There may be potential liability exposure for someone going into business in competition with his or her former employee -- even if there was not a signed noncompete agreement.  

Even though you may not have signed a non-compete, it doesn't mean that you won't be sued if you quit and go into competition with your former employer.  If the company perceives you as a serious competitive threat, they could still file a lawsuit againt you for such things as violation of trade secret laws, misappropriation of confidential information, and conversion of company property.

While a former employer might not win in the long run, your legal fees and costs in just defending a lawsuit could dig a financial hole so deep for you that your new business won't survive. So it may come down to a question of how much can you afford pay in defending a lawsuit.   This is a contingency that should always be weighed and considered as one of the potential risks of going into business for yourself -- especially when you will be competing with a former employer. 

A first thing to do before quitting your job and going into business for yourself is to go see a business lawyer  to get some advice on this and other risks of starting up a new venture. 

Another benefit to doing this it that it is inevitably better in starting a new business to have a relationship up front with a lawyer rather than to try to hire one after you run into legal problems down the road.

 Tom Pedreira, an attorney with the Mikkelborg firm, represents start up companies and closely-held business in all aspects of their regulatory requirements and legal needs.  He also volunteers time to answers questions for lawyers.com as a weekly panelist on Business Law.  The above information was provided in response to a question about going into business in competition with a former employer.