Best of the HotLine - "Competition"

James L. Goldsmith, Esquire

Recruiting agents

As I was leaving a recently concluded settlement, I gave the other salesperson some promotional pieces about my own brokerage that I happened to have with me. I was impressed with this salesperson's professionalism and felt that if she was dissatisfied with her current position she would make an excellent addition to our company. She was gracious and thanked me but said little to encourage me that she might seriously consider my invitation to talk.

About two hours later, I received a call from the broker of this salesperson. After making sure it was me, he lashed out in a way I had never experienced. With liberal profanity, he told me he was going to report me, have me thrown out of the Association and make sure I lost my license. With fingers still trembling, I called the PAR HotLine to find out if I am truly "damned" and what I should do to make amends.

A: Competition can have its abrasive quality. Indeed, the offensive side of competition may broach -- or exceed -- the ethical standards established by the NAR Code of Ethics (as when one disparages another company). As for soliciting competitors, welcome to the American marketplace! Asking a competing licensee to jump ship is not, under most circumstances, unethical or illegal.

There are several bounds to consider. Decency and/or local Association rules may discourage direct solicitation at board functions when this conduct would be inappropriate. Participation at functions would dramatically decline should these occasions be reduced to job fairs.

Recruiting a sales associate would also be improper when you are aware that the affiliate is a party to a covenant not-to-compete with her existing brokerage. These covenants are the subject of much controversy and their enforceability is not always easily determined. The better advice is to assume that all covenants are enforceable unless you have the written opinion of legal counsel to the contrary. Approaching someone known to be a party to a covenant not-to-compete may constitute the intentional interference with contractual relations which can be redressed in a lawsuit.

Prospecting is less a matter of law than image. One's comportment earns a position in the hierarchy of respect and this is important to some; for others, the thrill of the chase is more important. Viva la difference!