Consider your contract before you start a practice

Consider your contract before you start a practice

Jan 01, 2002

By Sarah A. Moser, Associate Editor and
Portia Stewart, Managing Editor

Q. I've worked as an associate at an equine clinic for several years. Now I'm ready to start my own mobile practice, but I signed a noncompete agreement with the clinic I currently work for. Can I still practice in this area, or do I need to move to another location? What other legal issues do I need to consider?

A. First, you need to determine whether the noncompete agreement you signed is reasonable, says Dr. Jim Wilson, JD, president of Priority Veterinary Management Consultants in Yardley, Pa. "A reasonable distance for a restrictive covenant in an equine ambulatory setting varies from as little as 5 miles in dense equine population areas, such as Lexington, Ky., and Ocala, Fla., to as many as 50 miles in more sparsely populated areas," says Dr. Wilson. "But a 25- to 35-mile radius is usually considered reasonable in locations with high human populations and low equine populations, including the suburbs of large urban centers, such as Philadelphia, and more rural areas, such as central New Jersey."

Unfortunately, Dr. Wilson says, establishing what's considered a reasonable distance is a "fact-specific" problem. "Judges or juries decide what distance is reasonable based on expert depositions and testimony," he says. "This process usually takes months or years of emotionally and financially draining legal wrangling. So it's probably not worth challenging unless your counsel is convinced that your case is strong. On the other hand, noncompete clauses aren't enforceable in California, Montana, North Dakota, Oklahoma, or Alabama."

If you live in a state that enforces noncompete clauses, you determine that the agreement is reasonable, and/or you choose not to challenge the agreement, you need to comply with the stated terms and practice outside the set radius. "A restrictive covenant prevents you from serving equine clients on farms and stables within the defined radius, even if the horse owners want you to provide the service," says Dr. Wilson. "However, if these owners transport their horses to a site outside the defined radius, you can provide medical care at that location legally."

January 2002 Veterinary Economics