Lab-savvy lawyers tackle overlooked issues involving non-compete covenants, protection of client lists, and effective partnership agreements


Unbeknownst to many owners of clinical laboratories and pathology groups, several developments have created new risks for the most important business assets of these organizations. Experts involved in legal and financial consulting for laboratories advise their clients to take definitive steps to prevent direct loss or any significant erosion in the value of these valuable business assets.

Too often, laboratory owners and the pathologist-partners of group practices find the value of their business needlessly reduced because they failed to take simple—but necessary—actions to fully protect their assets. That is not surprising, because many of a laboratory’s highest-value assets are represented by contracts with employees and partners, agreements on trade secrets, non-compete covenants with executives and sales representatives, and even something as basic as employee handbooks.

James J. Boutrous II and James J. GiszczakIn fact, experts involved in laboratory mergers and acquisitions tell Dark Daily that, over the past year or so, buyers of clinical laboratories and pathology group practices are actually intensifying their due diligence of these valuable business assets. That’s no surprise, because when buyers uncover the problems with these assets, it directly lowers the valuation of the laboratory and reduces the purchase price they offer to the laboratory’s owners.

Moreover, by failing to review and update these laboratory assets, many lab owners and pathologist-partners needlessly expose their laboratory organization to unnecessary expense and legal challenge. Non-compete agreements make an easy example of how lack of foresight can lead to unfortunate consequences and even monetary losses.

For example, what happens when suddenly, a lab’s knowledgeable vice president of sales moves to a competitor—or the pathology group’s top sales producer gives notice and pops up weeks later selling for a national competitor? It is likely that few lab organizations would be confident that their laboratory’s non-compete covenants are up-to-date, properly-executed, and fully compliant with current federal and relevant state laws? Few laboratory leaders conduct regular reviews of such assets and documents to ensure their lab is in a strong position to protect its revenue-generating clients from the raiding efforts of these ex-employees.

It is sound management to stay current with new laws, court decisions, and business practices that may erode the value the key business assets of clinical laboratories and pathology groups. To address this subject is James J. Boutrous II, Co-Chair of the Unfair Competition and Trade Secret Practice at McDonald Hopkins, LLC.  Boutrous and fellow attorney James J. Giszczak, also from McDonald Hopkins, will participate in a special audio conference for executives, laboratory managers, and pathologists that tackles the topic of preserving and adding to the value of laboratory assets. “How to Protect Your Laboratory’s Most Important Business Assets from Internal and External Threats”  will be conducted on Thursday, June 24, 2010, at 1 p.m. EDT.

Content is organized around three themes.

  • First, what are laboratory assets and why do they contribute to the business value of a laboratory organization?
  • Second, how have new laws, recent regulatory changes, and surprising court decisions undermined the protections written into the lab’s employment contracts, trade secret agreements, and non-compete covenants?
  • Third, what are the most important steps required to review these assets and implement fixes that maximize both the protection and the value of these vital laboratory assets?

Take something as basic as an employee handbook. It is often true that a significant number of clinical labs and pathology groups have never issued such an important document to their employees! Yet the well-crafted employee handbook is an essential cornerstone for defining the nature of the employment relationship and establishing clear, unambiguous discrimination, harassment, and retaliation policies.

When human resource issues arise with, say, a troublesome employee or a highly-paid executive, its is the laboratory’s detailed and regularly-updated employee handbook which provides the needed roadmap that often forestalls threatened legal action and ensures the laboratory will prevail in subsequent arbitration, associated labor board hearings or lawsuits.

Another reason for timely review of these assets is the fact that a growing number of clinical labs and pathology groups now conduct business across state lines. But legal experts say they often discover that a lab’s compliance with different state laws has either not been done or is inadequate to provide the desired bullet-proof protection to its business assets. It is common to see instances where the laboratory is unprotected because its contracts and agreements did not address the legal and regulatory requirements of each state where it conducts business. Labs need to be proactive about conducting regular reviews to ensure it enjoys the full protection of the law in every state where it does business.

