Taking over a project from a floundering employer?

May 7, 2009 7:10 PM

My employer is running out of cash, in debt to suppliers, and has had trouble meeting payroll several times this year. My gut says I'll be out of work in a couple weeks, a month at the most. I'm working on and managing several web development projects where a deposit has been provided by the client, but we're several months away from completion. Do I approach the clients, let them know the situation and propose completing the projects on my own for the remaining amount of the project?

A couple of other points - there is no other new revenue on the horizon, and I just found out my boss has given his notice.

I'm not doing this purely for my own benefit, as I'd genuinely like to see the clients get what they're expecting.

Has anyone experienced this type of situation? Is this horrendously evil?

posted by thehickmans to work & money (21 comments total)

While not evil (I believe you have to look out for yourself first), this could end up in a lawsuit or at the very least getting your name blacklisted in your local region...

If you really think they will go with you, you have to quit first.
posted by jkaczor at 7:19 PM on May 7

Whether or not it is evil, it may be tortious interference and/or breach of fiduciary duty. IAAL. IANYL. YMMV. Consult a lawyer before you take clients from your employer.
posted by The Bellman at 7:19 PM on May 7 [1 favorite]

If you do this, the clients may lose confidence in you. They may be immediately grateful for the information, but distrustful of you.

I think a better path is to do the best work you can for them, while maintaining the confidences of your employer. If and when it all falls apart, that's a better time to approach them.
posted by Houstonian at 7:24 PM on May 7

Some questions:

-When you joined the company, did you sign any kind of anti-competition agreement?

-Is there a contract between the customers and the company you work for?

If so, and if you left, how would that work? I suppose if the company goes under that's straightforward, contractually speaking, but what if it doesn't? Would the customers need to end their contract with your current employer? Are there any penalty fees involved?

-How are the projects themselves going? Are they on track themselves, or has the chaos at your employer hindered your company's capacity to meet their obligations to these customers? And does this anarchy hinder your ability to do your job?

Keep in mind that what you propose could backfire: unless the customers realize the company is falling apart and their projects are likely not going to complete successfully, they may turn around and talk to your boss (current or former boss) and warn them that you, the employee, are trying to derail their business arrangement. You may end up unemployed anyhow but with less prospects than you would otherwise.

You're also potentially depriving your existing employer of some much needed revenue at a key time.

If the projects are on track, and if you're still being paid regularly, I would probably stick it out so long as the pay keeps coming in. If my regular pay gets interrupted, then I might strike out on my own as an independent developer, and contact the former clients and let them know I'm available for work.
posted by thermonuclear.jive.turkey at 7:27 PM on May 7

Let me tell you a story about that... I used to work for a small company like that which you describe. The company was in some financial straits similar to your description and we weren't sure whether or not the company would survive but we were giving it our all and things were starting to improve a bit. Until one day when the largest recent client we'd landed (and who was about 75% responsible for still keeping the lights on) stopped paying us and halted our work for them. The reason that transpired was because one of our guys who was doing direct work on the client's project was feeling freaked out a bit by the environment, didn't come to any of us to talk about it, but instead used his channel of communication with the client to basically beg for a job telling them everything's fucked over here and we're going down and he doesn't want to go with it. That didn't go over very well with the client.

Long story short, that pretty much killed the company. I suspect that your course of action will probably have a similar effect on your company. And bear in mind if it gets back to the company (and it will), you might be sued. You might also have to deal with angry (former) coworkers.
posted by barc0001 at 7:29 PM on May 7 [6 favorites]

IANAL and I don't think I could say with certainty what you should do but it would appear to me that what you describe there might both violate any non-competition agreement you have with your employer as well as technically deprive the employer of income, if you would essentially be usurping the employer's position in the contract / project.

It certainly seems genial and professional of you to look after your clients in this fashion but unfortunately what you're proposing may not be sanctioned as entirely legal or ethical behavior.
posted by XMLicious at 7:31 PM on May 7

barc0001 got it right. Keep your mouth shut. You can make overtures to the client once your company closes.
posted by saradarlin at 7:36 PM on May 7

Bad, Bad idea.
posted by mazienh at 7:42 PM on May 7

If your work is good enough, when the company goes tits up you can jump on the opportunity.
posted by furtive at 7:46 PM on May 7

No, you can't do this. But you can create a plan for getting the work done as efficiently as possible, and present it to your boss, making it more likely that you'll be kept on in a layoff.
posted by theora55 at 7:51 PM on May 7

God, no. What a horrible idea.

If and only if the company actually closes down, you may do this. But most certainly not until then, not even if you are yourself let go but the business continues.

Even if we ignore the legal and ethical problems, you are going to be seen by these clients as part of the problem, no matter whether that was true or not. Understand that every ex-employee of every firm on earth will tell you that THEY were not the problem.

It's always "everyone else." Always.
posted by rokusan at 7:53 PM on May 7

Also, keep in mind that service firms that work project to project (software developers, architects, housing contractors) are often "running out of cash", and things may not be as dire as they seem in any given week or month. At other times, they will be flush, and this isn't always directly related to how well they're being run at those times.

