So, one of the risks of fighting a non-compete is the provision that require employees to pay for their former employer’s attorneys fees if they lose the case: Seems fair. But, of course if fairness were the issue, the provision would be reciprocal and provide attorney’s fees for prevailing employees. And the standard for the amount is “reasonable attorneys fees,” and we know reasonableness is truly in the eye of the beholder. The first take away is to beware of fee shifting provisions, and if you have a chance to actually negotiate your agreement, make sure the fee shifting is a true mutual obligation.
Recently, I tried a case in which the former employer proved a breach of the agreement and sought attorneys fees in the amount of $750,000+. (Of course, this was a 6 year case.) And much of my experience is in litigating cases with fee shifting statutes, and those fees are awarded by the court and not the jury. But, the fee petition was so large, three times what the damages for breach were, and it seemed to me that an attorney’s fees claims should be a jury issue. A one week trial on lost profits, but an half hour hearing on three-quarters of a million dollars. So, I researched the issue and found that the issue of attorneys fees in contract cases may trigger Seventh Amendment rights.
I have tried three cases in the last 12 months, but none more difficult than a non-compete case in Lexington County. The judge did not grant summary judgment on the non-compete or non-solicitation provisions, and my client had conceded he breached the non-compete. The defendant was permitted to argue he was entitled to $2.7 million in lost profits, which encompassed a 5 year period although the non-compete was 1 year long. A jury deliberated 5 hours before asking for a calculator, and another couple doing math. When it was all said and done, the defendant will receive a breach of contract remedy that is 10% of the lost profits sought and one-half of the first settlement offer. But the motion for attorneys fees’ is still pending. (Defendant asked for a figure in excess $700,000.).
Well. This case has a lot of “boots on the ground” experience to dissect. Couple if quick take aways for now:
1. It is cliche, but you never know what a jury is going to do. This verdict appears to be an inconsistent verdict; it may be a compromise verdict; it is likely a confused verdict. But, do the parties really want to try this one all over again? Cost-benefit says “no.” However, rationality gets lost in the passion for revenge that can infect these cases.
2. Judges do not wade very deep into non-competes that often. The appellate law in the state of South Carolina is not as clear as it could be. The law has evolved slowly over the last 50 years, and sometimes in ways that appear to be inconsistent. This lends itself to variability and lack of predictability at the trial court level.
3. There is a fairness standard that seems to underpin much of what drives juries, and in the present political and cultural environment, juries in certain locales and/or in response to certain fact patterns are not as hostile to non-competes as one might guess. Whoever wins the fairness battle, wins the war. And, if there is a split decision in the fairness equation, then verdicts tend to reflect that through a compromise verdict.
Conditions 1, 2 and 3 make an appeal likely.
Trying cases is what I think I do best. There are some lessons that I have learned along the way. Twitter helped be shrink them down to 140 characters or less. Here are my top 10:
1. Cases are won as much by facts forgotten as facts remembered.
2 If truth is in the middle, then so will be the verdict.
3. Juries tend to make humble lawyers proud and arrogant lawyers humble.
4. The billable hour, whether your own or another’s, will dictate the course & length of litigation more times than not.
5. If you don’t pay attention to the trivial aspects of your case, the jury just might. Know thy case.
6. Don’t ask, if you don’t already know.
7. Jurors want to know you believe in your case before they believe in it.
8. If you don’t like your client, the jury surely will not.
9. Moderation in all things, except your passion for your case.
10. Make your case a cause.
[From my blog Blogger at Law. These lessons are just as applicable to efforts to beat a non-compete.]