Man accused of using LinkedIn to steal clients

Ex-employee must disclose online contacts, rules UK court

By OUT-LAW.COM, 9th June 2008

An ex-employee of recruitment firm Hays has been ordered to disclose details of his profile at social networking site LinkedIn. Mark Ions set up a rival agency and is accused of using LinkedIn to steal clients. He says Hays encouraged his use of the site.

Ions worked for Hays Specialist Recruitment for six and a half years before leaving to run his own agency, Exclusive Human Resources, which he set up almost three weeks before resigning.

Hays alleges that while still an employee Ions copied and retained confidential information about clients and contacts of Hays. The firm says that Ions used that information for his own venture and that he breached his contract of employment. Hays went to the High Court in London to seek pre-action disclosure from Ions and his firm, i.e. an order to disclose information that Hays could use as the basis of a subsequent lawsuit.

Hays examined Ions' email account after his departure and found evidence that Ions had invited at least two Hays clients to join his network at LinkedIn, a social networking site that focuses on professional relationships. It suspects him of inviting many more.

Ions told the court that he had been a member of LinkedIn for over a year, with the encouragement of Hays. LinkedIn is widely used by recruitment firms and Ions said that others in Hays were also members.

In a letter to Hays' solicitors, Ions offered to delete "the entirety of the Hays linked contacts" from his LinkedIn network though he did not say how many there were. Hays demanded full details and warned him to preserve this evidence. Ions then said he had arranged for the whole of his old LinkedIn network to be deleted. He said he had no other copy of the list and could not recreate it. The US operator of LinkedIn agreed to preserve the data pending the outcome of the case.

Ions argued that all the information was put on the site during the course of his employment. Mr Justice David Richards wrote, "His case, denied by Hays, is that it was done with Hays' consent and that once uploaded and once the invitation to join his network is accepted, the information ceased to be confidential because it was accessible to a wider audience through his network."

His lawyer said it was not Ions' action in uploading email addresses to LinkedIn, but the invitees' acceptance to become connections which resulted in the information which resulted in the information becoming available on his network and it is not then confidential but publicly available, at least to his other connection.

"In my view, this breaks down at the first stage," wrote Justice Richards, dismissing that argument. "If the information was confidential, it was Mr Ions' action in uploading the email addresses which involved a transfer of information to a site where at least the details of those addresses who accepted his invitation would be accessible by him after his employment had ceased."

"The evidence suggests that he may have done so, not for the benefit of Hays but for the benefit of his post-termination business," he wrote. "If so, even if confidentiality in the information was thereafter lost, Hays may well have a claim against Mr Ions."

Later in the judgment, Justice Richards observed of the email addresses, "Even if he uploaded them with authority, it is difficult to imagine that the authority was not limited to using them in the performance of his duties as an employee of Hays."

Ions was ordered to disclose his LinkedIn business contacts requested by Hays and all emails sent to or received by his LinkedIn account from Hays' computer network. Ions was also ordered to disclose all documents, including invoices and emails, evidencing his use of the LinkedIn contacts and any business obtained from them. Ions was told to ask LinkedIn for the documents.

Hays' additional request for a copy of Ions' entire database of clients was rejected as being "simply a fishing expedition" and "plainly too wide."

OUT-LAW.COM is part of international law firm Pinsent Masons.

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Posted Tuesday 10th June 2008 14:10 GMT

Ryan

I suppose...

As a recruiter (thankfully not working for Hays), I'd consider everything I do to source candidates and find them roles to be the intellectual property of the company I work for. Naturally it's a bonus when another agency recruits an experienced agent who comes with their own contacts, however I don't see the need to carry databases with you when you leave. If you're a good agent (quiet you non-believers, some of us have integrity!), you should be able to start from scratch elsewhere with just an internet connection and a phone.

If you bring clients with you then that's an obvious plus, but you don't need linkedin for that, nor do you need to steal data/resources either, that stuff's just a sweetner when there's nothing to differentiate you from the other agents.

Reputation is everything in this game - candidates should seek YOU out on linkedin because they're happy with how you work and you get results.

Seems to me with the struggling market right now Hays is just desperate for some cash!

Paris, because she knows all about head-hunting...

Posted Tuesday 10th June 2008 09:48 GMT

Jay Cooper

Hmmmm, interesting

I'm a massive user of Linkedin. I find it to be a brilliant and invaluable resource. I consider it mine and not my companies and like this chap would fight tooth and nail to keep it. My network includes a lot of old customers. In my view it's no different to picking up a phone and speaking with them, and there is no law against that (at least not the last time I checked...........)

THe only thing I can think of which would even give Hays (who I have used before and they are shit....actually, beyond shit.....complete detrious of the worst kind) a leg to stand on is they were paying for their agent to use the premier package and not the free version. Then maybe, just maybe they'd be able to do something about it.

Posted Monday 9th June 2008 22:49 GMT

James Butler

Why not?

There are really only 2 scenarios:

1) You hire an agency and expect to work with them.

2) You hire an agent and expect to work with them.

If an agent leaves the agency, the only question that remains is whether the client(s) are under contract to keep working with that agent, or if they are under contract to keep working with the agency.

Most agencies, for various industries, are simply professional associations that bring nothing besides their name and their group of agents to the table. The agency, itself, has no contacts, and they really have no clout beyond the brand recognition their name engenders.

Here in Los Angeles, for example, a movie star might be under contract with Creative Artists Agency. Under the terms of that contract, they may end up being represented by an agent who arranges for work for the client. Of course, CAA can't arrange for work ... it's a corporate entity. The agent, herself, wouldn't even have any access to the client if they were not working for CAA, yet the agent probably maintains their own industry contacts which they mine to provide work opporunities for the CAA clients who are assigned to them.

When the CAA agent leaves the company for, say, William Morris Agency, the client's contract stays with CAA, and CAA then assigns another agent to the client. If the client doesn't like that arrangement, then they can (often) buy out their contract in order to sign a new one with William Morris, and then to continue to be represented by the agent who jumped ship.

If Hays' agreements with their clients are actually contracts between the clients and the agents, then Hays has not got much to complain about. They provide business services to their agents for a percentage of the contract's worth and the agent secure the contracts and do the work. The clients are not, in fact, Hays' clients.

However if the contracts are between Hays and the clients, then the agents can not simply "steal" the clients without the client first compensating Hays for the remainder of their contract. Any client who decides to continue being represented by an ex-agent would need to shell out some dough to buy out their Hays contract before they could sign a new one with the ex-agent, or the ex-agent's new company.

If Hays failed to protect themselves, then I have not got much sympathy for them.

It's not as simple as a bag checker at a local grocer opening up their own grocery nearby and siphoning off customers from their old employer, and Hays should be aware of the differences as they relate to their industry.