Is the Lateral Bound by Any Restrictive Covenants?
Find out whether laterals signed non-compete or non-solicitation agreements with their prior employers. While the hiring firm may not be a party to those agreements, if they hire a lateral, who then violates a non-compete agreement, the firm may be accused of tortuously interfering with a business relationship, contract right or prospective economic interest. There may be other instances in which restrictive covenants will similarly impact your firm’s ability to do work for certain clients. This is particularly important where one of the motivating factors in hiring laterals is the client base that they expect to follow with them to the new firm. These potential new clients should of course be included as part of the conflict check mentioned above. Similarly, find out whether a lateral hire gained access to any trade secrets that they might be using at your firm. This could include a confidential pricing model to which a CFO was exposed, or in some instances highly developed client lis
