You find out that your business partner is competing against you. The same person who had access to your client list, your pricing strategies, and everything else that makes your business work. They signed a non-compete agreement, and now they're violating it.
Our friends at the Law Offices of Darth M. Newman see this situation all the time. A commercial litigation lawyer can help you figure out your next move before things get worse.
Start Gathering Evidence Right Now
The first thing you need to do is document everything. Take screenshots of their new website. Save their social media posts. Keep copies of any advertising they're doing. If you've got emails where they're soliciting your clients, save those too. Your former partner might start covering their tracks once they realize you're paying attention, so you need to grab this evidence while it's still available. Build a timeline. When did they leave? When did this competing business actually start? Which clients have they contacted? You'll want to track any revenue you've lost that you can tie directly to what they're doing. The more documentation you have now, the stronger your case later.
Pull Out That Non-Compete Agreement
Not every non-compete agreement is enforceable. You need to read what yours actually says. What geographic area does it cover? Some agreements say they can't compete within 50 miles. Others might say an entire state. How long does the restriction last? Six months? Two years? And what specific activities are prohibited? Courts will enforce reasonable agreements. But if your non-compete tries to prevent someone from working anywhere in their industry for ten years, you're probably going to have problems. Judges don't like agreements that prevent people from making a living. There's also the question of consideration. What did your partner get in exchange for signing this agreement? If they signed it when you first formed the partnership and got an ownership stake, that's solid consideration. If you tried to make them sign it three years into the partnership without giving them anything in return, that's a different story.
Figure Out How Much Damage They've Actually Done
Before you do anything else, you need to assess the real impact. Are clients actually leaving? Has your revenue dropped in measurable ways? Or is this more of a technical violation that isn't really hurting your business yet? Some violations demand immediate action. Others might not justify the cost and stress of litigation. Only you can make that call, but make it based on actual numbers, not just anger.
Send A Cease And Desist Letter
A strongly worded letter from a lawyer often solves the problem without anyone filing a lawsuit. This letter needs to spell out exactly which terms of the agreement they're violating. It should demand that they stop the prohibited activities immediately. And it should put them on notice that you're prepared to go to court if necessary. Sometimes people violate non-compete agreements because they think you won't notice or won't care enough to do anything about it. A cease and desist letter tells them they were wrong. Many former partners will back down at this point rather than face litigation.
Know What Remedies You Can Pursue
Injunctive Relief: You can ask a court to order them to stop competing right now, today, while your case is still pending. Courts can issue temporary restraining orders or preliminary injunctions when someone is causing ongoing harm to your business. This is often the most powerful tool you have because it stops the bleeding immediately.
Monetary Damages: You can sue for the money you've lost. Lost profits, lost clients, the value of relationships they've damaged. If your agreement includes an attorney's fees provision, you might be able to recover those costs too.
Specific Performance: A court can order your former partner to actually honor the terms of the non-compete for whatever time remains on it.
Which remedy makes sense depends on your situation. Sometimes you just want them to stop. Sometimes you need to be compensated for real financial losses. Often, you want both.
Think About The Future Too
While you're dealing with this immediate crisis, take a step back and think about preventing the next one. Review all your non-compete agreements. The one with your current partners, the ones with key employees, everyone who has access to sensitive business information. Are they enforceable? Are they up to date with the current law? Do they actually protect what matters to your business?
You might want to add non-solicitation clauses that specifically prohibit people from going after your clients and employees when they leave. Trade secret protections matter too. Signing a document is one thing, but you also need actual security measures in place to protect confidential information. When someone violates a non-compete agreement, you can't just ignore it and hope the problem goes away. Swift action protects what you've built. Getting legal advice helps you understand your options and make strategic decisions about how to respond to your specific situation.