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Brokers try to protect client relationships

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Noncompete agreements are commonly used by insurance brokers because the business is so relationship-driven, which is a key focus of many of these agreements, experts say.

“It’s very reasonable to restrict those brokers from soliciting the clients that they brought in while using the company resources, and the company’s basically paying them,” said Jeffrey A. Lehrer, a partner with FordHarrison L.L.P. in Spartanburg, South Carolina.

“A lot of times where people get into trouble with noncompetes agreements is where they also take confidential information of their employers,” be it a client list, client preferences, pricing or other information, said Leiza Dolghih, a shareholder with Godwin Bowman & Martinez in Dallas. “That’s what will usually cause a lawsuit.”

In October, Daytona Beach, Florida-based broker Brown & Brown Inc. obtained a temporary injunction against its Lake Mary, Florida-based rival AssuredPartners Inc., which had hired several of its former employees

A state judge ruled that employment agreements prohibiting their move to a rival for two years after they left Brown & Brown were “valid and enforceable.” The temporary injunction prohibits the defendants from “further breaching the restrictive covenants” and calls for the defendants to divest themselves of former Brown & Brown customers, unless doing so would cause the customers themselves harm.

Other brokers that have been involved in noncompete litigation include Jardine Lloyd Thompson Group P.L.C., Willis Towers Watson P.L.C. and Aon P.L.C.