Enforcing a Non-Solicitation Clause in New York After BDO Seidman: Myths About 'Legitimate Interest' in Client Relationships
Updated: 5 days ago
Many business owners think that once a salesperson or professional signs a non-solicitation clause in New York, they can stop that person from contacting any former client, period. That's not how New York law works. Since the Court of Appeals decided BDO Seidman v. Hirshberg, 93 N.Y.2d 382 (1999), courts have cut these clauses down to only the clients the employee developed using the employer's resources. If your top producer walks out and calls accounts she brought in herself, or accounts she never actually served while she worked for you, a judge may well let her keep calling them.
This post walks through the six myths we hear most often from owners of New York professional services firms, brokerages, and sales-driven businesses when a key employee leaves and starts poaching accounts.
Key takeaways
A non-solicitation clause in New York protects only clients the employee developed using your money, time, and goodwill.
Clients the employee brought from a prior employer are generally off-limits, even if your form covenant covers "all clients."
If the former client reached out first, courts usually don't treat the contact as solicitation.
An overbroad covenant signed by every employee as a condition of hiring can be denied partial enforcement entirely.
A preliminary injunction is not automatic — you need concrete proof of a protectable interest and irreparable harm.
Does signing a non-solicitation clause in New York mean the employer can stop any client contact?
No. In BDO Seidman v. Hirshberg, 93 N.Y.2d 382 (1999), the Court of Appeals held that an employer's legitimate interest in client relationships extends only to clients the employee came to know through the employer's resources. If the employee cultivated or inherited those relationships on your dime (using your marketing budget, your referral network, your senior partners' introductions), you have an interest the court will protect. If not, you don't.
The decision laid out a three-part test. The restriction must be no greater than necessary to protect that legitimate interest, must not impose undue hardship on the employee, and must not injure the public. A clause that sweeps in every client the former employee ever met, regardless of origin, usually fails the first prong on its face.
The practical point is that the enforceability of a non-solicitation clause in New York is not decided by the four corners of your contract. It's decided client by client, based on who paid to build the relationship. Our firm's trade secret and departing-employee playbook covers related evidence issues in detail in our post on trade secret misappropriation and former employees.
Are clients the employee brought from a prior job still protectable?
Usually not. The Second Department made that explicit in Marshall & Sterling, Inc. v. Southard, 148 A.D.3d 1009 (2d Dep't 2017). An insurance producer named Southard joined M&S with a book of business he had built at a prior firm (the "Fitzharris clients"). When he left, M&S tried to enforce its non-solicitation covenant as to that entire book. The court said no — the goodwill with those clients was never created through M&S's efforts or expenditures, so M&S had no legitimate interest in blocking Southard from calling them.
At the same time, the court kept the covenant alive for clients Southard originated while at M&S. That's the typical outcome: a judge severs the covenant, enforces it as to the "employer-developed" accounts, and lets the employee go free as to everything else.
If you're hiring a producer who's bringing a book, address it in writing at the start. Document which clients came in with them. Six years later, when you're in Suffolk County Supreme fighting over whether an account was "theirs" or "yours," that onboarding memo is worth more than any boilerplate covenant.
If the former client called the ex-employee first, is that still solicitation?
Generally no, and the First Department confirmed that in Perella Weinberg Partners LLC v. Kramer, 2024 NY Slip Op 04349 (1st Dep't 2024). The court dismissed non-solicitation claims tied to two major clients (Monsanto and Caesars) because the clients had approached the former employees, not the other way around. A client who initiates contact is making a choice, not being solicited.
The same decision is useful on the other side of the equation. The First Department upheld enforceability of the firm's personnel non-solicitation clause (which barred poaching the firm's own bankers) because the departing partners had cultivated relationships "through the use of the employer's resources," pointing to tenure, expense accounts, and compensation history as evidence. That's the kind of proof you want to assemble before you sue: payroll records, T&E reports, CRM entries, marketing invoices tied to the specific accounts in dispute.
