Legal Question in Business Law in Georgia

Don't! You could face enough legal fees and damages in such a case to run your new business right into the ground.

First of all, no business "owns" its clients or customers. People are free to use whichever service providers they like, and agreements that prevent them from doing so are often viewed as illegal "restraints of trade" and are generally struck down by the courts.

Even though your firm didn't make you sign a nonsolicitation agreement, you still may have some legal liability to your former employer if you blatantly try to steal its customers. That's because, to date, 42 states have adopted some form of a statute called the "Uniform Trade Secrets Act." The Georgia Trade Secrets Act of 1990 ("GUTSA") is located at title 10, chapter 1, article 27 of the Georgia Code. GUTSA is largely identical to the Uniform Trade Secrets Act.

Under it, you're prohibited from stealing your employer's "trade secrets" and using them for your own benefit, even without a written agreement with the employer. In most states, a firm's client list would be considered a "trade secret" unless its content can be "readily obtained through some independent source."

So what bad things will happen to you besides the gigantic legal fees you will incur?

� Injunctive Relief: GUTSA empowers a court to order a defendant to stop violating the plaintiff's rights and to take steps to preserve the secrecy of the plaintiff's information. See Ga. Code � 10-1-762.

�Damages: A court can make a defendant pay money damages to the plaintiff for the economic harm suffered as a result of a trade secret violation. This may include the plaintiff's losses resulting from the misappropriation and the defendant's profits derived from it. If the court determines that the defendant acted willfully or maliciously, it may award the plaintiff punitive damages in an amount up to twice its actual damages. See Ga. Code � 10-1-763

�Attorneys' Fees: If a plaintiff sues and wins, the court may award attorneys' fees if it finds that the defendant acted willfully or maliciously. On the other hand, if the defendant wins, the court may award attorneys' fees if it finds that the plaintiff acted in bad faith when filing the lawsuit. The court may also award attorneys' fees if a motion to terminate an injunction is made or resisted in bad faith. See Ga. Code � 10-1-764.

You have likely already violated the act in telling your clients of your plans, so you are already potentially in deep trouble.

In the absence of a contract, an employee is generally free to leave and compete with the former employer. Customers are free to make the choice to take their business to you (assuming they have no contractual obligations to the former employer). Leaving to start your own business is a normal, every day occurrence. What will cause you problems? Using your current positon, on the employer's time, to start soliciting clients. Trying to convince clients to breach any contract with the former employer. Copying any customer information from the computer or files in order to use it in your business. In fact, don't take as much as a pencil. The employer may be looking for anything to use against you.

Merely mentioning your plans, without more, is not going to be a violation or breach. However, there is a short distance between mentioning that and then having a conversation about the customer coming with you. Your post indicates those conversations have taken place. If you want to leave and compete, you probably should end all of that until you are gone.

Technically, you may quit, start a new company and compete if you are not under any contractual duty not to. However, you should quit before taking any substantive steps of starting your company.