Q: All of my agency's independent contractors (ICs) sign a contract under which they agree not to solicit my agency's "house clients" for a year after they leave the agency. The contract defines "house clients" as those clients that my agency's employees handle or that we referred out to the ICs as leads to pursue. Three months ago, one of my ICs left, and we have since noticed a loss of house client business, so it is apparent that the IC has been soliciting them in violation of the contract. The IC denies any solicitation, claiming that the clients just followed him without having been solicited at all. How do we prove that he solicited the clients? If we sue, can we get an injunction preventing the IC from further solicitation?
A: It is often quite hard to prove that a former IC or employee solicited clients. The solicitor denies having done so, and the clients often won't cooperate because they don't want to be placed in the middle of the controversy.
The law defines "to solicit" as "to ask for with earnestness." It implies a specific request to a particular person to do a particular thing. It is more than merely announcing a new affiliation and hoping that clients come over.
So you can prove solicitation in one of two ways: first, by direct evidence, which means testimony or documentation of the specific requests made by the former IC. In many cases, the plaintiff agency owner has no direct evidence because the ex-IC has been careful not to leave a paper trail.
The second way to prove solicitation is by circumstantial evidence, which means "evidence that tends to prove a fact by proving other events or circumstances which afford a basis for a reasonable inference of the occurrence of the fact at issue." In this case, the sudden disappearance of many of your clients is circumstantial evidence of solicitation.
If all you have is circumstantial evidence, you cannot be sure of winning a lawsuit. Indeed, most litigation attorneys would probably counsel against even trying.
For the future, the solution to this problem is to change your IC contract to prohibit a former IC from "handling" the clients, rather than soliciting them. You also need to prohibit the IC from assisting any other agency to handle them.
By "handling," I mean making reservations and other travel arrangements. Another word for the same thing is "servicing." It is much easier to prove that an ex-IC or his new host handled the client's travel arrangements than it is to prove that he solicited them.
To prove "handling," you would sue and obtain emails, reservation records, tickets and back-office reports from the new host. All such material would be direct evidence of violation of the IC contract.
Although you would probably prevail in a suit for damages, it would be difficult to obtain an injunction prohibiting further handling. Courts generally grant injunctions only when the plaintiff can show "irreparable injury," which means a loss that even money damages cannot cure.
So for you to prove irreparable injury, you would have to show that your agency would be put out of business by continued violation by the ex-IC. Conversely, if money damages would compensate you for the loss, you probably could not get an injunction.
ICs who read this column may think it is unfair to prohibit an IC from handling or servicing house accounts after termination while not prohibiting the host agency from soliciting, handling or servicing the IC's own clients after the IC leaves. I agree, so the IC contract's prohibitions should be mutual.