Covenants Not to Compete-Not to Solicit Customers or Employees-LLC Confidentiality

I use the Pre-Organization Questionnaire Letter to raises the issues and give LLC owner/members options for including covenants not to compete, not to solicit customers or employees, and an LLC confidentiality provision in their LLC Operating Agreement. These provisions are contractual in nature (as is the entire LLC Operating Agreement) and are intended to provide some binding rules among LLC owner/members for protection of basic LLC business or investment assets.

Including these types of provisions expands the areas of coverage of the LLC Operating Agreement and thus increases its beneficial potential. Also, this type of issue needs to be decided up front because once the LLC is going and LLC owner/members perceive a conflict of interests over any of these matters it will practically impossible to then make rules.

All these options are offered because convents not to compete may be difficult to enforce while covenants not to solicit LLC customers or employees and covenants protecting LLC confidential matters are easier to enforce. It may be that the latter will suffice if the covenant not to compete is struck down or it may be that covenants not solicit customers or employees and LLC confidentiality rules are all the LLC owner/members really need.

In any case, focusing LLC owner/members on these issues up front in the Pre-Organization Questionnaire Letter gets them thinking about these issues in terms of their own business or investment which is good for the business and a goal of my LLC organization (see the “Education” paragraph at “Form” LLCs)

“Government and co-operation are in all things the laws of life; anarchy and competition the laws of death.” John Ruskin (1819-1900), Essay iv, 77.