This paper will discuss the considerations that a business owner, partner, manager or other person who has been in a business relationship in an entity or otherwise, receives news that a highly trusted employee, partner, shareholder, or similar team member has either given notice of an intention to “leave the fold”, or has simply left.
Also coming into play is whether the Former Member retains or seeks to retain any interests (shares in a corporation, right to payment of a capital account or other money which he or she may claim is due to him or her from the organization, and the like). The organization’s response to the Former Member may be swift and litigious, if their property interests are great, and the Former Member’s threat to the organization is real and credible. The likelihood of success of such litigation will depend on many factors too varied to discuss exhaustively here, but most important of those factors will be the existence of a written agreement not to compete, not to solicit, or, at a minimum, not to use confidential information against the organization. Absent such an agreement, the process of taking legal action to prevent a Former Member from working against the Remaining Members becomes much more difficult and expensive.
In choosing its course of action, the Remaining Members should get experienced counsel who asks questions and gives answers that enable the Remaining Members and their organization to evaluate the costs, benefits, and ultimate wisdom of each of their courses of action, and to enable them to take such course of action as effectively as possible, with the ultimate goal of enabling the Remaining Members to continue in the business that they set out to continue in, rather than spend enormous amounts of time, effort and money in a corrosive fight against their Former Member.