfering with Smith's new employment.

As that battle rages, Frank notes the growth in noncompete litigation and the fact that top executives are increasingly becoming targets. Frank and I had a lengthy discussion about this, and some of that discussion made it into his article:

More and more employers — witness clothing retailer TJX Cos. — are threatening to sue to enforce non-compete clauses of executives’ employment agreements when they jump ship, and it’s no longer just to protect company secrets or customer lists.

Rather, companies are more frequently using non-compete litigation to try to block top employees from working for a competitor, said Boston attorney Jay Shepherd. “I think part of it is that it’s harder to get good top executives, so there’s a competition for that talent.

“Our non-compete litigation is growing like crazy,” he said of his employment law firm. The portion of non-compete cases it handles has grown to 65% of the practice, about double that of 2002.

Some of the new cases stem from the recent flurry of mergers and acquisitions. In these situations, typically the merged company doesn’t want departing executives, who have left of their own volition, trying to duplicate their success there with the competitor down the road, Mr. Shepherd explained.

“We’re definitely seeing more of this,” he added. “And people forget that companies can get emotional, too,” and will file lawsuits based on a sense of betrayal or disloyalty and, occasionally, out of spite.

And it's not just noncompete lawsuits against executives that are rising. Our own research tells us that noncompete cases have surged over the last decade. The number of published decisions in state and federal courts nationwide nearly doubled from 1996 to 2006. Over the past three years, the number of reported cases rose 32%. One reason is the increase in employees signing noncompetes, especially outside the IT industry. Another reason is the fiercer competition for top-level talent.

Bottom line: If you're thinking of hiring your competitor's top performer, be prepared to battle it out in court.

A two-word corporate blogging policy

OK. So your employees have their own blogs. At first, you thought it was cute. A passing fancy. This year's e-fad.

But now you've realized that the blogs are not going away. And what is more, people are reading them. Reading about your company.

You need to do something. You realize that banning the blogs will just make you and your company look bad. But you need some kind of policy, don't you, or who knows what your employees will write?

That clatter you hear is the sound of legal and HR departments around the world frantically typing up corporate blogging policies. Examples abound. Here are IBM's Blogging Guidelines, a pioneering effort. It's pretty good. Here is Sun's policy; it's very good. Hill & Knowlton's is also quite good. Debbie Weil's excellent The Corporate Blogging Book includes helpful resources and advice, as does her top-notch blog, BlogWrite for CEOs.

On the other hand, Harvard Law School's policy reads exactly how you'd expect Harvard Law School's to read. It actually starts off with an apology ("We don’t mean to turn you off from blogging by immediately inundating you with legalese, but we need to make clear our respective rights and responsibilities related to this service.") — then it inundates us with legalese:

By posting your Content using the Services, you are granting Harvard a non-exclusive, royalty-free, perpetual, and worldwide license to use your Content in connection with the operation of the Services, including, without limitation, the license rights to copy, distribute, transmit, publicly display, publicly perform, reproduce, edit, translate and reformat your Content, and/or to incorporate it into a collective work.

(Nothing like a 59-word sentence to inspire you.)

But before you go starting a Corporate Blog Policy Task Force and taking meetings with lawyers, consider what you're really trying to accomplish. You probably want to make sure your employee-bloggers aren't sharing company secrets. Duh. You also want to make sure your employees aren't dissing your customers, or each other. And you probably want to make sure that your workers aren't posting compromising pictures of American Idol contestants on the company blog.

How can you accomplish this without inundating the blogosphere with Harvardesque legalese? With this two-word corporate blogging policy:

"Be professional."

If your employee-bloggers are posting the secret-sauce recipe, bad-mouthing customers, or distributing NSFW (not safe for work) art, fire them. And if you're concerned that your employees won't understand what you mean by "be professional," then you have a management problem or an employee problem. Or both.

Not just another lawyer

Once again we drink from that font of wisdom: network television.

Last time we did this, we learned about plain English on "24." (See What would Jack Bauer do? Use plain English.) This time, we turn to NBC's "30 Rock."

At the end of last week's episode, a man walks into Liz Lemon's office to explain that he was the one who had mistakenly sent her Valentine's roses. When she asks him who he is, he explains:

         LAWYER
I work up in Legal, and —

         LIZ (interrupting)
You're a lawyer?

         LAWYER (shaking his head)
I prefer ... law stylist.

At first I wrote this off as just-another dig at lawyers, showing that they're so embarrassed by their profession that they don't even want to use the word lawyer. Heck, even I've done that.

