When Should I Talk to a Lawyer about Compensation?

Jack Chapman 08/20/08

V.P. and “C-Level” positions with complicated golden parachutes, performance clauses, and the like obviously need legal attention. Most lower and middle management positions don’t. But where do you draw the line?

The first strong indicator that you need a lawyer is when you’re asked to sign anything other than a straightforward list of itemized compensation - and, please, talk to a lawyer before you sign anything, not afterwards.

If you’re given something that sounds like their lawyer wrote it, let your lawyer read it. There’s a strong probability that you’ll need an expert to explain things fully. Sometimes, more important than telling you what’s there, a lawyer can tell you what’s not there: default provisions such as dispute resolution, attorneys’ fees, commission payments, etc. So, read it, of course, but have an attorney tell you what it really means.

The most common compensation-related documents that need special attention are the “nons,” such as non-compete, non-disclosure, and non-solicitation.

Candidates sometimes say, “I don’t worry; non-competes are not enforceable anyway.” Wrong!

Non-anything can be enforceable and, even if it can’t be enforced, it can cost a considerable sum to fight it. Even if you “win,” by the time it’s cleared up by a judge, you may have lost a job opportunity with a competitor and wasted a lot of time and money in the process.

Often a competitor won’t consider you until it’s cleared up, and they obviously won’t wait out a lawsuit. Many employees don’t understand the full implications of these provisions, and a lawyer can tell you quickly.

For now, remember, if they tuck a “non” into the documents when you’re signing your innocuous W-4 tax forms in personnel, don’t sign, wait. Have a lawyer look at it first.

Let’s look at non-compete agreements. Think about what they’re asking you to give up. Is it worth it? Can you live with its provisions? The other side of the coin is to evaluate what you can gain by signing a non-compete. To start with, a hiring company probably won’t think to offer anything to gain but your job. But if you’re giving up something, shouldn’t you get something in return?

If you sign a non-compete, that could add 2-6 months to your job search; you deserve compensation for that. Try to limit a non-compete to voluntary termination; that is, it applies if you quit, but not if you’re fired. Even if it applies if you do quit, why not still negotiate for 6 months of severance in consideration of the non-compete and its effect on your job search?

The following situations are examples of when to not only have the agreement in writing, but to have it in writing in a way that’s enforceable; hence, let a lawyer help you.

• When you’ve negotiated a valuable bonus, severance, residual commissions, stock option vesting or other financial extra, that you will be paid even after you leave a company.



• When you’re leaving a good position, going to a competitor or having to relocate, you’d be well advised to get legally accurate assurances of the security of your new position – covering those “what ifs” (especially what if the new position doesn’t work out).



• Equity, partnership, bonus pool, or profit sharing participation can be confusing. If anything is fuzzy now, ask your counsel to explain it.



• It is usually critical to get a written contract if you’re bringing something to the table that you want to walk out with when you and your new employer (inevitably) part ways.

A written contract to cover this last situation is important, and often over-looked. For example, experienced sales people with their list of established clients and contacts want to keep the rights to solicit them if they leave the company. Recruiters, accountants, and lawyers, for example, all build up clients who are more loyal to them personally than to the company or firm they work in. If they leave the firm, it’s important to clear up whether it’s fair game to bring clients along.

Scientists and others might want to keep part of their inventions and other intellectual property. If you don’t have a written contract, anything you bring to the table or develop while an employee may well end up the property of your employer -- even if you’re doing it at home with your own time, money, and laboratory.

This can impact you even if you’re not an inventor-type; employers can lay claim to any practical methodology, improvement or innovations you create in your work. Beyond that ownership, you also could lose your option to continue to work on it once you are gone and maybe even be prevented from writing about your contributions and your work experiences. That’s not a very good position to build a career from. Protecting your intellectual property needs to be spelled out by a lawyer, not you.

The bottom line: if you want to be sure you walk out with something, get it in writing before you walk in.

There are two kinds of lawyers in this domain: the ones who work for the companies and the ones who work for the individual (plaintiff) – the latter is the kind you want. I have some resources listed on my website.

In the beginning of your tenure with a company, you’re on a honeymoon phase. They like you, they hired you, and you both expect great things and a bright future. When the end comes – and it will – sometimes the parting is not amicable. In those situations, it’s nice to have the exit doors open and clearly marked. You, yourself, can make sure they’re open, and an hour or so with your lawyer can make sure they’re clearly marked.