When Employees or Contractors Steal Clients or Ideas

Stay in this business long enough, and at some point you’ll feel like you’re in an episode of L.A. Law.

A couple of nights ago we were having dinner with some colleagues and one of them was sharing how an ex-associate started her own studio in the same market and started offering similar services at much cheaper prices. We got to discussing what was the best way to deal with that.  It’s a tough situation to be sure.

If you stay in this business long enough, it’s bound to happen to you. An employee or contractor you trusted will steal clients or ideas. It’s one of the worst feelings in the world. You’ll deal with a lot of feelings: anger; frustration; sadness; loss; heart-break even. As artists we’re sensitive people. The art we create, the knowledge we acquire, or the client relationships we build all take a lot out of us. So when someone in whom you’ve poured knowledge and trust breaks that trust, it stabs to the core of your soul.

So how do you deal with it? How do you prevent it? Can you prevent it? Here are some things I’ve learned over the years in learning how to deal.

  1. Expect It. First and foremost go into this business knowing that it will happen. If it never happens to you, consider yourself one of the lucky ones (unless the reason it never happens is because you run your business so badly, you haven’t any ideas or clients worth stealing. Then you have a whole other problem.) If you expect it, you can put plans in place to help minimize it.
  2. Create a vetting process. Have a system in place for vetting anyone you hire. Ask for referrals. Talk to other studios who’ve worked with them. Read their blogs. If you start with a trustworthy source, you minimize the chance of it happening.
  3. Give incentives. Create an environment where they have more of an incentive NOT to leave you. It could be the money you pay them or the benefits you provide.
  4. Limit exposure. Limit the direct exposure to clients that newer employees or contractors have. This is a relationship based business. If your employees and contractors are the ones doing most of the direct work with clients, guess who’s building the relationship? They are. As the head of your studio, make sure you’re the main point woman (or man) as much as possible. If you have a larger studio with many employees, you may be more of an executive type that doesn’t do a lot of direct client exposure. That’s fine and chances are your studio is big enough to handle if a client jumps ship. But definitely make you stay connected to the really big clients, the ones it would hurt to lose.
  5. Have contracts in place. There’s a reason they’re called sub-contractors. Make sure you’re using contracts with them that clearly establish how they are to act when on a job for you. They should not be passing out their business cards, or talking about their business. They are there to represent you. If you can, give them your cards to pass out when they’re on a job for you. Also, go ahead an add a non-compete clause (aka a “covenant not to compete” or CNC) if you like, but know that in some states non-compete contracts and clauses won’t hold up in court if their restrictions are too broad. In California, CNCs aren’t binding at all except for equity stakeholders in the business.
  6. Have more than one “basket”. As the saying goes, “don’t put all your eggs in one basket.” Your business can be radically affected if you have one star employee or contractor doing all or most of your work. Make sure either you do a healthy amount of the work, or you have a team of people where the work can be distributed.
  7. Get back on that horse. Don’t go to the extreme and stop hiring people altogether. If you follow these tips, for the most part you won’t have any issues. You will wind up hurting only yourself if you stop getting the extra help you need just because you’re afraid it may happen to you again.
  8. Keep moving forward. I love the line from the animated feature “The Robinsons.” When failures or other bad things happen, the Robinson family recited the mantra “keep moving forward.” Your business has to continue to evolve in such a way where if someone steals your ideas (which again, WILL happen if you’re doing good work) you’re already moving on to the next big thing.

My last tip is one I’ve shared before, and it is admittedly the hardest one to do: forgive. You need to get to a point where you can forgive the person who wronged you; and you may need to forgive the client(s) too. As I said, this is a relationship business, so chances are you’ve built relationships with your clients. It may be more painful if they jump ship to go with an ex-employee or contractor then the contractor taking them. But if you don’t get to a place where you can forgive everyone involved, that bitterness can (and will) eat at you. Also know that forgiveness is not a one time thing you do and it’s done. It is very much like loving a spouse. It needs to be an intentional act you do on an ongoing basis.

What advice or stories can you share of your experiences?

6 thoughts on “When Employees or Contractors Steal Clients or Ideas

  1. This is some solid advice, but the silent argument is what to do when you’re ready to strike out on your own. For example, how do you peacefully coexist with the point man (or woman) who has previously been keeping you insulated from opportunity to expand and grow as a professional? I mean, as a former in house video producer, I was never going to climb past a certain income level, and was never going to even retain the right to show my own work. I know forgiveness is key, but the reality is also that sometimes abrupt and decisive action is necessary to change power dynamics sufficiently to create new opportunities, opportunities that the old guard has often been long ignorant of. My genius belongs to me, and I’d prefer to earn more than a pittance for it, and that by my own hand, not feeding from table scraps. In case it’s not obvious, I’ve unfortunately allowed this to happen before.

    1. Hey Seth, I think it’s perfectly okay for an employee or contractor to strike out on his/her own. But it all comes down to the way you do it. You can work for one studio then go do your own thing and still maintain your integrity. And if you do it right, your old employer may even help you set up shop.

      In your example it would seem like the employer did not do the kind of things I suggest in order to keep you happy and incentivized to stay put.

  2. I had a subcontractor who was also my friend. That was the worst combination. She went after two of my clients…one alerted me; the other hired her. My blood is still boiling about it. Your advice is spot on.

Comments are closed.