Ever Had to Sign a “Non-Compete” Agreement Like This One?

Got an interesting note from a commercial freelancer recently:

Recently (and perhaps because of the recession) I’ve been asked to sign non-compete agreements from agencies I work with. The first time I was asked, I said no—and lost the account. Now I’m being asked again, and it happens to be a fairly substantial client.

I have no problem signing a confidentiality agreement, but this non-compete states:

For two years after the date your relationship with (agency) ends, you may not solicit any contractor, independent contractor, or agent of (agency) to work for you or on behalf of any competing business; or solicit any client or customer of (agency) to purchase from you any product or service which competes with any product or service provided by (agency).

My client is obviously paranoid; I think he has been burned in the past. While my town is a reasonably major metro, we only have a handful of large household-name corporations. Essentially, if his clients are one or more of those big companies, then I wouldn’t be able to do any copywriting business with any department in those firms – even those the agency isn’t directly working with.

Some of these companies probably use six different agencies in town. If I sign this agreement, and get a call from one of those other agencies (quite possible), I’d have to turn down that work. Or, if one of the companies themselves wanted to hire me to write, say, internal communications (work outside the agency’s scope), I’d have to turn that down as well. Help!

PB: Maybe I’ve been lucky in my commercial writing career, but I’ve never been asked to sign anything so draconian as this, so in my experience, it’s not at all common. Non-competes are typically used for employees who leave a company and, understandably, that company is a bit hesitant to have them go to work for a competitor for at least a few years. But to require a contractor to not solicit work from their clients or even competing agencies that might work for those clients, for two years? That’s downright preposterous.

Now, I have encountered the wrath of a copywriting client who thought I was going around them to solicit work directly from the client – a BIG no-no, and I get that (talk about paranoid; they saw me swapping cards with an account exec from the client, and made the totally wild leap that I was soliciting work directly from them).

So, this is similar but exponentially more far-reaching, and in a much more locked-down form. I wouldn’t sign it unless you’re okay with being shut out from doing any commercial freelancing jobs for any of these other companies, which I kinda doubt you are. My first instinct is to tell them to go jump in the lake. After all, according to this agreement, you do one $250 job for them, after which they drop you, and you’re shut out from all this potential work for two years. That’s laughable.

But, there’s definitely something else going on here, and a little digging ought to unearth it. You need to craft some sort of win-win. Ferret out their real concern and get to some middle ground. In addition to the quite conceivable inanity of the “one-$250-job” scenario described above, explain that each of their clients might have dozens of people/departments who could potentially hire you, and to do work THEY (the agency) had zero interest in (like collateral, internal communications, etc).

As such, how fair is that they put this blanket rule on ALL business? That’s heavy-handed, greedy, and not at all acting in good faith (just an editorial aside; I probably wouldn’t say that to them, but then again, I just might…).

Why not say you’ll get permission from them before taking on any other work from any division of any of their clients? Or, as a last resort (and not a habit you should get in), if you really want to work with them, and feel the upside potential with them is great (a gamble, obviously), why not offer, say, a 10% “royalty” on any work gotten from within that company?

Assuming their main concern is that you might poach work from them that would be up their alley, if they KNOW they won’t be interested in X kind of work, under the royalty situation, they might actually be motivated to get you in those doors so they make their piece. Not an ideal situation, and if they don’t agree to either of those, I’d absolutely walk.

By the way, I got an update from the freelancer recently:

“My client has agreed to let me propose some changes to that part of the agreement. I have done that, and now I’m waiting for his reply. He is clearly fearful that I am going to solicit his clients, which I think is the result of some past experience he had that is totally unrelated to me. However, I think there is generally a growing paranoia as competition has escalated in the days since the recession hit. I’ll email you with a full update as soon as this is resolved.”

Have you ever run into this situation before?

How did you handle it?

What would you suggest she do?

If crazy-restrictive agreements like these are indeed becoming more common, why do you think that’s the case?