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Accountant leaving company with practice clients ?

Is it legal or illegal when an accountant who has worked for a practice once leaves in its clients ?

Hello Dear colleagues,

We set up an accountany practice in 2007 and since then we had two separate big cases which accountants made a decision to leave the accountancy practice after working many years ( between 5 and 10 years ) as an accountant ( employee) and they made a decision to leave the accountancy practice to set up an accountancy practice by themselves. Soon they left, they contacted all the clients they used to work for  the previous accountancy practice ?

Have this situation happened with other colleagues ?  Is this ilegal or Illegal ? Is there any way to claim revenue losses against these accountants  ? Any other suggestion or recommendation ?

Thank you very much for the advice

Rodolfo

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By MC1
05th Aug 2018 12:28

I was asked to try to help a practice owner in a case like this many years ago when his manager walked off with more than 90% of the clients!
The governing body visited but could do nothing to help and there was no action in law.
Not sure how the manager could sleep though. What goes around comes around I guess.
Good luck.

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to MC1
06th Aug 2018 09:18

I'd imagine he slept quite comfortably given that he'd secured an income from 90% of his previous bosses client's. How many start ups accomplish that at no cost.

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05th Aug 2018 12:40

(1) Speak to a solicitor

(2) Work out why your clients and staff are leaving

Thanks (1)
05th Aug 2018 13:41

If their former employment contracts included restrictive covenants, which should have been the case, and those covenants were not so general as to be unenforceable, then you ought to be able to sue them for damages on the basis of breach of covenant. If you *didn't* all sign an appropriate contract with covenants, your journey through the courts will be much tougher, as you will have to prove that there was an oral or implied agreement not to take clients away if they left your employment.

You need to pay a good solicitor for legal advice.

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05th Aug 2018 13:41

1. It depends on their employment contract. If they worked for you for a long time the contracts may not be very robust. Anne's suggestion about seeing a solicitor applies here and to bringing all other contracts up to date.
2. Can you actually prove who approached who, and where client actually came from? e.g. might these clients have come to you with the leaving accountant?

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05th Aug 2018 15:27

I would have thought that the clients had built up a relationship with the accountants with whom they dealt and that they preferred to continue dealing with them.

Several years ago I worked as a practice manager for a small firm of solicitors. One of my first jobs was to sit in the office of one of the employee solicitors who had been put on gardening leave, to ensure that he didn't take any paperwork with him to his new firm. Of course, he had already taken details of his client list before this occurred.

Another example is that of hairdressers where over a period of time the client builds a relationship with the person who regularly cuts their hair. The client doens't necessarily want to move to another cutter and so will often try to find where their cutter has moved to. The proprietors don't like it and may use restrictive covenants to prevent their employees operating within a specified radius.

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05th Aug 2018 16:14

There is nothing illegal or improper as such in enticing clients away from another firm. Surely we all do it when the opportunity arises.

Any impropriety here will be if an enforceable restrictive covenant in the ex-employee’s contract of employment has been breached. As you make no mention of there being one, and as it will have been the first thing you will have checked when the problem first arose, presumably there isn’t.

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06th Aug 2018 00:08

... And even if there is a restrictive covenant in the contract, it's still not certain you would succeed in taking action against the said (ex) employee.

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06th Aug 2018 01:02

A restrictive covenant would help (as long as not too restrictive or time limited) however you could also ask what is making those ex staff wanting to set up their own practice.

You can't always avoid staff leaving but there is a difference between staff leaving to work as an ordinary employee for another firm, and staff who set up on their own.

Thanks (1)
06th Aug 2018 08:45

You can put things in to contracts to try and stop this,. however you cannot erase the memory of staff when then leave, and ultimately you don't own the clients.

"non compete" style clauses are very difficult to enforce and you cannot stop clients from moving.

If you think he has stolen a data base when he left you could maybe have a go at that, maybe a legal letter across his bows may cause them to think again.

If he has stolen a database from you, I suppose under this GDPR cobblers you are required to report yourself for allowing it to happen.

From a practical point I would be calling all the clients you think you are exposed on and try and re establish the bond with your firm to limit any damage.

Thanks (3)
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07th Aug 2018 10:08

Do not waste your money on any solicitor, good or bad.
If a clients wants to go there nothng anybody can do. It appears that you have left the care and attention of your clients to the accountant that left and now you are paying a price.

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07th Aug 2018 10:18

So you will have some time on your hands.
Use some of it to find new clients but make sure you use some to learn some lessons.
1 - make sure that you keep close to your clients and in particular to the decision makes at those clients
2 - make sure you treat your staff well and keep them on side
and I am sure there are quiet a few more

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07th Aug 2018 10:42

You can't stop an employee leaving and setting up a rival firm, and you can't stop him taking your clients if your clients approach him first. However, you may be able to take action if the former employee has obtained clients using information that belongs to you, e.g. if he has targeted and approached your clients specifically, particularly if the approach used contact details obtained by him while he worked for you. He is entitled to compete with you using the general skills he picked up, but he is not entitled to compete by using confidential information he obtained in your employment.

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07th Aug 2018 11:19

Jack Spratt made a good point which I try to do.

Treat your staff welll Look at Trival benefits. It may hurt but pay them properly and make them feel part of a team.

No one makes mistakes and are held accountantable for them. If an error is made the practice makes it.

Thanks (1)
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07th Aug 2018 11:19

Jack Spratt made a good point which I try to do.

Treat your staff welll Look at Trival benefits. It may hurt but pay them properly and make them feel part of a team.

No one makes mistakes and are held accountantable for them. If an error is made the practice makes it.

Thanks (0)
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By A4TUser
09th Aug 2018 16:14

Some very good points have been made above. I have recently left my job in a small accounting practise to set up on my own. And whilst I haven't taken any clients with me, I do feel that if employers appreciated the value of their staff a bit more and didn't always concentrate on negative things when they happened, especially the 'small stuff' then they wouldn't lose good staff. Employers should be more flexible where possible and recognise that good staff are hide to find as my previous practise should well know! If clients want to move that is their prerogative, especially if they have received a good service from the individuals who choose to leave.

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12th Aug 2018 09:14

As a Growing practice this has been my constant worry and to protect us we have designed a very robust employment contract and that's the key. They can be designed that even if client approaches them they cannot be involved directly or indirectly with the clients.

please check if there is such restriction in the employment contract

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12th Aug 2018 09:16

As a growing practice this is my constant worry as I do not have direct relation with my clients. Key is restriction in employment contract where employees cannot be involved with clients directly or indirectly and if employment contract is strong then you should feel safe. Employment contract is key to protection

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