One simple step to take today to future proof your agency

With the current state of the country, and the world, our collective futures can feel uncertain at times, leaving many business owners concerned for their short- and long-term outcomes.

Even at the best of times, it’s easy to get bogged down in business growth and wealth creation, rather than protecting what we already have.

Principals spend years building their client database, getting their brand out there, and improving their suite of frequent-use documents, but it’s easy to forget how much these things are worth.

Think about it. If you lost your client database, brand and all your documents, how would that impact you? Could you run your business anymore? Could you even sell it without those things?

That’s why asset protection is critical, and there’s one simple step you can take to future proof the most important elements of your business.

Usually when we speak about shielding assets, we’re talking about fancy corporate structures and legal hocus pocus to protect our assets from third parties.

Not today. Today we’re talking about protecting one of our biggest assets from our own staff. In other words, making sure that when staff leave, they’re not taking your hard-earned CRM with them.

We assume our staff are working in our best interest, and they usually are. They’re hardworking, and we trust them. But for the most part, staff don’t stay with us forever, and in many cases, when they do leave, the relationship you’ve previously shared will change.

Let’s face it, they’re either moving onto self-employment, or other employment – and they’ll soon have someone else’s best interests at heart.

I had one client whose employment contract did include a clause protecting confidential information, however it was very narrow and didn’t cover the client database.

The restraint of trade clause was also brief, failing to cover approaching or accepting clients.

That client was starting up their own agency, and due to deficiencies in their employment contract, it was easy for them to open, operate, compete, and take their former employer’s clients.

Simple steps to protect your CRM

Obviously, this is not an outcome any agency wants, and there’s a simple way to prevent it.

Take care of your contracts.

A solid employment contract should include three main clauses; those are:

  • Intellectual Property (IP) created by the employee belongs to you as the employer;
  • An employee can only use your confidential information and IP (including client database) in the course of working for you; and
  • When an employee leaves, they cannot ‘go after’ your clients.

If your current contracts don’t have these clauses, attempt to have a new one signed – if not now, at least when the opportunity arises, such as a promotion or new job title.

Talk to your employees

Ensuring your contracts are watertight is only part of the process. Talking to your staff about what’s in their contract is just as important, because in many cases, agents don’t actually understand the rules when it comes to CRM ownership.

In fact, many agents believe they own the clients that they bring in, regardless of what might be stipulated in their contract.

I had one client who received a complaint about text messages received from a former staff member, promoting his own services.

The complaint was against the agency for supplying private information, but it alerted them to the fact that the former staff member had stolen their client database, and was marketing directly to it.  

We were engaged to stop the exiting agent from using the database, but soon discovered he genuinely believed he owned the clients he was contacting, and he promised to delete the data.

We also had him sign a statutory declaration to that effect, as we could have had a privacy data breach on our hands too.

So, while you can take legal action against a former employee if the contract is tight, having a solid understanding between both parties is a more cost effective, and less stressful, method of ensuring the safety of your assets.

It might feel like an uncomfortable situation, but an awkward conversation is better than having to enforce the terms of the contract at a later date through litigation.

Everyone in the real estate business spends so much time, effort and money building their leads, that it’s worth spending some time to at least think about how you’re going to protect that asset.

And one of the simplest things you can do is future proof your employment contracts.

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Kristen Porter

Kristen Porter is a legal practitioner specialising in real estate, property management and privacy laws. She is the founding Director of O*NO Legal The Real Estate Agents' Lawyer.


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