Enforcing Restrictive Covenants in Contractor Teaming Agreements
Litigation By Harvey Binnall PLLC - 2019/05/17 at 02:34pm
Experienced Commercial Litigation Lawyer in Alexandria, VA
Teaming agreements often feature restrictive covenants in the form of “no poaching” or “no solicitation” clauses that prohibit the parties to the agreement from directly recruiting employees from one another. Confusion over the enforceability of such covenants is an ongoing problem leading to commercial litigation.
Whether you are attempting to enforce a restrictive covenant embedded in an underlying teaming agreement or attempting to prove that the restrictive covenant is unenforceable and therefore inapplicable to your case, our team at Harvey & Binnall, PLLC can provide comprehensive assistance.
Contact us to learn more about our services.
What is a Teaming Agreement?
A teaming agreement is essentially a subcontract made between two or more parties (a prime contractor, and various subcontractors) for the purpose of “teaming” together for a period of time to bid for a contract. This is particularly useful for large projects where the prime contractor would not have the breadth of expertise necessary to successfully bid for the contract (without the assistance of specialized subcontractors). The teaming agreement functions as an “agreement to agree,” of sorts, as it is made prior to having secured the main contract. Importantly, however, it is not generally enforceable if it makes guarantees regarding the main contract.
Enforceability of a No Solicitation Clause
Whether a restrictive covenant in the form of a “no solicitation” clause is enforceable (in the context of a teaming agreement) is not only dependent on a clear mutual intent by the parties to bind themselves to its sufficiently-specific terms, but also dependent on a showing that there is a legitimate business need for the parties to collaborate closely.
Generally speaking, agreements between employers requiring that those employers refrain from recruiting certain employees are illegal and unenforceable as a matter of law and could even lead to criminal penalties under applicable antitrust regulations. In the teaming agreement context, however, so long as a “no solicitation” clause has a legitimate business justification (i.e., due to the close collaboration of the two parties in their joint venture), and so long as the “no solicitation” clause is limited, then it may be enforceable.
For example, “no solicitation” clause that does not prohibit a party to the teaming agreement from hiring another party’s employee through indirect means (i.e., job postings, employee approaching the employer, etc.) will likely be enforceable, as the prohibition would only affect direct recruitment.
Contact Harvey & Binnall, PLLC for Guidance
Here at Harvey & Binnall, PLLC, our attorneys boast decades of experience working with a wide range of plaintiffs and defendants embroiled in commercial disputes, including those that center around teaming agreements.
We are familiar with the unique challenges imposed on parties engaged in government contracts, and — thanks in part to our willingness to try a case to conclusion — are able to approach difficult cases in a proactive manner, often winning an advantage early on in the litigation process. Over the years, our team has developed a long and consistent track record of success in negotiating favorable settlements and securing positive verdicts for clients.
If you have any questions about your case, or even if you are ready to begin the litigation process, we encourage you to contact us to arrange a consultation. Call 703-888-1943 or send us a message through our online form to speak to an experienced Alexandria commercial litigation lawyer at Harvey & Binnall, PLLC.