Legal Definitions - hands-off agreement

A hands-off agreement is a specific type of contractual clause, often included within an employment contract or a separation agreement, designed to protect an employer's client base. It prevents a former employee from using confidential information or relationships developed during their employment to solicit, divert, or "steal" customers away from their previous employer.

Unlike a general non-compete clause that might restrict a former employee from working for a competitor altogether, a hands-off agreement specifically focuses on prohibiting the former employee from directly targeting or engaging with the former employer's existing clients.

Here are some examples to illustrate how a hands-off agreement works:

• Example 1: Sales Professional

  Imagine a senior sales manager who works for a software company, managing relationships with several key corporate clients. If this manager decides to leave and join a competing software firm, a hands-off agreement in their original employment contract would prevent them from directly contacting or soliciting any of the clients they managed or had access to at their previous company. This protects the former employer from losing valuable client accounts due to the manager's insider knowledge of client needs, preferences, and contract renewal cycles.

• Example 2: Marketing Consultant

  Consider a lead marketing consultant at a digital advertising agency who has developed close working relationships with many of the agency's top clients. If this consultant decides to start their own independent consulting firm, a hands-off agreement would prohibit them from reaching out to those specific clients they served at the agency, or any clients whose confidential information they accessed, to offer their new services. This ensures the agency retains its existing client relationships and prevents the consultant from leveraging the agency's client list for personal gain.

• Example 3: Financial Advisor

  A wealth management advisor at a large financial institution has built a significant book of business, with detailed knowledge of their clients' financial situations, investment portfolios, and personal preferences. If this advisor leaves to join a smaller, boutique investment firm, a hands-off agreement would prevent them from directly contacting these former clients to encourage them to transfer their investment accounts and assets from the large institution to their new firm. This safeguards the institution's client base and proprietary client data, ensuring the advisor cannot simply take their former clients with them.