Non-disclosure agreements: best practice tips

6 Minutes

In this blog, we’re going to give you some information about NDAs – how to get the fundamentals right, and what to concentrate on as the issuer and as the recipient.

We’ll also highlight some examples of when they shouldn‘t be used and give you some resources for further information.

And in the first of a new series of ‘Lunch and Learn’ sessions, we’d like to invite you to our ‘NDAs unwrapped!’ webinar, led by intellectual property expert Sophie Freeman. Details of how to register are included below.

Get the essentials right

The use of NDAs is commonplace in business dealings, but they are often signed or issued without much consideration on the assumption that they all say the same thing. This is not the case and it’s important to concentrate on the detail. Consider the following:

• Make sure it’s needed. If you’re issuing it, what are you trying to protect? If you’ve received one, is it valid or required? Should it be mutual? What information has already been discussed/shared?
• Use standard plain English. To make sure that the terms are clear and relevant to the issues and claims likely to arise, define the confidential information and how it may be used, and identify the parties.
• Be explicit about who the recipient can disclose the information to. An actor should be allowed to share information with their agent, for example.

Advice for those disclosing confidential information

If you are the party making the disclosure and issuing an NDA, it is important to practise what you preach:

• Make sure you comply with the level of protection you expect from others.
• Educate your staff. Be clear about what information is confidential and share best practice for email communication, home-working and the use of personal devices.
• Encourage a working environment where employees and managers feel safe and empowered to talk.
• Be aware of your, and your officers’, conduct: NDAs should not be used to bully or threaten (#metoo).
• Be specific: don’t rely on NDA templates, pre-used or second-hand documents.
• Create internal processes that enable you to trace and control your confidential information. This is as simple as using limited-access folders, protecting your files with passwords and distributing PDFs rather than Word documents.
• Be aware of where you have distributed information. If a relationship covered by the NDA ceases, ask for the information you have shared to be destroyed or returned, confirmed with a written undertaking.

Advice for those receiving confidential information

Some tips and procedures to follow if you’re in the position of receiving the NDA:

• Ask for their standard mutual NDA as it’s likely to be a little more balanced- but check it is truly mutual
• Think carefully about whether you are also going to be disclosing any information, in which case a mutual NDA is appropriate anyway.
• Is the PDF document in a tiny font? The devil is in the detail – ask for a Word copy or convert it, read it and don’t be afraid to amend it (clarify parties, • • ID the information, permitted use etc). If it’s inaccurate or you can’t comply, don’t sign.
• Check your status as the signatory. Are you signing as an individual, employee or director?
• Check the law and jurisdiction of the NDA.
• Look for hidden clauses and be particularly careful of broad indemnity clauses.
• If there is space for them to do so, or if it’s a mutual NDA, make sure the discloser signs too.

Improper use of NDAs

The Solicitor’s Regulation Authority (SRA) has issued a Warning Notice with guidance for solicitors around the misuse of NDAs, but it is also useful for all those issuing NDAs. The warning notice covers the use of NDAs in any form of agreement or contract, or a clause within a wider agreement or contract, under which it is agreed that certain information will be kept confidential.

The guidance is relevant to all NDAs regardless of the context in which the NDA arises and covers both the terms or proposed terms of the NDA and the solicitors conduct in handling the matter.

Acas have also issued some very straightforward and clear advice that you may find useful.

The Legal Director

call: 020 3053 8613