Tom Shumate's Tennessee Non-Compete Law Blog

The Tennessee Bar Association Released My Educational Games on Covenants Not to Compete and Preventing Legal Malpractice

I created an educational game on noncompetes for the Tennessee Bar Association. Attorneys across the state can play it to obtain continuing legal education credit.  I also created one called, "Preventing Legal Malpractice: Know Thy Enemy." These games are probably the most fun you can have while knocking out your CLE requirements. You can register for them here.

Tennessee Court of Appeals Expands Scope of Litigation Privilege to Include Prelitigation Conduct

In Unarco Material Handling, Inc. v. William Liberato, et al., the Middle Section of the Tennessee Court of Appeals expanded the scope of the litigation privilege to include prelitigation conduct.  The facts are very interesting, to say the least.

After Kerry Steel and Unarco became embroiled in litigation and settled their dispute, the President of Kerry Steel suspected that Unarco provided inaccurate information to induce the settlement.  When Kerry Steel's President and its attorney learned that Unarco's President, Liberato, had resigned after the settlement, they approached him about providing sworn testimony regarding the parties' previous negotiations and settlement.  During the course of their discussions, Kerry Steel's President and its attorney learned that Liberato signed a retirement agreement that included a broad confidentiality agreement.  To get around that, Kerry Steel agreed to indemnify and hold harmless Liberato from any damages that might result from providing testimony to Kerry Steel.  Liberato accepted the offer and spilled the beans on Unarco.  When Unarco learned about Liberato's testimony, it sued Liberato for breaching his resignation agreement and sued Kerry Steel, its President, and its attorney for inducing Liberato to breach his agreement.  The trial court found that Kerry Steel's attorney was immune from liability pursuant to the litigation privilege, so Unarco appealed.

The Court of Appeals discussed the history of the litigation privilege in Tennessee and its public policy function and then proceeded to examine the scope of the privilege.  It discussed how the privilege was extended from communications made during litigation to those made prior to the commencement of litigation.  Then, after examining holdings from other states, it extended the privilege to prelitigation conduct so long as (1) the attorney was acting in the capacity of counsel for a client or identifiable prospective client when the conduct occurred, (2) the attorney was acting in good faith for the benefit of and on behalf of the client or prospective client, not for the attorney's self interest, (3) the conduct was related to the subject matter of proposed litigation that was under serious consideration by the attorney, and (4) there was a real nexus between the attorney's conduct and litigation under consideration.  Since it was on a roll, the Court then held that Kerry Steel's attorney's conduct satisfied these factors, so it was absolutely immune from suit for inducing Liberato to breach his resignation agreement. 

It would be interesting to know whether the information provided by Liberato confirmed the suspicions of Kerry Steel's President and whether it has attempted to set aside the parties' settlement agreement or otherwise take any legal action against Unarco.

It would also be interesting to know what happens to Kerry's Steel's attorney.  To be clear, I have no problem with the Court's extension of the parameters of the litigation privilege (and its absolute immunity) to attorneys for doing their jobs.  But while reading the decision, I wondered about the ethical propriety of Kerry Steel's attorney's conduct.  From my work on another case, I was aware that Rule 4.2 of the Tennessee Rules of Professional Conduct states:  "In communicating with a current or former agent or employee of an organization, a lawyer shall not solicit or assist in the breach of any duty of confidentiality owed by the agent to the organization."  (emphasis added)  While the Court made it clear that the Rule does not establish the applicable standard of care, it strongly suggested that Kerry Steel's attorney may face ethical sanctions despite his immunity from civil liability. 

LAW TECH 2010

POSTSCRIPT:  NETWORK SOLUTIONS GROUP WAS ONE OF THE SPONSORS OF THIS EVENT.  YOU CAN LEARN MORE ABOUT IT AND SEE SOME PHOTOS OF THE EVENT AT THE FOLLOWING LINK:  http://www.nsgllc.com/nsg-sponsors-law-tech-2010/ 

 

I'm producing the Tennessee Bar Association's annual Law Tech 2010 seminar again.  If you haven't already registered, I strongly encourage you to do so. Here are some of the reasons to attend:

· You get to choose from 11 sessions for a total of 6.5 credit hours (4 general, 2.5 dual);

· The program includes topics such as “E-Discovery in Smaller Cases,” “From Paper to Pixels:  Building the Complete (and Green) Electronic Case File,” “Using Visuals to Strengthen Trial Strategy,” “Social Media, Viral Marketing, Low Overhead and Smart Ways to Grow and Maintain Your Practice Ethically and Affordably,” “Legal Technology Trends for 2010,” and “Using Technology to Level the Playing Field.”

