Without fail, when I mention that I’m a startup technology lawyer at an event with startup-folks, someone nearly always approaches me and asks, “So I work at [Insert Company Name here], but I’ve got this project or idea I’ve been working on. I’d really like to leave at some point and do that full-time, but I need my job at [Insert Company Name here] to pay the bills for now.  How can I do both?“

It is a great question and one that people really should be thinking about.  Many very successful companies were spun from side-projects or part-time development work in a basement or garage.  One of my favorite stories is about the founder of del.i.cious, that I write about in my book:

Joshua Schachter started his collaborative bookmarking website del.icio.us in 2003 as a personal project simply to allow him (and a few friends…) to tag and share web pages. Schachter had collected links to thousands of web pages he like and didn’t find any thing that could help him organize and share those likes with others. So, he developed del.icio.us in his spare time and started tagging websites to share with others.

But Schachter didn’t even consider himself to be an entrepreneur or a business owner. In fact, Schachter’s full time job as a Morgan Stanley employee. However, the power of the web made del.icio.us a huge hit and by 2005, Schachter felt it was best to incorporate the company as del.icio.us, Inc. Shortly thereafter, Schachter sold the business for an unnamed amount. All this from a little hobby…

At a time like this with funding options somewhat tight, many entrepreneurs are looking for a way to continue to build their product or idea, but keep the regular cash flow of their current job.  Sure, this comes with risks of less time to dedicate to your startup project or idea, but it also allows you to have your cake and eat it too, so to speak…

How to have your cake and eat it too…

So, to the question at hand, if you are employed elsewhere and have a side project or part-time startup, what should you watch for?

First thing to remember is that each situation is unique — each company will have different policies and procedures in place.  So be sure to be cautious.  Carelessness can get you into trouble (and can sometimes get you fired from your employer) if you are using company resources for your startup such as photocopying hundreds of color business plans, doing tests in the company lab or using your company laptop for development work.  So know your company, understand its rules and contracts, and avoid being reckless.

Here is a good set of questions and considerations to think about with respect to your current employer and your startup:

· Are you bound by an employee non-solicitation agreement? Your new startup company should never initiate contact with your former co-workers about any job prospects if you or any other members of your founder team are under a non-solicitation agreement. Disputes regarding employee non-solicitation clauses often focus on who initiated contact and when. If the candidate initially contacted the company about employment prospects, then generally there will be no violation of the non-solicitation clause. As a result, it is critical to maintain documentation establishing how the initial contact was made and when (e.g., an e-mail inquiry from the candidate, an internet application, written notes of a telephone inquiry);

· Are you bound by a customer non-solicitation agreement? Your new startup company should not initiate contact with the customers or clients of your former employer if you are subject to a non-solicitation agreement for the customers of your prior employer. You may announce your new business and your participation, but be cautious about additional solicitation. If a customer does approach you (and not the other way), be certain to document the conversations and keep records as to the formation of the relationship.

· Have you breached your duty of loyalty to your current employer prior to departing? For example, you should not solicit other employees to leave, undertake any work for the recruiting company, or inappropriately take or gain access to any information. If any such improper activity has occurred, you should promptly consult legal counsel to evaluate whether and how the situation may be corrected, and whether it remains feasible to proceed with forming your business and hiring other employees;

· Are their any restrictive agreements in your employment documentation and do you have copies in your files (including confidentiality agreements, non-compete agreements, non-solicitation agreements, etc.)? Soon-to-be founders have a tendency to overlook or “forget about” restrictive agreements, so it is important to be particularly diligent in performing a search on any possible restrictions. Restrictive covenants are often found in confidentiality and invention assignment agreements, offer letters, employment agreements, and stock agreements;

· Have you identified every contractual limitation you would need to observe? For example, if you are bound by a confidentiality agreement, how does the agreement define “confidential information”? What is the scope of any non-competition agreement? What is the scope of any non-solicitation clause?; and

· Have you been careful to not reveal any trade secret information? You should identify, at a high level, the areas of trade secret information that may be considered sensitive and avoid tasks that would jeopardize the trade secret. You should also explore the time duration of the sensitivity, and plan the timing of forming your business in conjunction with these durations. You should then evaluate whether any work duties you had contemplated undertaking in your new startup could create a risk of using or disclosing such sensitive information in the course of the new job.

It may not be what you do, but how you do it

And a final point — remember that as you depart or prepare to depart your current employer that the way you depart may offer a lot about how your current employer will react.  Some former employers can make it very difficult for you (see the case of Torrent Technologies).  In particular, when the transition may involve some intellectual property that has some actual or perceived overlap, be very cautious, and consider talking to a lawyer or other advisor to determine how to proceed appropriately.

And finally, as a general point, be particularly cautious if you are building your startup in an industry or space where your current company is active.  If you wind up leaving later to start a gaming company and you currently work for Microsoft or Real Networks in their gaming divisions, they may watch you more carefully than if you were leaving to start a biotech company.

Remember, it is okay to walk the line between a “company-man” and an “entrepreneur;” just be sure to watch where you step!

This article is an excerpt from my new book What Every Engineer Should Know About Starting a High-Tech Business Venture, available now.