Introduction

So, you’ve just landed a new client or partner, and things are looking great. But then you start to wonder: what if they poach my best employees or snatch up my clients when this contract ends? Enter the non-solicit clause—your secret weapon against business betrayal. But what exactly is a non-solicit clause, and do you really need one in your business contracts?

Read: Do I need to sign a contract for it to be valid?

Why have a non-solicit clause?

You might be wondering: why would I need one of these clauses in my contracts? Here are a few good reasons.

Protects your talent pool

You’ve spent time (and money) building a great team. The last thing you want is for a client or partner to come along and lure your best employees away. A non-solicit clause helps keep your talent where it belongs—on your payroll, not someone else’s.

Secures your client base:

Imagine you’ve just finished a big project for a client, and now they’re trying to cut you out by directly approaching your other clients or contacts. A non-solicit clause can help prevent your client list from becoming a shopping list for your competition.

Maintains fair competition

A non-solicit clause keeps everyone playing fair. It ensures that your business relationships don’t turn into a game of “who can steal whose resources first.”

In short, a non-solicit clause is all about maintaining the integrity of your business and protecting your hard-earned assets.

Read: 7 common contract mistakes that could cost your business thousands

What should a non-solicit clause include?

If you’ve decided that a non-solicit clause makes sense for your business, here are the key elements it should cover.

Definition of solicitation

Be clear about what constitutes solicitation. Is it direct contact, indirect communication, or simply making someone an offer they can’t refuse? The more specific you are, the better.

Protected parties

Clearly define who is covered by the clause. Are you protecting your employees, contractors, clients, or all of the above? Make sure there’s no ambiguity—otherwise, it’s like putting up a fence with a big gap in the middle.

Duration of the clause

Decide how long the non-solicit clause will be in effect. It could be six months, a year, or even longer after the contract ends. The key is to make sure it’s reasonable—too long, and a court might not enforce it.

Geographic scope

Specify the geographic area where the clause applies. Are you only worried about poaching in your local area, or do you want to cast a wider net? Be mindful that courts may frown upon overly broad restrictions.

Consequences of breach

Outline what happens if the non-solicit clause is violated. Will there be financial penalties, an injunction, or both? Make sure there’s a clear deterrent to discourage the other party from stepping over the line.

When should you use a non-solicit clause

So, should you include a non-solicit clause in every contract you sign? Not necessarily. Here are some situations where it makes sense:

Client contracts

If you’re providing services to a client and you’re worried they might try to hire your employees directly or go after your other clients, a non-solicit clause can help protect your interests.

Partnership agreements

If you’re entering into a partnership or collaboration where you’re sharing sensitive information, like client lists or employee rosters, a non-solicit clause is a smart move.

Vendor and supply agreements

Even if you’re not directly employing someone, you may still want to prevent vendors or suppliers from poaching your team or clients.

Mergers and acquisitions

During the due diligence phase of a merger or acquisition, you might need to share sensitive information about employees or clients. A non-solicit clause can protect your business in case the deal falls through.

Read: How long do NDAs last?

Common mistakes to avoid with non-solicit clauses

If you decide to include a non-solicit clause, avoid these common mistakes:

Being too vague

A vague clause is a useless clause. Be clear about what you’re protecting and from whom. For example, “Don’t steal our clients” is not nearly as effective as “Do not contact, solicit, or accept business from any client with whom we’ve worked in the past 12 months.”

Making it too broad

A non-solicit clause that’s too broad in scope or duration might not hold up in court. Keep it reasonable and focused. Saying “You can’t talk to anyone, anywhere, ever again” won’t fly.

Forgetting to define employees

If you’re trying to protect your workforce, make sure to specify whether the clause applies to full-time employees, part-time workers, contractors, freelancers, etc. Leave it open to interpretation, and you could be left out in the cold.

Failing to review and update

Business relationships change, and so should your contracts. Review your non-solicit clauses regularly to ensure they still make sense for your current situation.

Read: Top 10 legal tips for startups

Pros and cons of including non-solicit clauses

Before you rush to add a non-solicit clause to all your contracts, weigh the pros and cons:

Pros:

• Protection: Shields your clients and employees from being poached by the other party.

• Deterrent: Serves as a warning to potential poachers that there will be consequences.

• Clarifies boundaries: Makes it clear what is and isn’t acceptable behavior during and after your working relationship.

Cons:

• Enforceability issues: If your clause is too broad or too restrictive, a court might refuse to enforce it.

• Potential pushback: Some clients or partners may resist signing contracts with non-solicit clauses, seeing them as too restrictive.

• Negotiation required: You may need to negotiate the terms to ensure they’re fair to both parties, which can take time.

Conclusion

A non-solicit clause can be a powerful tool in your contract toolkit, helping you protect your employees, clients, and business interests. However, it’s not a one-size-fits-all solution. Make sure your clause is clear, reasonable, and tailored to your specific needs. And remember, it’s always a good idea to consult a legal professional to ensure your contract is airtight.

So, next time you’re drafting a contract, consider adding a non-solicit clause. After all, in the world of business, it’s better to be safe than sorry—or in this case, better to protect your team and clients than to be caught off guard.

How Cobrief can help with contract review

Reading your business contracts can feel overwhelming as an owner-manager of a small to medium-sized business. That’s where Cobrief comes in. Cobrief helps business owners and operators review their business-to-business contracts for legal risks.

Upload your contract to Cobrief's AI contract review software, click review and you’ll get a list of all the risks, in plain English. This helps you decide whether to sign, negotiate or reject the terms of your contract, or hire a lawyer. Think of it as a heat map for your contracts.

Get started here.