So I had to keep watching Showtime’s House of Lies to see what happened with Marty Kaan’s threats to open his own consulting firm in LA, in competition with his long time employer Galweather Stern. And maybe I also had to keep watching because I think Kristen Bell’s character has the best work wardrobe I have ever seen. Either way, big things happening in Season 2. We are mixing silks with wool, and Marty’s actions are going to get him sued. Well, they would in the real world.
In Season 2 Episode 6 and 7 – we see Marty take additional steps towards opening his own shop. If I represented Galweather Stern (and let us be clear, they are in California where non-competes are disfavored) I could still easily file suit against Mr. Kaan, today and allege the following:
1. Breach of Fiduciary duty. This was accomplished when he asked his banking client to stop doing business with GS and hire KAAN and ASSOCIATES. Big no no when you are still an employee of GS. Big problem to solicit clients away from your current employer.
2. Conspiracy. This was accomplished when he spoke to his other GS colleagues about opening his own shop.
3. Breach on Non – Solicitation. This was accomplished when he invited Ms. Jeanie to join his new firm. We can assume most big consultants have contracts that say they wont solicit employees to leave and compete.
4. Breach of Non – Compete. The existence of a non-compete was referenced in Season 1 but now that I know these folks are in LA – I don’t think it would be binding, California law thankfully disfavors these suckers. You could still file a breach of contract claim if however, another state’s law applies. For example, if GS also has a NY office and therefore all of the contracts are written under NY law – Marty is back in the hotseat.
5. Trade Secret Violation. If Marty used information he knew was confidential from GS to compete with them, he could be charged with violating state or federal trade secret act. Not Good.
I could go on but I won’t. Bottom line is that such behavior makes for a good story line. Jetting around on the company’s dime while you tell everyone (but your company) you are leaving and going to start your own firm makes for good drama. It also makes for fabulous litigation. And you think a new business wants to fork out $50,000 in its first year for attorneys fees? I doubt it.
So please, don’t do as they do on TV. Remember, it is fiction. And the actions of one arrogant fictional character should not inspire anyone to act likewise. Or, if you feel so inclined and you need someone to help you reply to the injunction filed against your new firm to prevent you from working, call me. I would be honored to help.