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The Make-Up Bar, LLC v. Cooper, Levenson, April, Niedelman & Wagenheim, P.A.

A-5189-06T1 (N.J. Super. App. Div. 2008) (Unpublished)

ATTORNEYS; NON-COMPETITION; DAMAGES — Where an attorney negligently prepares a no-solicitation agreement instead of a non-competition agreement, his or her client still may not be entitled to damages if it can’t show that employees who left their jobs and breached what would have been a non-competition agreement actually caused harm to the client.

A hairdresser claimed that she retained a law firm to draft a “no-hire” agreement for a short term employee who was opening his own salon. She brought a legal malpractice action, claiming the attorney actually prepared a “no-solicitation” agreement, resulting in her losing four other employees who joined the short term employee when the new salon opened. The law firm filed a summary judgment motion, and for motion purposes conceded that they failed to prepare the agreement requested by the hairdresser. The firm argued that the hairdresser had failed to prove damages, an element of a legal malpractice claim. The lower court agreed and granted summary judgment to the firm. The hairdresser appealed.

The Appellate Division affirmed. It found the hairdresser’s sole proof – a handwritten document that the four departing employees would cause a loss of $600,000 in revenue – to be speculative and uncertain. The Court noted that the hairdresser’s belief that the employees would otherwise have stayed on for three years to be contrary to past practice; the records indicating no employee of the hairdresser stayed three years and many remained only for several months. The Court also stated that the hairdresser failed to produce evidence of the specific business that would be diverted to the new salon by the hiring of her former employees. Lastly, the Court found that the hairdresser never presented any analysis or comparison of profits generated or clients lost before and after the employees left for the new salon. In affirming the lower court’s ruling, the Court held that remote, uncertain, or speculative anticipated profits are not recoverable.

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