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EMH Insights

Why I’m not going to sign your Non-Disclosure Agreement

A non-disclosure agreement (‘NDA’) is a legally enforceable contract that is sometimes created by parties to prevent the disclosure of confidential information. Under the stipulations of such a document, a party who has some type of private information agrees to reveal this information to another party with the understanding that the confidentiality of said information be maintained. On the surface, an NDA appears to be a prudent tool to fairly protect the interests of one party – but we at EMH Strategy are reluctant to sign one. Here’s why:

 

  1. Signing an NDA would prevent us from accepting prospective clients in similar spaces, or alternatively prevent us from accepting clients if we have already signed an NDA for someone else. This is known in legal terms as the Doctrine of Inevitable Disclosure – disclosure of confidential information would be inevitable if we were to take on more than one client in a similar industry.
  2. We might know someone who can help a prospective client. By signing an NDA, we are prevented from seeking expertise from a third party that may significantly influence a client’s product or project. This not only negatively affects our client’s outcome, but it impedes our ability to deliver a product with which we are satisfied and to which we would be comfortable attaching our name.
  3. Similarly, we may have gleaned some insight from another client that will allow us to deliver an excellent product. If we had previously signed an NDA in which we acquired knowledge that would be useful for another client, we would be prevented from using it, regardless of whether or not that client is in a similar space.
  4. Ideas are not as important as execution. Many people have great ideas but struggle to implement these ideas into profit making ventures. EMH Strategy is here to assist in the execution of these ideas, not to steal them. This is not to say that there are no longer any truly unique ideas worthy of confidentiality, but in many cases these ideas are better suited to patent protection.
  5. NDAs place all the responsibility and risk on me – and none on the client. We have to ensure that we never reveal the confidential information detailed within the NDA; otherwise, we may face litigation. A client is not under the same obligation – there is no restriction on what a client may disclose about our operations. An NDA is a unilateral contract and is not one of mutual respect.

NDAs do have their place, however they must cover tangible and extremely specific items of confidential information – not just mere “ideas”. Overlapping innovations are inescapable and signing a NDA for one client can open the door for costly and lengthy litigation. We at EMH Strategy keep all client information confidential. Especially in a small city like New Orleans, maintaining a strong reputation for integrity is essential to building a good business. That said, when you hire us, you’re hiring experts, and that expertise has been developed over a career of assisting other clients, with the free flow of best practices and insights critical to success for all of our clients.

By Rhett Sugars