But then I thought that maybe there was something more to it. What if instead of just acting like lawyers, we tried acting like "law stylists," using a little creativity to surprise and delight our clients? Just another thing to think about while we're looking for the remote ...

No-alternative billing

I hate the term "alternative billing." It has that sneering, look-down-your-nose quality to it, like "alternative lifestyle." Actually, I think lawyers have done a very good job of marginalizing it. I mean, there's hourly billing, and then there's ... what?

The lawyers look away and reply, "Well, there's ... (ahem) ... alternative billing."

"Oh?" the clients ask. "How does that work?"

"Uh, well, there are contingency fees, blended rates, flat fees, fixed fees, retainers. That sort of thing. It's not the traditional way of doing things. Very few of our clients ask for it."

"Oh."

As if there's something wrong with it. As if traditional (hourly) billing came over on the Mayflower. (In fact, it's only two or three lawyer generations old.) And the menu of "alternative" arrangements sounds ominous: a collection of ways to bilk the client.

Actually, 62% of in-house counsel say they're interested in "alternative" billing arrangements, according to the Association of Corporate Counsel's 2006 Managing Outside Counsel survey. This figure is surprisingly high, since most in-house lawyers migrated from large law firms where the almighty billable hour rules. But after working in the real world of business and bottom lines, in-house lawyers are seeing hourly billing for what it is: a way to increase clients' bills.

But in the same survey, corporate counsel report that 90% of their outside lawyers resist the idea of "alternative" billing. (Read more about the survey in Outside counsel ignoring GCs on hourly billing.)

Maybe clients will continue to put up with this. But I doubt it.

Pretty soon, they'll start looking for "alternative" lawyers.

Geniuses of Service: Being of value

In law school, you learn about torts, contracts, and evidence. As the cliché goes, you learn to think like a lawyer. But here's what you don't learn about:

Client service.

And lawyers run into more problems with bad client service than they do with torts, contracts, or evidence problems.

There are plenty of great books on client service — a couple of excellent ones are in the booklist on the right:  Raving Fans and Re-Imagine!   (That's Tom Peters's exclamation point, not mine.) But most lawyers are busy reading cases and contracts, and don't have time to add client-service books to their reading lists.

As a timesaving alternative (since you're already reading this), I thought I'd start a series of occasional posts highlighting real-world examples of excellent client service. Not surprisingly, most of these examples are from outside the legal world. (Does this make them extralegal? And while we're on the subject, why doesn't extralegal mean outlaw? But I digress.)

Here then, for your consideration, is the first installment of "Geniuses of Service":

Genius: Meredith & Grew — a Boston-based commercial-real-estate company.

Story: Our law firm just moved to a new, much-larger office on Boston's Beacon Hill. Moving offices is always disruptive, but our move went smoothly. This was thanks to the exceptional client service we got from our broker, Meredith & Grew. Even though our new office was still small compared to the rest of the commercial market, our brokers — Roger Breslin and Michael McElaney — treated us as if we were their biggest client (we're not, by a wide margin).

Although it was a smaller deal, it proved tricky because of a very tight schedule driven by the need to quickly sublet our old space. Every time a problem arose, Roger and Mike were immediately on hand to solve it. We got voicemails and emails from them early in the morning and late in the evening — it was as if they were working on our move at all hours of the day.

They showed us nearly every available space in town that met our requirements, but they never tried to "sell" us on a space. After they found us the ideal spot, they worked tirelessly to make sure the deal went through. And they kept at it, even when it seemed like it wasn't going to happen. Once we were all moved in, they treated our firm to a top-notch steak dinner that probably cost as much as the fee they earned.

But the thing that stood out the most was how they managed to make us their client in the first place. In April 2005 — nearly a year and a half before we entered the real-estate market — Roger got in touch with me to offer some market information about our old building and neighborhood. For free. Didn't try to sell me anything. Didn't hassle me. Impressed with this approach, I met with Roger and Mike and learned a lot of valuable information. It didn't seem to matter to them that we were a small firm, or that we weren't in the market just then. Instead of trying to sell me something or convince me how good they were, they simply came to my office with one goal:

To be of value.

And they were. Over the next year, they kept in touch. No pestering; just reminding me that they were there and that they could help when we needed it. And when we finally did, guess who we called?

The lesson for lawyers (and any service professional) is that you can go farther by showing a prospect how you can be of value to them than by trying to sell them on how good you are. We should keep that in mind.