Can Partners Compete After They Leave? Maybe.

Businessman with fingers crossed behind backBONUS: Sample non-solicitation agreement.

By Marc Rosenberg
Retirements & Buyouts

A non-compete covenant prohibits departed partners from joining another CPA firm or creating their own firm within a radius of a specified number of miles from the firm, within a specified period of time after their departure.

Increasingly, firms are writing and enforcing tougher and tighter non-compete clauses.

One of the key tests that courts have used in ruling on the enforceability of non-compete agreements (different from non-solicitation) is the extent to which such agreements prevent the departing partner from earning a living.

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The vast majority of U.S firms are local practices located in areas with many competing firms. If a partner leaves to join another firm and does not attempt to take clients, it is very difficult to claim that the departing partner will substantially and irreparably damage the interests and the value of the firm.

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