Too restrictive client protection clause
Thread poster: N.M. Eklund

N.M. Eklund  Identity Verified
France
Local time: 02:38
Member (2005)
French to English
+ ...
Jul 22, 2009

I am currently negotiating with one of the big 4 international accounting firms. They have drafted their 'standard' service provider contract for me to sign, but I'm having difficulty convincing them that their client protection clause is too restrictive.

I've come across these kinds of clauses before when working with agencies. Called non compete clauses, they tell us we can't initiate contact with their clients for a given period (max 2 years) after their contract ends.

This accounting firm has taken this clause and stretched it a bit further. They call it a client protection clause. According to them, I am not to work for their clients AT ALL outside for a period of time. The problem is that since they're such a huge company, I couldn't work at all, because they have thousands and thousands of clients around the world, three of which are major clients for me.
I explained to them that this clause is not adapted to my profession, and their only concession is an offer to include a clause that I would have to ask their permission first before accepting any work.
Yikes! Goodbye quick turnarounds and client confidentiality.

From what I understand, they have a large risk management department that governs everything. Since the Enron days, accounting firms have to prove complete transparency and no conflict of interest if they have clients for accounting or for auditing (they're not allowed to do both for the same client). I believe they're trying to apply the same logic to me and my work. They want to guarantee no conflict of interest if I'm ever called upon to translate the client's Annual accounts and then contacted elsewhere by the client or through an agency to translate the statutory auditor's report.

I've been trying to figure out what to suggest to replace this clause.
Maybe asking them for a list of clients for whom I'd have to ask permission
or just suggesting a strong confidentiality clause emphasizing that I would keep each client separate, and not embark on insider trading?
or just try to ram into their brains that if I don't INITIATE the contact, then all's good.

Help!
Have any of you seen this before (from a direct client)?
What do you suggest?

I've already researched the internet, and any freelancer contract containing these clauses are applied when the freelancer works ONLY for this client for a period of time, instead of many clients simultaneously.


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Sara Freitas
France
Local time: 02:38
French to English
Get legal advice Jul 22, 2009

NM,

If you are a member of the SFT (I think you are?) contact the legal hotline. Phone number can be found in the members' area of the SFT website.

Kind regards,

Sara


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Patricia Lane  Identity Verified
France
Local time: 02:38
French to English
+ ...
Negotiation seems the only solution Jul 22, 2009

I can only comment on such type of contractual agreements in France, other countries may differ.

While employee contracts that include such non-competition clauses are governed by the Code du travail, which specifies the scope, duration and compensation of such restrictions, private contracts such as those between independent professionals and their clients do not benefit from such a framing and protective body of law.

In my own experience with some of these excessively tight agreements, even basic legal concepts such as the balance of rights and duties between the signatories tend not to have much weight. As Sara suggested, seek legal advice. I suspect the only viable solution is a successful negotiation whereby both parties can sign-off on an acceptable document.

Good luck, and let us know how things turn out!

Patricia


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Samuel Murray  Identity Verified
Netherlands
Local time: 02:38
Member (2006)
English to Afrikaans
+ ...
Can they... Jul 22, 2009

N.M. Eklund wrote:
This accounting firm has taken this clause and stretched it a bit further. They call it a client protection clause. According to them, I am not to work for their clients AT ALL outside for a period of time.


Can they provide you with a list of their clients, to enable you to comply with this clause?


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Laurent KRAULAND  Identity Verified
France
Local time: 02:38
French to German
+ ...
Which makes me think... Jul 22, 2009

Samuel Murray wrote:

N.M. Eklund wrote:
This accounting firm has taken this clause and stretched it a bit further. They call it a client protection clause. According to them, I am not to work for their clients AT ALL outside for a period of time.


Can they provide you with a list of their clients, to enable you to comply with this clause?


How can one possibly find an excuse (I know that nobody has to justify their refusal to provide services to a given party anymore, at least not in France) for declining work offered by a potential client? Should one say "Well, you know, I signed a client protection clause with X - and X forbade me to work with/for your company"?

For the rest, and humour left aside, I would go with Sara and Patricia... You could also point to the fact that their conflicts of interests are just theirs, not yours.

Laurent K.

[Edited at 2009-07-22 20:01 GMT]


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Narasimhan Raghavan  Identity Verified
Local time: 07:08
English to Tamil
+ ...
You are a translator and the client is an accountant, where is the clash of interest? Jul 23, 2009

Suppose you are a caterer and supply packed lunches to the firm's staff. Can the firm prevent you from offering catering services to its clients?

Translation and accounting are entirely different lines of work. Non-compete clause can apply only to the same line of work. You cannot compete with your client as accountant and it is nobody's case that you are going to do so.

If the client still insists on the non-compete clause, make it mutual. He cannot offer services to your other clients, how about it eh?

This case of mutuality I have resorted to in my negotiations with a translation agency. We finally agreed that I should not offer services to a new client, whose existence I came to know through the work I carried out for the client in question.

For example, my agency client in Delhi gave me work from a well-known Indian firm. I am morally bound not to undercut the agency client and approach that end client.

Regards,
N. Raghavan


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Kate Chaffer
Italy
Local time: 02:38
Italian to English
Competing over what? Jul 23, 2009

Narasimhan Raghavan wrote:


Translation and accounting are entirely different lines of work. Non-compete clause can apply only to the same line of work. You cannot compete with your client as accountant and it is nobody's case that you are going to do so.



Just what I was thinking! If you're in different lines of business, how can you 'compete' with them?


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