Compare that with Davis v. Marshall & Sterling, Inc., 217 A.D.3d 1073 (3d Dep't 2023), where the Third Department enforced a non-solicitation and commission-sharing covenant against account executives who had arrived with no clients or licenses. The accounts in dispute were "solicited, developed and serviced by" the employer, which the court said is exactly what a legitimate interest looks like.
Can you salvage an overbroad covenant through partial enforcement?
Sometimes, but not if the drafting was heavy-handed from the start. BDO Seidman allows partial enforcement (essentially blue-penciling the covenant) when the employer has acted in good faith and the overbreadth isn't the product of coercion or overreaching. Courts routinely cut out non-covered client categories and keep the rest in force.
The Fourth Department drew a hard line in Brown & Brown, Inc. v. Johnson, 2018 NY Slip Op 728 (4th Dep't 2018). After a bench trial, the court refused partial enforcement, and the Fourth Department affirmed. The employer had imposed the covenant as a condition of hire and required every employee, regardless of position, to sign the same non-solicitation agreement, which "undercuts" any claim that the covenant was necessary to protect legitimate interests. The court also said that a partial-enforcement clause in a clearly overbroad covenant casts doubt on the employer's good faith. The employer walked away with nothing.
In our practice, the single biggest predictor of whether a court will enforce a client non-solicitation clause isn't the wording of the covenant — it's whether the employer can produce documents showing which specific clients it spent money and time to develop. Without that paper trail, even a well-drafted covenant tends to fail. The lesson for owners is to tier your covenants by role, document the business justification before you hand out the form, and avoid making entry-level hires sign the same restrictions as rainmakers.
Is a preliminary injunction routine when a former employee starts calling your customers?
Not at all. A preliminary injunction under CPLR § 6301 requires a showing of likelihood of success on the merits, irreparable harm, and a balance of equities in your favor. The Second Department recently reminded employers of how high that bar is in Power-Flo Tech., Inc. v. Crisp, 2024 NY Slip Op 05231 (2d Dep't 2024), affirming denial of an injunction where the employer failed to show the ex-employee misappropriated trade secrets or confidential customer lists, or that his services were unique or extraordinary.
If you're going to move for a TRO on day one (and sometimes you should, because a few weeks of unchecked poaching can hollow out a book of business), you need affidavits, contemporaneous emails, and client-by-client proof ready to file. Our walkthrough of the mechanics is in how to stop business harm before trial. If you are also seeking money damages and the employee is moving money or assets out of state to frustrate a judgment, consider pairing the injunction with the asset-freeze remedy explained in our post on prejudgment attachment under CPLR § 6201.
A practical note on economics. Commercial litigation is expensive. As a rough rule of thumb, unless about $100,000 or more is at stake, we usually recommend pushing hard for a negotiated resolution (a cease-and-desist letter, a short-term standstill, a buyout of the disputed accounts) before suing. Every situation is different, but the economics matter, and a $40,000 fight that costs $150,000 to litigate is a win for no one but the lawyers.
Does firing the employee without cause void the non-solicitation clause?
It depends on the Department and the facts. The without-cause termination defense is strongest against forfeiture-for-competition and compensation-clawback clauses — provisions that strip an employee of deferred pay or benefits if they compete after a termination the employer initiated without cause. The First and Second Departments have read that principle broadly, and some decisions have extended the reasoning to freestanding non-solicitation covenants as well, particularly where the covenant functions as a penalty on competition. The Third Department took a narrower view in Davis v. Marshall & Sterling, Inc., 217 A.D.3d 1073 (3d Dep't 2023), rejecting a without-cause termination defense in the context of a non-solicitation and commission-sharing covenant.
If your business is based in Manhattan, Brooklyn, Queens, Nassau, or Suffolk, you are in First or Second Department territory, and the without-cause defense is live. If your matter is upstate, the law may cut differently. The venue question matters almost as much as the drafting question, which is one reason owners facing a departing-employee crisis often start by picking the right court before filing anything. We walk through those strategic choices in our guide to commercial litigation attorneys.
