Last week, The Wall Street Journal reported that New York Attorney General Eric Schneiderman has launched an investigation of employers’ use of non-compete agreements.
The article centered on Stephanie Russell-Kraft, a 28-year-old journalist who Thomson Reuters fired within weeks after hiring her in September, learning she had signed a non-compete agreement in 2013 with her former employer, the legal news site Law360.
Russell-Kraft was to cover the business of law for Reuters, a role that would have competed with Bloomberg and Bloomberg BNA. Both Law360 and Reuters compete with Bloomberg companies and, in an additional disclosure, I also covered the business of law beat for Reuters before helping launch Big Law Business last year.
I spoke with Russell-Kraft about her dismissal, her views on the non-compete and legal journalism. She said that according to several lawyers, her non-compete is so broadly defined that it could bar her from working at publications that merely include legal news, even The New York Times.
Despite the ordeal, Russell-Kraft said that she still has maintained relationships with reporters and editors at Law360.
In advance of publishing the Q&A, a Law360 spokesperson said the company is “aware of an investigation into certain media company employment practices and has received inquiries in connection with (Schneiderman’s) investigation.”
“As is our standard practice, we do not comment on ongoing investigations and intend to give our full cooperation to investigators to the greatest extent possible,” the spokesperson said.
“We are confident that our employment practices comply with all applicable laws, and we remain committed to maintaining the highest standards in our ethical, journalistic and employment practices.”
A Reuters spokeswoman declined comment.
Below is our Q&A, which Russell-Kraft completed in writing via email.
Big Law Business: So you were featured in the Wall Street Journal on Tuesday about how a non-compete at Law360 prevented you from working at Reuters. What happened?
Russell-Kraft: I was hired at Law360 in August 2013 as a general assignment reporter. It was my first full-time reporting gig, and I moved back to New York from Berlin to take it after finishing my master’s. On my first day, alongside tax forms and the usual HR paperwork pile, I signed the non-compete agreement. When I signed the agreement, the HR representative who conducted my orientation called it a formality and told me it just meant I couldn’t freelance for a competing site while still working there. I didn’t get a copy of it after I signed.
Over the course of the next two years, I was promoted to senior reporter for securities litigation and regulation, saw many colleagues move on to other similar news sites, and never heard another thing mentioned about the non-compete agreement.
I applied to a job at Reuters over the summer, and after an initial interview, filled out the online application. On the application there was a question asking me to check a box acknowledging I wasn’t subject to any restrictive covenants that would prohibit me from doing my job at Reuters. I checked it.
After I was offered the business of law gig at Reuters, I left Law360. It’s hard to believe now, but leaving felt really bittersweet. I really loved my colleagues, and my editors even bought me a German chocolate cake to celebrate my last day.
Over a month later, two weeks after I started at Reuters, I received a threatening letter from Law360 telling me I was violating the agreement. I immediately went to my editors at Reuters, who told me they’d work with HR to get it resolved. Two days later, after spending the morning in court waiting for the Dewey verdict, I was packing up my stuff and getting escorted out of the office. I was technically fired for “dishonesty,” because of the box I had checked.
I later found out that Law360 sent a separate letter to Thomson Reuters’ GC saying I had had access to “critical and sensitive confidential and proprietary information” and asking Reuters to take “immediate steps” to make sure I didn’t disclose any of it. I have no idea what confidential information I supposedly had access to, but I understand that from Reuters’ perspective, I was a litigation risk. It was a lot easier to fire me on a technicality than to try to test Law360’s agreement in court. I also later found out that every editor in my section at Reuters had been well aware of the non-compete for years.
During my time at Law360, I always believed there was an unwritten social contract, just like at other trade publications: young journalists crank out a lot of content for low wages with the understanding that they’ll still gain experience and eventually get to move on to bigger publications. The trade publication gets cheap labor and can boast to new hires that its alumni go on to great places like The Wall Street Journal, Bloomberg and Reuters. As restrictive non-competes creep further and further into the industry, this social contract is breaking down.
Big Law Business: How has this affected you?
Russell-Kraft: Getting fired was a complete shock. For a good month or so, I walked around feeling like a giant rug had been pulled out from under me. I was really excited about the step up in my career, and it took me quite a while to reconceptualize all of the plans I had built around it.
Because I’m still under the non-compete, I’ve decided to steer clear of legal news. It doesn’t matter whether or not Law360’s contract is enforceable, the fact that it exists makes me a risk to other publications. I’m sure you remember that you reached out to me with a freelance offer a few months ago but had to take it back after Bloomberg had a chance to review the terms of my non-compete. Some job application sites (including the Wall Street Journal’s, ironically) ask you to disclose upfront whether or not you are subject to any non-compete, and they usually don’t give you a chance to explain yourself. I’ve said yes in every instance, and I have to imagine that has also had a chilling effect on my already anonymous, shot-in-the-dark job applications.
