February 13, 2012

Protecting your business from rogue ex-employees

Losing a key employee is problematic at best. If that former employee leaves armed with your confidential business and customer information and starts working for a competitor, it is potentially disastrous to your business.

The financial services sector has seen significant change in recent years and has been under enormous market and competitive pressures. No wonder that our financial services client wanted prompt and effective advice on his position and options to minimize the potential damage to his business. A former employee was clearly in breach of specific provisions in his employment contract and prompt action was necessary to protect the company’s confidential information.

The immediate priority was to stop any further potential threat of lost business, so we acted swiftly to obtain an injunction which prevented the former employee from dealing with our client’s customers. This was followed by an order requiring that all the paper and electronic client information that had been taken be returned to safeguard the business date.

The next priority was to recover our client’s losses. This involved working closely with the client to calculate what lost business they had suffered as a consequence of the ex-employee’s actions. We were successful in obtaining damages for our client not only from the ex-employee, but also from his new employer. This story highlights not only the need for quick and effective action, but also for the need for properly thought out restrictive covenants in employment contracts to protect your business from future exposure.

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