Real estate companies and their professionals face unique employment issues – from non-compete restrictions to confidentiality agreements to garden leave.
Consider, for example, something as obvious as a job change.
People change firms all the time in the real estate industry – seeking new opportunities, increased pay, or maybe just a change of city.
While such a change can sometimes go smoothly, there are always risks for the employee, the former employer, and the new employer. These risks must be navigated with care by lawyers with the requisite skill and expertise in both real estate and employment law.
In this example, a job change, the Firm's Real Estate Employment Practice Group is equipped to understand the vantage point of the employee, the former employer, and the new employer. We have represented all of these parties. We know how to navigate all the angles and how to win if a dispute arises.
Below is a non-exhaustive list of considerations for each of the players in this scenario.
- The employee may have equity and/or profit participation in some of the ongoing real estate ventures of the former employer.
- The employee may be entitled to residual compensation based on performance of certain real estate investments controlled by the former employer.
- There could be restrictive covenants in place – like non-compete, confidentiality, non-circumvention or non-disparagement agreements – from which the employee wishes to escape.
- The employee will want to avoid any entanglements with the former employer - as those could risk his/her marketability and undermine his/her value to the new employer.
- The employee, who is trying to “do the right thing,” may feel great concern about investors who invested with the former employer “because of” the employee and are now being “left behind.”
- The former employer may be concerned about the theft or conversion of intellectual property and trade secrets.
- The former employer will have to protect and demand the return of physical property – particularly any technological assets containing sensitive data.
- The former employer may wish to strictly enforce applicable restrictive covenants – like non-compete, confidentiality, non-circumvention or non-disparagement agreements – so as to protect its own business opportunities and reputation.
- The former employer may need to protect its own investors – from being disclosed, solicited or otherwise exploited by the former employee.
- Ministerially, if the former employee held any officer or director positions in any of the single purpose entities set up by the former employer, new appointments must be made by the former employer. And of course the former employer may have to amend any transaction documents which included the former employee as a notice party.
- More importantly, if the employee is a so-called “Key Man” in respect of funds or other structures set up by the former employer, these have to be successful navigated.
- The former employer will have to determine if the departure requires any contractually-mandated disclosure to lenders or counterparties.
- The new employer must ensure that it is hiring an employee free from entanglements.
- The new employer will want to demand disclosure and assess the implications of any applicable restrictive covenants to which the former employee is bound or arguably bound. However, it may be the case that this disclosure itself might breach the former employee’s employment agreement with the former employer.
- The new employer must be careful not to give rise to any allegation that it tortiously or wrongfully interfered in the employment relationship between the employee and its former employer.
- The new employer will have to weigh the risk that the full value, capabilities and knowledge of the employee will not be available to the new employer without conditions or restrictions imposed by the former employer (through litigation or otherwise).
Finally, all parties have to assess the “practical” implications of actual litigation. On the one hand, no company wants to hire someone who is later embroiled in a protracted dispute and thereby unable to serve the new employer. On the other hand, it is rare that a company wants to get a reputation of suing former employees who quit. Indeed, assessing these “practicalities” is often more important to the outcomes than the terms of the documents themselves.
These considerations – and many more – are quite likely to arise when a key real estate employee changes jobs.
As the Pure Play in Real Estate Law®, the Firm couples our expertise in real estate transactions with litigators who focus on real estate employment litigation. This makes our Real Estate Employment Practice Group properly positioned for employment disputes in the real estate industry.
Whether our clients are changing jobs, negotiating employment agreements, severing a long-term employment relationship, or in an employment dispute, the attorneys in the Real Estate Employment Practice Group – both litigators and real estate lawyers – bring a wealth of experience to real estate-related employment matters.
Our representative experience includes:
- All types of employment disputes, including age, race, disability, and sex discrimination actions.
- Employee discipline and discharge issues, development of employment policies and procedures, negotiation and drafting of employment agreements such as non-competes, non-disclosure and confidentiality agreements, garden leave, carried interest agreements, etc.
- Representing clients on employment matters before the EEOC, state and local administrative employment agencies and numerous state and federal courts.
- Outside general counsel to large corporations on employment policies and protocols and qualified agent agreements.
- Litigation of wrongful termination actions.
- Litigation of business protection claims - such as improper solicitation of customer accounts, theft of trade secrets and customer lists, and violation of non-compete and confidentiality agreements.
- Outside general counsel to new real estate platforms established by seasoned real estate veterans covering all employment policies and protocols.