I know some (young and skittish) people who leaped out of project-based firms at the first sign of financial stress, but almost a decade later, those firms are still humming along. Ups and downs are common when you're counting on future-unknowns to pay future bills.

So keep your resume up to date and your ears open, but keep working very hard. Should your business end up recovering and prospering again, your employers will probably remember this.
posted by rokusan at 8:00 PM on May 7

Wow, this feedback has been really helpful and provided some much needed perspective!

Some answers for those who asked:

- My employment contract doesn't include a non-compete clause, and I've had it reviewed by a lawyer to be sure.

- The projects are all on track, as long we can pay our designer. :)

- The agreements with each client are in the form of proposals that they've accepted, so they are "contracts".

I'd have to say that what really struck me is that it may deprive my employer of income - I'll have to see if they last that long, but that's a great point!
posted by thehickmans at 8:01 PM on May 7

Also, really do not underestimate the effect that doing something like this will have on your reputation with future employers in the same business. A lot of people will think you're a snake for this. And it's not necessarily just your employer you'd be depriving of income either. Some of us (me included) were collecting half-pay to get the company through the rough patch on the idea that we'd get caught up later. I ended losing about 5 grand personally because of this, as did several others. Again, we were REALLY not happy about this person's actions and not at all shy about mentioning what happened any time their name came up in conversation.
posted by barc0001 at 8:10 PM on May 7 [2 favorites]

Thanks to everyone for their input, this has made me rethink the path I was considering.

As a follow-up, if I was let go or left the company and the clients contacted me to complete the projects, is there anything I should consider or be concerned about?
posted by thehickmans at 9:21 PM on May 7

Best thing to do is not say anything yourself, but just keep doing good work, build your relationship with the client, and if/when your company closes and you go to the inevitable "last meeting" with each client, be sure they're aware that you are going to be on the market or working on your own very shortly. (This can be in response to someone asking what you're planning on doing next, which will almost certainly get asked.)

That basically invites them to hire you once you're free, but doesn't actually involve you poaching or soliciting the client.

In the meantime you might want to do some research and get yourself set up to work as an independent contractor, so that when they contact you, you'll be ready to go.

It's borderline sleazebag territory to actively solicit business from a former employer's clients (and getting into seriously unethical to do it while your employer is still cutting your checks), but if you just put it out there that you're available for work, and they ask for you to do work for them because they were happy with your past performance? That's just business. Let them come to you.
posted by Kadin2048 at 10:39 PM on May 7 [1 favorite]

Regarding your follow up, I would say if the clients come and talk to you after you're no longer with the company, either because you left or the company ceases to be, that's fine.
posted by barc0001 at 11:22 PM on May 7

>if I was let go or left the company and the clients contacted me to complete the projects, is there anything I should consider or be concerned about?

Documentation (in the form of a memo that you create is fine, but from the client would be great) that the client initiated the request rather than vice versa, and when they did so.
posted by megatherium at 4:23 AM on May 8 [1 favorite]

Hey, do you work with me? I just got laid off in a similar situation - I've dropped to contract status to finish out my current projects.

Our wrap-up meetings are generally like this:

Client: OK, we're dropping a new release in September, so we'll touch base about new documentation in July and get a contract going.
Me: OK.

This time, I'll mention that I've gone freelance again. That piece of info just lies there and they can decide whether to go with me, or go with my company.

Good luck to you. It's not a fun place to be, especially in the murky waters of competition between former employers and new freelancers. Stay as clean as you can - how you behave now will follow you in your industry.
posted by catlet at 8:34 AM on May 8

Re: Your follow up-

If they let you go and then the client contacts you, that is absolutely A-OK. The key here is the company chose to let you go and the client chose to contact you directly. You are not in the driver's seat here and thus not acting to hurt the company.

If you quit then they contact you it is a little sketchy. If you are let go then you contact the client, that too is sketchy. In these cases you made a decision that hurts the company by quitting or stealing a client.

Your responsibility is to your employer, not your clients. Remember that and you'll be fine.
posted by chairface at 4:28 PM on May 8

Your responsibility is bound to your employer, until they are no longer your employer, either because they laid you off or you quit.

Then your responsibility is to yourself.

Don't start negotiating to compete with your employer while you still work there. That's unethical and, depending on the details, could get you into legal trouble.

Once you are no longer associated with your employer -- regardless of whose decision that is -- you are like any other contractor in the world bidding to get former clients to hire you. At that point you have zero obligation to your former employer and absolute freedom with respect to your former employer to solicit your former clients.

Noncompete clauses are unenforceable/anticapitalist/unAmerican. Don't worry about it if you have one. And you don't have one, so don't worry even more!

What's not unethical while you continue to work for your employer is to think strategically about building relationships with clients that could help you win their work if things fall apart. Make friends, talk about what you are bringing to the project as presently conceived, solve problems for them. If you quit or they fire you, you have contacts. And you shouldn't hesitate for a second to contact them.

And none of the above is inconsistent with your friendship with coworkers and commitment to present projects. Loyalty is excellent. But loyalty is no longer an issue if you're no longer a citizen of that country. Whether you quit or they let you go, at that point you're a free agent. At that point, enjoy maximizing your self-interest and reject any suggestion that you still hold obligations to your old firm.
posted by gum at 9:13 PM on May 8