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Non-Compete Agreement Cost

Updated: August 11, 2023
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What does a non-compete agreement cost? Employers who want to protect their business from former employees may ask this question. Let’s explore non-compete agreement costs and review general information about non-compete agreements and how they work.

How Much Does a Non-Compete Agreement Cost?

A non-compete agreement is a type of restrictive covenant that is executed between an employer and an employee. It is a legally binding agreement. The employee agrees that they will not compete against the employer when and if their employment is terminated.

When employees begin working for a company, they are trained to do their job using company policies, knowledge, skills, and sometimes intellectual property. A non-compete agreement keeps all this information private. It prevents the employee from starting their own business to compete against their former employer.

The legality and enforceability of non-compete agreements vary by state. Suppose a company is considering implementing a non-compete agreement into its hiring practices. It is recommended that they consult with a knowledgeable attorney.

An attorney who has experience with non-compete agreements will know if the agreement is permissible in the jurisdiction and how to draft a comprehensive non-compete agreement that protects the company.

According to ContractsCounsel’s marketplace data, the average cost of a project involving a non-compete agreement is $542.59.

See Non-Compete Agreement Pricing by State

What’s Typically Included in a Non-Compete Agreement

Non-compete agreements will vary based on the company's industry, business, and needs. Even though they can be customized to serve the needs of a specific business, non-compete agreements should contain the following information:

  • Date. Include the date the agreement becomes effective. For example, this is the date the employee is hired. In some cases, employees must sign a non-compete before accepting a promotion.
  • Duration. Non-compete agreements must specify how long the departing employee must wait before finding employment in the same industry. Typically, the duration will be between two and five years because the duration must be reasonable.
  • Geographic Location. The non-compete agreement will usually specify an area in which the former employee cannot seek employment in the same industry. The area must be reasonable, and if the employee moves outside this area, they can work in the same industry.
  • Specific Competitors. Former employees may list specific competitors that an employee cannot work with within some industries. This is more common with large well-known franchises.

Are Non-Compete Agreements Enforceable?

The enforceability of non-compete agreements varies by state. For example, California, Oklahoma, and North Dakota specifically prohibit non-compete agreements. Other states will look at non-compete agreements on a case-by-case basis to determine if the contract is enforceable.

Courts will only uphold a non-compete agreement if it is reasonable. The following factors will determine reasonability:

  • The employer has a legitimate interest in protecting their business
  • The specified region is a reasonable size
  • The agreement isn’t so restrictive that employees will have trouble finding work
  • The duration of the agreement is reasonable
  • Whether the type of work or scope of the agreement is overly broad

Whether a non-compete agreement is held up in court depends on how the agreement is written. For this reason, it is vital to work with an attorney who is familiar with non-compete agreements and state laws surrounding these agreements.

A knowledgeable attorney can help draft a non-compete agreement that is reasonable, specific, and will protect your company from former employees acting as competitors.

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Examples of Non-Compete Agreement Projects

Non-Compete Agreement Drafting Service

Non-compete agreements can be vital documents for any company that wants to protect its trade secrets, knowledge, and business.

Non-compete agreements are often scrutinized in court, and any mistake in the agreement can have it thrown out and deemed unenforceable. So when an experienced lawyer drafts your non-compete agreement, you have peace of mind knowing that the contract will protect your company.

If you hire a lawyer to draft your contract, you will meet to discuss your business needs and what you need to protect. The lawyer will then draft a custom-tailored non-compete agreement that you can use with your employees.

Non-Compete Agreement Review Service

Non-compete agreement templates can be found online and often contain standard boilerplate language. However, if you choose to use a standard template, your non-compete agreement may not be enforceable based on your state and jurisdiction.

If you choose to use a template or draft your own non-compete agreement, you should hire a lawyer to review the document before using it. A local lawyer will know all the state laws that a contract must adhere to and can help you customize your non-compete agreement to best suit your business.

Drafting Non-Compete Agreement Costs

Hiring a lawyer to draft a non-compete agreement will come with costs. The lawyer will charge for any time spent working on the agreement, including consultations and revisions.

ContractsCounsel’s marketplace data shows the average non-compete agreement drafting costs are $695.62 across all states and industries.

Non-Compete Agreement Review Costs

A lawyer will also charge for review services, although typically less than drafting services. The lawyer will use their time and legal expertise to ensure your non-compete agreement is reasonable and will hold up in court.

According to ContractsCounsel’s marketplace data, the average non-compete agreement review costs are $406.56 across all states and industries.

How Do Lawyers Charge for Non-Compete Agreements?

Hourly Rates for Non-Compete Agreements

When using an hourly rate fee agreement, the lawyer will charge the client a set hourly rate for each hour of work spent on the client’s case or project. Lawyers like this fee structure because it ensures payment for all time spent on a case. Clients will not know the extent of their legal fees until after the project is complete.

The marketplace data for ContractsCounsel shows the average hourly rate for a non-compete agreement lawyer ranges from $200 - $350 per hour.

Flat Fee Rates for Non-Compete Agreements

When using a flat fee rate structure, the lawyer will assess the project then provide the client with a flat fee quote to complete the job. Clients like this fee arrangement because they know exactly what they need to budget for legal fees.

A flat fee rate is typically paid upfront, benefiting the lawyer. The downside, however, is that if a project takes longer than expected, the lawyer will not be compensated for additional time.

ContractsCounsel's marketplace data shows that the average flat fee rate for a non-compete agreement costs $542.59.

Get Help with a Non-Compete Agreement Project

Do you need help with a non-compete agreement? If so, post a project in ContractsCounsel’s marketplace to receive flat fee bids from business lawyers to handle your project. All lawyers on the ContractsCounsel’s platform are vetted by our team to make sure you are provided with top tier service.

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