The Dark Report’s upcoming audio conference on June 24 is designed to provide laboratory managers, their lawyers and business advisors, and key executives with the full range of information necessary to maximize the value of these important business assets. Information and registration can be found at this URL: http://darkdaily.com/audio-conferences/how-to-protect-your-laboratorys-most-important-business-assets-from-internal-and-external-threats

This information-rich 90-minute session will include a full list of the “do’s and don’ts” for sales and executive non-compete contracts. Related to sales non-compete agreements are the secrets of protecting client lists and the lab’s most valuable trade secrets—before a manager or top sales rep defects to a competing lab.

For laboratories with key managers, executives or partner-pathologists preparing to retire, there will be useful information about how to update agreements and partner documents with an eye to preventing future anti-competitive actions should these individuals decide to offer consulting services or, post-retirement, begin working part-time for competing laboratories.

This June 24 audio conference is a must for every clinical lab, pathology group, and lab industry supplier that wishes to institute the proverbial ounce of prevention now in order to avoid the pound of pain that often happens at the most inopportune time—and leads to significant monetary loss. Invite your laboratory’s legal counsel to sit in and participate with you and your laboratory team. Use this link to register now!

Related Information:

THE DARK REPORT AUDIO CONFERENCE AT A GLANCE

DATE: Thursday, June 24, 2010
TIME:
1 p.m. EDT; 12 p.m. CDT; 11 a.m. MDT; 10 a.m. PDT
PLACE:
Your telephone or speakerphone
COST:
$245 per dial-in site (unlimited attendance per site)
TO REGISTER:
Click here or call 1-800-560-6363 toll-free

How to Register:
1. Online
2. Call toll free: 800-560-6363.

Your audio conference registration includes:

  • A site license to attend the conference (invite as many people as you can fit around your speakerphone at no extra charge)
  • Downloadable PowerPoint presentations from our speakers
  • A full transcript emailed to you soon after the conference
  • The opportunity to connect directly with our speaker during the audience Q&A session

Register Now! Or for more information, call us toll-free at 800-560-6363.

Distinguished Faculty:

James Boutrous is Co-Chair of the Unfair Competition and Trade Secret Practice Team at McDonald Hopkins LLC. He has extensive non-compete and trade secret experience that includes counseling, auditing and drafting agreements. Mr. Boutrous’ national practice involves both prosecuting and defending employers in non-competition and trade secret litigation, with significant injunction hearing experience. He regularly advises healthcare clients on restrictive covenant, trade secret and employment issues related to physicians, sales representatives, customer account representatives, key administrators, and technical and clinical personnel. He is a member of the Non-Compete/Trade Secrets Subcommittee of the American Bar Association’s Labor and Employment Law Section. Mr. Boutrous is also a skilled employment litigator, with trial experience in employment discrimination matters, defending employers in labor arbitrations, as well as labor and employment counseling.

James Giszczak is Co-Chair of the Unfair Competition and Trade Secret Practice Team at McDonald Hopkins LLC. His extensive non-compete, non-disclosure and trade secret expertise includes advising, auditing and litigation. He has nationwide experience prosecuting and defending employers and employees in non-compete, non-disclosure and trade secret litigation, with considerable injunction hearing experience. Mr. Giszczak regularly advises healthcare clients regarding restrictive covenant, trade secret and employment issues related to physicians, sales representatives, customer account representatives, key administrators, and technical and clinical personnel. His practice also focuses on business and commercial litigation with trial, litigation and consultation expertise in sales representative and business disputes. He regularly advises clients on data security measures and responding to security breaches that involve sensitive personal information. Mr. Giszczak has successfully tried cases in state and federal courts, and arbitrated cases before the American Arbitration Association. In addition, he has represented clients in both state and federal appellate courts.