After talking to some senior HR executives, I’ve also learned that this is the type of thing that will raise red flags for any prospective employer. So not only does the non-compete incident hurt my chances in legal and business news, it adds a handicap across the industry.
Big Law Business: The WSJ article said the Attorney General’s office is investigating the employment practices of companies like Law360 that use non-competes. Do you know anything about how that’s going?
Russell-Kraft: I’d rather not comment on the AG’s investigation other than to say I’m glad this abusive practice is getting the attention it deserves.
Big Law Business: What did the non-compete say?
Russell-Kraft: The non-compete, which, as far as I know, is given to all Law360 editorial employees, bars me from working at any publication that directly competes with Law360 in “providing legal news and data services.” I’ve spoken with several lawyers who say it’s an incredibly broad definition that could be interpreted to include any publication that covers legal news, like the New York Times. But what’s so troubling is how arbitrarily this definition has been applied. I’ve been told that Law360’s top brass really only has a few specific places in mind, but they’ve never spelled that out to employees. American Lawyer, Debtwire and The Wall Street Journal seem to be fair game, but apparently Reuters is not.
The non-compete also includes a non-disparagement clause barring employees from saying anything negative to “any person or entity,” even after employees have left the company. It’s written so broadly that an employee could interpret it to mean he or she can’t even speak with agencies the AG’s office or the EEOC.
What troubles me is that Law360 isn’t the only media company coming up with these agreements, which are a problem even outside of journalism, like at Jimmy John’s!
I’ve seen a lot of comments on the Wall Street Journal story, many from lawyers, to the tune of “make sure you read everything before you sign it. And if you don’t like the agreement, just don’t take the job.” It’s textbook legal advice, but it completely ignores the reality young journalists are currently facing in the labor market. It’s not as if I had a slew of other jobs lined up when I started at Law360. I was incredibly thankful just to be employed and able to pay my rent, and might have needed to take the job even if I had understood the full implications of the agreement.
And if these non-competes become standard industry practice, and you decide to say no to five jobs because of them, where does that lead you? Still unemployed.
Especially in an at-will employment state like New York, non-compete agreements for junior employees are simply anti-competitive. They act as wage suppressors. Instead of offering reporters competitive salaries, companies like Law360 try to ban their reporters from moving on to other legal news outlets, which are the places they are most likely to get hired and offered a better wage.
Big Law Business: At the end of the day, these things can probably be waived, right? Did you get any explanation as to why Law360 decided to follow up with Reuters and enforce the non-compete?
Russell-Kraft: I think they can. But as far as I know, in situations where Law360 has been asked to waive its non-compete clause, the company has said no.
I have no idea why Law360 decided to follow up with Reuters. If the goal was to make an example out of me, they’ve succeeded. There are reporters and editors who want to leave Law360 but can’t because they fear retaliation, or because other legal news outlets won’t hire them now. That needs to change.
Big Law Business: Are you still friendly with people at Law360? Did they have any understanding?
Russell-Kraft: I’m on great terms with a lot of reporters and editors there. Everyone I’ve talked to since I was fired from Reuters has been just as shocked as I was. The whole thing felt like a betrayal.
Big Law Business: Do you know of other journalists who have signed these non-competes? Any who have been affected by them?
Russell-Kraft: I know of some journalists at other publications who have had issues with non-competes, and I know of some current and former employees at Law360 who have been held back because of the same contract I signed.
Big Law Business: How did you get into journalism? And, how did you break into the business of law beat?
Russell-Kraft: I’ve been writing and translating for a living for about five years, but I decided I wanted to go specifically into journalism while I was getting my master’s in cultural anthropology. I love researching, reporting and writing, but it became clear to me while I was in grad school that academia is not for me.
As for the business of law beat, I really only covered it for two weeks! When I started at Law360, I was a general assignment reporter covering tax, class actions, government contracts, bankruptcy and securities. I really enjoyed covering securities law and jumped on the chance to become a senior reporter for that beat when the promotion was offered to me in 2014.
Big Law Business: Did you like the beat?
Russell-Kraft: I was definitely excited for the change. As a securities reporter, a lot of my information came from court documents and SEC records. The business of law is a much trickier beat that requires a lot of sourcing, and I was looking forward to working on that skill.
Big Law Business: How have the past five months gone? What’s on the horizon for you?
Russell-Kraft: I’m incredibly lucky that my husband has a well-paying job and that, for the time being, I’ve been able to be somewhat picky about my next step. If the situation were different, I might have had to take whatever job I could get my hands on, whether or not it was good for my career. I can’t stress how lucky I am in that regard.
Since I’ve been effectively pushed out of legal news, I’ve spent the past few months trying to recenter myself and figure out exactly what beat and what types of reporting projects best suit my interests and my skills. I’ve been doing some freelancing and I have some ideas in mind, but I’m not 100% set on a new path. I’m hoping that in a few years I’ll be able to look back on all of this as something that brought about a positive change in my career. We’ll see!