Question

Topic: Customer Behavior

Conflict Of Interest Or Not?

Posted by maryann on 11/5/2008 at 9:57 AM ET 250 Points
I own a marketing/web design business that serves the small business market in my local area. I provide mainly web design services, but also print marketing and some advertising-related services to clients.

I have a client who sends me a low to moderate, but not high, volume of work each year. One of their employees recently left and started their own competitive business in the next town.

The ex-employee has called and asked me to do some work for them. My relationship with their old employer is OK, but not great, and they currently owe me for invoices dating back since May.

I do not expect the old client to give me great amounts of work in the future. The potential new client COULD be a good source of income and long-term work due to their ties in the community, but I don't know that for sure.

Is their any legal risk to taking on the ex-employee as a new client? This is not a business type with a lot of proprietary information, nor do I have any kind of documentation for exclusivity with either party. I am both concerned about legal implications as well as the moral ones, as my business is mostly referral based and a bad reputation could hurt me in the long run. (For the record, the old client has never sent me any qualified referrals.)

I appreciate your help.
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RESPONSES

  • Posted by Frank Hurtte on 11/5/2008 at 10:14 AM Accepted
    Here are a couple of random thoughts: I have been in your situation and know the pain.

    First, you are hired for what you know. If you limit yourself to just one client per geographic territory or industry, you in essensce limit your business. If you have a non-disclosure, confidentiality agreement, you are protected. You will never disclose secrets from one client to another. But, if the information is public (no matter how obscure) you have every right to use it - becasue you are an expert.

    If you do not have an agreement with the old client, sign one and send it to them along with a note that you wanted to let them know their information is confidential. Further, you want to let them know you are going to pursue business with other companies in their industry - no names.

    As for the past due invoices, a bill is a bill. This is the same as shoplifting except it is service related. Insist that it is paid.
  • Posted on 11/5/2008 at 10:47 AM Accepted
    Without an exclusivity agreement you may work with whomever you would like. The suggestions by Frank are appropriate, but not necessary. If you feel there is a conflict, you have the right to inform the old client (or not) that you are working with someone else in the industry and do not feel comfortable working on both accounts at the same time; therefore, you will no longer work with them. To preserve the relationship, to some degree, you can assure them that no "trade secrets" will be divulged to the new client. The fact that they have owed you money since May might be a good reason to make the change. Your decision has no impact on the money they already owe you, except that it might take a little longer to collect.

    Bottom line: Take the new account and take whatever steps makes you feel comfortable with the decision.
  • Posted by Mikee on 11/5/2008 at 10:57 AM Accepted
    I do not see it as a conflict of interest unless you are using material from the original client to help the new client. The work product of the original client needs to stay with that client.

    You are a designer, who designs websites etc. for companies. It doesn't matter what industry these clients are in, you work for each client to satisfy their needs. In fact, many web designers work in niche markets, catering to a certain industry, i.e real estate agents, insurance agents, etc., as there is some advantage of the designer knowing the industry.

    Mike
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