2015 might already be dubbed Year of the Broker but perhaps there should be a subsection for lawsuits. I don't think I've ever seen so many new brokers/ISOs get sued by their previous employers. In almost every case, it's for an alleged violation of a non-solicitation agreement.
I can't think of a worse way to start off than by fighting a Temporary Restraining Order while spending tens of thousands of dollars on a defense. I have to wonder if stealing deals could possibly justify this headache even if your employer had wronged you in some way. Can your new company survive without stealing deals from the last company you worked at? Because if not, then you probably don't have a very good business plan.
I won't pretend to know whose at fault in every situation but I am amazed by how litigious everyone has suddenly become. I think a great deal of this pressure is being exerted by outside investors. "Why would I invest in your company if your sales reps
can just quit and pillage the portfolio with a competing business?" they might ask. It's a great question and if the funder hasn't taken a hard line stance on such occurrences in the past, why would they believe that they would in the future?
I know what it feels like for a merchant to be "yours," but there are times when you have to just let go. Funders are paying big bucks to get ISO business but they don't want the baggage of lawsuits, restraining orders, and drama.
Perhaps the challenge should be to beat your former employer on future new business as long as you don't violate a non-solicit or non-compete. Might your success that way be the best revenge?
Six months ago, I wrote a post that addressed the phenomenon of starting an ISO with little to no money. I had people ask me if anywhere from $2,000 to $5,000 was enough to get started. The answer is no, especially if you plan on stealing deals from your previous employer (whether you think it's justified or not) because you're going to need another $30,000 to $50,000 just for your legal defense. Just sayin...
Some funders are bullies pure and simple, but who is right or wrong won't matter especially if you quit your job with only a couple grand in the bank and immediately get wrapped up in a lawsuit.
Last year nobody could go two minutes without talking about stacking. This year, in the year of the broker, nobody can stop talking about deals being stolen. I'm not taking anyone's side, just commenting on a trend. The lawsuits are flying and unfortunately the fastest growing group of people getting rich in this industry are the lawyers. Year of the Litigator anyone?
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