The federal non-compete picture adds another layer. The Federal Trade Commission's 2024 rule banning most non-competes was blocked by a Texas federal court before it took effect, and the agency's enforcement posture remains in flux. New York's own non-compete reform bill was vetoed in 2023, so state law continues to govern, and BDO Seidman continues to supply the framework.
How these cases change the way you should prepare
Think of a non-solicitation enforcement action as a two-stage proof problem. First, you have to show the court that the covenant itself is reasonable — scoped to a protectable interest, limited in duration and geography, not oppressive to the employee. Second, you have to prove, account by account, that each client in dispute was developed through your resources, not the employee's prior book or inbound referrals.
That second stage is where most cases are won or lost. If you can walk into a hearing with a list of twenty disputed accounts, dated internal referral records for each, marketing spend attributable to each, and senior-partner time entries showing firm-level servicing, you look like Davis or Perella Weinberg. If you walk in with a signed form contract and nothing else, you look like Power-Flo or Brown & Brown.
If the dispute also involves claims that the ex-employee copied files, downloaded a CRM database, or took confidential pricing data, add trade-secret theories to the complaint. Those causes of action can carry injunctive relief and attorney-fee exposure that pure contract claims don't. Our post on common commercial litigation cases in New York gives a broader view of where these fit in the dispute landscape, and if the matter moves toward dispositive motions, our plain-language guide to summary judgment under CPLR § 3212 explains how courts handle these record-heavy fights at the end of discovery.
Frequently Asked Questions
What's the difference between a non-compete and a non-solicitation clause?
A non-compete bars the employee from working in a competing business at all, usually within a geographic area and time window. A non-solicitation clause is narrower — it lets the employee compete, but prohibits targeting the employer's specific clients, employees, or vendors. Courts generally enforce non-solicitation clauses more readily than non-competes because they're less restrictive of the employee's ability to earn a living.
How long can a New York non-solicitation clause last?
Reasonableness is judged case by case, but one to two years is the typical range that New York courts accept for client non-solicitation clauses in professional services and sales roles. Longer durations get harder to defend without specific proof that the client relationships take that long to "fade." BDO Seidman enforced an eighteen-month restriction after narrowing its scope.
What if there is no written non-solicitation clause — do we have any recourse?
You may. Even without a covenant, employees owe a common-law duty of loyalty during employment, and misappropriation of trade secrets or confidential customer lists is independently actionable. You can also pursue tortious interference and unfair competition claims if the ex-employee's conduct crosses specific lines, like soliciting your customers while still on your payroll or walking out with proprietary files.
Does an employee's signing bonus or garden-leave payment affect enforcement?
Yes, courts weigh what the employee received in exchange for the restriction. A substantial signing bonus, equity grant, or paid garden-leave period strengthens the employer's good-faith argument and can help justify partial enforcement of an otherwise aggressive covenant. Courts are generally skeptical of long post-employment restrictions because the duration must be no greater than necessary to protect the employer's legitimate interest — a proportionality analysis drawn directly from the BDO Seidman framework.
Final thoughts
Enforcing a non-solicitation clause in New York is not about the signature at the bottom of the page — it's about whether you can prove, client by client, that your firm's resources built the relationship the departed employee is now trying to take. Build the paper trail before you need it, draft the covenant to fit the role, and get strategic counsel in the first week after the resignation.
If you or your business is facing a departing employee who's calling your clients and you need to decide whether, when, and how to enforce a non-solicitation clause, the team at Yassi Law PC is ready to help. Call us today at 646-992-2138 for a consultation.
Written by Reza Yassi
Prior results do not guarantee a similar outcome.
This article is for informational purposes only and does not constitute legal advice. Although I am an attorney, I am not your attorney, and reading this article does not create an attorney-client relationship. Laws vary by jurisdiction and may have changed since the publication of this article. For advice specific to your situation, consult a qualified attorney.
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