Preventing the contact tug-of-war

To turn an old saying on its head, for every silver lining, there is a cloud. Unfortunately, that cynical principle is rearing its ugly head through a warning by law firm Mishcon de Reya, which is predicting a downside to an economic upturn: “We forecast a sharp increase in 2010 in incidents of data theft and breaches of covenant by consultants as the [recruitment] industry begins to bounce back from 18 months of recession.”

A key area of concern for recruiters is the 21st century black book, electronically-based databases of candidate and client contacts. For most, such databases will be communally accessible electronic documents that have been built up through contributions by multiple members of a team or business.

But the question for many is, which contacts belong to an individual and which belong to the employer? A 2008 case involving Hays Specialist Recruitment and a former Hays employee, Mark Ions, resulted in a High Court Judge concluding that Hays had reasonable grounds for considering that it may have a claim against Ions for the transfer of Hays business contacts to his LinkedIn account while Ions was still employed by Hays and with a view to the subsequent use of them by him in his own business.

But that result does not fully address the question of who owns contacts that individuals have developed themselves and built into their own business networks while they work for a particular employer.

“It’s certainly an issue,” acknowledges Hugo Plowman, an associate solicitor at Mishcon de Reya specialising in intellectual property (IP). “On the one hand, employers want their employees to use advances in technology that will help them generate business, and on the other hand you want to protect your company’s confidential, business sensitive information.”

John MacKenzie, a partner at law firm Pinsent Masons and a specialist in IP, takes a different view. “LinkedIn is a website that encourages you to link to people you actually know,” he says. “It’s a bit like a personal address book.”

Individual members build their personal professional profiles and when they move positions, MacKenzie points out, they change job titles and descriptions in their profiles but still maintain their personal contact list.

However, he emphasises, it’s a different matter if employees are specifically directed to build up their social network profiles or perhaps a discussion group on one of the networking sites as part of their jobs.

The most definitive solution is for employers to direct their employees to not use sites like LinkedIn at all, Plowman says. However, such sites are so essential to business life today that this advice may not be practical. In such cases, MacKenzie and Plowman agree that “it boils down to delineating very clearly” in the terms of employment contract and through company policies the terms of using such sites on the job.

Both also agree that too few employers are taking such preventive measures, which they say are most effective if agreements are signed before new recruits start work. Mid-course corrections are possible, but Plowman warns that employees will want some kind of payback for signing after they have worked for their employers for some time.

While the dividing lines of ownership involved in the 2008 Hays-Ions affair offer a fairly clear-cut perspective of employers’ rights, the lack of a test case on the legal position of an individual who has shown initiative in building up his or her own contacts list suggests that common sense is the key, even in the cyber age.

Says Plowman: “If you can Google it and find it, you can generally use it. And you can’t stop an employee from furthering their career.”

Key facts

• According to the report ’The return of data theft and covenant breach in the recruitment industry’, law firm Mishcon de Reya has seen cases involving theft of information via social networking sites increase by 125% between 2007 and 2010
• 86% of the data theft cases prosecuted by Mishcon in 2007-2010 involved the theft of client and applicant details
• Methods used to steal data: email 53%; hard copy 17%; USB memory sticks, DVD, CD, etc 15%; social networking 7%; other 8%
• In 93% of cases, the employer did not discover the theft of the confidential information until after the employee had left the business
• 70% of data theft cases in the recruitment industry were planned and carried out by men, operating alone or in groups; 67% were carried out by individuals acting alone.