Two brokerage giants are embroiled in a legal battle after an executive jumped ship from one to the other.
Dallas-based CBRE sued former executive Chris Hipps in December after he joined Chicago-based Cushman & Wakefield as its Texas managing principal, alleging that he breached his employment contract, the Dallas Business Journal reported.
Hipps served in various leadership roles throughout his more than 10-year tenure at CBRE, including managing director of advisory and transaction services over investment services in the Dallas-Fort Worth area.
A temporary injunction granted by the court suggests that CBRE will likely “succeed on the merits of its claim.” A jury trial has been scheduled for Jan. 6, 2025.
CBRE contends that Hipps’ employment agreement included restrictive covenants such as non-competition, non-solicitation, and confidentiality clauses, which prohibited him from joining a competitor until a year after his departure from CBRE.
The lawsuit reflects a broader national debate over the validity of non-compete agreements, with the Federal Trade Commission contemplating restrictions on their use. Texas judges have typically ruled in favor of businesses in cases related to non-compete agreements.
In response to CBRE’s lawsuit, Hipps’ attorneys argued that his non-compete clause was unenforceable under state law and an excessive measure to protect its business interests, the outlet reported. Regardless, the temporary injunction prevents Hipps from assuming his role at Cushman & Wakefield.
Despite the legal drama, Cushman & Wakefield expressed support for Hipps and anticipates his eventual integration into its team.
“Regardless of the outcome of his appeal, Mr. Hipps will be free to work at Cushman & Wakefield, anywhere and in any capacity, in less than nine months,” a spokesperson told the outlet.
CBRE, akin to most major brokerages across the country, struggled in 2023 due to challenges facing commercial real estate, such as high interest rates, tough lending standards and persisting remote-work trends. Such challenges have caused revenue stemming from sales and leasing to plummet.
The company’s profits dropped by more than 55 percent year-over-year in the third quarter to almost $191 million, down from nearly $467 million in profits in the third quarter of 2022. CBRE’s net quarterly revenue also fell by 4.2 percent year-over-year to $4.4 billion during that stretch.
However, the firm anticipates a big bounceback in 2024, primarily contingent on a reduction in interest rates and improved access to credit.
—Quinn Donoghue