· Most of our speakers are nationally known experts in their fields, and many of them are well known bloggers:  Ross Ipsa Loquitur by Ross Kodner (www.rossipsa.com ); The Mac Lawyer by Ben Stevens (www.themaclawyer.com); LexMonitor and Visa Law by Greg Siskind (www.lexmonitor.com and www.visalaw.com); and TechnoEsq by Finis Price (www.technoesq.com);

· Many of the speakers will be available throughout the day for questions and networking;

· We’re going to have an exhibitor hall containing 3 times as many exhibitors as in years past;

· The exhibitors will give away prizes to attendees at the conclusion of the event.  These prizes include the following: $100 Gift Card, Two (2) Suite Tickets to 2010 Titans Home Game (Date TBD), Four (4) Suite Tickets to 2010 Predators Home Game (Date TBD), Two (2) Hours Consulting Time with Dr.Stuart Miles, $100 Best Buy Card, Three (3) iPod Shuffles, Two (2) $50 Sperry's Gift Certificates, Lime Restaurant Gift Certificate, Two (2) Large Tote Bags Filled with Goodies, Swag-Water Bottles and Thumbdrives, Apple iTouch, Gift Basket, and other items yet to be announced.

· Breakfast and lunch are included; and

· We’re also having a post-event reception (Free Beer/Wine!).

Here's a description of the agenda:

 

The TBA’s annual “Law Tech” seminar is back and better than ever. This year it includes many double-track sessions and even more sponsors.

Bill Ramsey and Phillip Hampton kick things off with their technology trends and updates for 2010. Then our featured speaker, Ross Kodner, author of the law technology blog, Ross Ipsa Loquitur, will teach you how to go from paper to pixels to create the complete (and “Green”) electronic case file, while Conrad Jacoby teaches you how to use technology to level the playing field.

Ben Stevens, author of The Mac Attorney blog, will show you how to practice law in the clouds by using Software-as-a-Service (SaaS) to improve your practice, while Dr. Stuart Miles demonstrates how to use visuals to strengthen your trial strategy.

In the afternoon, Ross Kodner and Greg Siskind, author of the bestselling ABA book, The Lawyers Guide to Marketing on the Internet, and his Visalaw blog, will discuss how to grow your practice ethically and affordably using social media and viral marketing. Meanwhile, there will be a special panel discussion for Mac attorneys.

Next, Finis Price, author of another well known blog, TechnoEsq, will teach litigators how to use technology effectively during trial and at mediation, and Ross Kodner will demonstrate how to use practice management systems to practice more profitably and ethically. Finally, Ross Kodner will give a session on how NOT to commit malpractice with your computer while Conrad Jacoby gives a practical session on e-discovery.

In sum, you get to choose from 11 educational sessions for a total of 6.5 hours of CLE credit, breakfast and lunch is included, door prizes will be awarded at the conclusion of the event, and many of the speakers will be available for questions and networking throughout the day, and there will be a post-event reception.

 

You can register at the following link:  

https://www.tnbaru.com/CLE/catalog_course_details.php?course=6217

 

I hope to see you there.

 

Tom    

 

Don't Put All of Your Eggs in One Basket

Some employers take the time and incur the expense of drafting beautiful non-compete and confidentiality agreements. They dutifully have them signed whenever a key employee is hired. They do this because they know how critical they can be to the well being of the company. Then they stick those priceless documents in the same file cabinet where they keep their supply catalogs and their favorite carry-out menus. Then, years later, when the employers reach into that same file cabinet to get the non-compete agreements of their now former employees who are competing with them, those agreements are nowhere to be found. Not surprisingly, those same employees now deny ever signing a non-compete.  Sound ridiculous?  I wish it was, but these facts are not that uncommon. 

So what are the lessons to be learned from this?

• Have witnesses observe the signing of the agreements;
• Keep a record of who witnessed the signing of each employee's non-compete agreement;
• Keep the originals under lock and key;
• Limit who has access to the keys;
• Never, ever allow the employees to have access to their original agreements.  If they need to see it, make them a copy;
• Keep multiple copies in multiple formats (hard copy and electronic); and
• Keep copies in multiple locations, including at least one copy stored off site.

Computers, Tequila, and Handguns: Controlling Technology So It Doesn't Control You

I wrote an article on this topic that was published in the American Bar Association's webzine, Law Practice Today. You can read it here.  If you do not subscribe to this publication, you are missing out.  Each issue is packed with substantive content and practical advice.  (In the interest of full disclosure, I was a member of its Editorial Board so I'm biased.)