Legal Question in Business Law in California

Client Lists

I am a self employed independent contractor. I prepare income tax returns for individuals and businesses. 90% of the tax returns I work on come from one client's tax prep office. I have worked for this client for over three years. I use her office facilities, computers telephones and supplies to prepare these tax returns.

For this client I service her data base of clients. She rarely works or speaks with clients. Having developed a relationship with her clients, they now call and request to speak with me. When they refer new business they tell their friends and co-workers to speak with me. Most of these people consider themselves ''my'' clients.

Should I decide to open my own office, can I use the contact information I have accumulated (personal notes, rolodex, etc.) to contact these people to inform them of my new business venture?

Some additional information: I have no contract, written or otherwise, with respect to my current position. I am an independent contractor paid on a form 1099, not a w-2 employee.

Thank you in advance for your thoughts


Asked on 8/09/01, 6:17 pm

2 Answers from Attorneys
J Steven Bingman

Re: Client Lists

Regardless whether you are an independent contractor, your client's client information may be her "trade secrets." Customer lists and customer information can be considered to be trade secret under certain circumstances. You risk a lawsuit by using these materials. That being said, the law provides that you may send out announcements to former clients of the fact that you are opening your office. However, such announcements need to be carefully written so that they do not rise to the level of a "solicitation." It would be best to consult an attorney regarding the verbage of your announcement and the "materials" of your former client's. If you have any questions, feel free to give me a call at 310-385-8620.

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Answered on 8/09/01, 7:40 pm
John Hayes The John Hayes Law Offices

Re: Client Lists

Those client lists could also be considered her property. If you decide to start your own firm you cannot take copies of those lists or contact any of her clients directly. You can send out an announcement regarding your new office but it needs to be very general and they need to contact you. The announcements can be considered just that an announcement but any other type of direct contact with any of her clients is considered solicitation and she can sue you for the lost business. In addition, you cannot promote or even inform any of her clients of your intention to start your own firm while still in her employ. You can only send out the announcements after you have left her employ.

Remember, you may be the one doing all the work but she is the owner of the company. It is her name on the door, she pays for the advertising, the rent, she has spent probably spent years building up a large enough client base in order to make enough money to hire someone to do the paperwork. Before you decide to quit and start your own business consider the fact that these people may call you directly and refer friends to you but they are still hiring her firm. If there is a problem with the IRS they are coming after her, not you.

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Answered on 8/11/01, 4:57 am


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