As a general rule, I don’t sign NDAs; meaning non-disclosure agreements, because as a general rule, NDAs are BS, meaning b******t. Here’s the thing, NDAs serve a narrow function. Enforcing confidentiality when no other legal structure would require it. It’s why you don’t need Lawyers or medical personnel to sign an NDA. You also don’t need an NDA to prevent the disclosure of information that would otherwise be a crime.
NDAs are for trade secrets, and times someone’s work for hire needs to be treated as a trade secret. Someone working on new technology, or being hired to ghostwrite a book that they can never acknowledge having written.
Oh, NDAs also work well when a company wants a legal tool to bully former contractors and employees if the need arises. The tobacco industry famously used NDAs as a legal threat towards associates to prevent them from testifying about known health risks associated with smoking.
Frivolous Lawsuits Are Not Fun
When everyone is honest and above board, NDAs best serve all parties when they are specifically defined. For an employer, a clear and precise agreement is more likely to result in successful court rulings, should lawsuits occur. The benefit to employees is a lower likelihood of being sued frivolously or bullied with threats of erroneous legal action.
The confidential definition of an NDA being too broad isn’t favorable to a company in court. However, even when fighting a bad, non-specific NDA, when you have clear defenses around publicly and priorly known information. It’s a beating to be on the receiving end of a lawsuit. Basically, being sued even if you have a strong case isn’t fun.
I have some faith in humanity and believe most NDAs aren’t required with malicious intentions. My experience around NDAs is mostly with people who are playing business. People having nothing specific to protect, and without money to put up much of a fight in court. Still, why would I risk anything, under the assumption someone is being honest. Or will continue to be honest. Or won’t go crazy the day I win the lottery because they mentioned a method of picking numbers while I was working with them.
I won’t sign most NDAs. However, I will sign some. I even have one in the Scope of Work I use for most of my life as a service provider.
The Five Criteria of NDAs I’ll Sign
1. I’m getting paid, highly likely to be paid, or really interested; This should go without saying. Don’t create legal agreements for the sake of having legal agreements.
2. “Confidential” is actually confidential, is defined as such, and is not trying to protect info so obvious from public records that it’s equivalent to a 4-year-old whispering a secret.
The sentence “will not disclose identifiable information that is unknown publicly at the time of disclosure and is likely to cause financial harm.” sums that up. Saying “…any information related to our marketing channels or methods.” – Yes, someone really sent me this once – is not a viable NDA, as most “marketing channels” are publicly known or easily extrapolated.
3. The “confidential information” is worth protecting. Meaning both confidential and has a risk of harm to a person or business if disclosed. Saying someone likes cream in their coffee, may not be a public record, but unless they are Dave Asprey the disclosure of that info is unlikely to cause harm.
4. That you’re not trying to use an NDA to prevent me from reporting a crime. This is happened before and will likely continue until people just stop signing unneeded NDAs
5. That my use or disclosure of the information you’re trying to protect, wouldn’t itself constitute a crime. A fair number of things already have criminal and civil sanctions, some, apply to me. Please don’t write those into an NDA and act like without that signed sheet of paper, you have no protection. It’s sort of like asking me to sign a document saying I won’t murder you. I sware to you, if I sign or do not sign that sheet of paper, I will be in the same amount of trouble if I commit a murder.
While most NDAs are BS, some are worth signing. But if you have little or no confidential information, a broad scope for the NDA, ambiguous clauses, aren’t paying me, or are already protected by existing laws I won’t be playing Art of the Deal with you, even if you’re the president.
Here are a few other posts about the ridiculous prevalence NDAs have reached.
NDAs Are Out of Control. Here’s What Needs to Change via hbr.org
No I Won’t Sign Your NDA: Why Non-Disclosure Agreements Are Stupid via cinematlmagazine.com
5 Pieces of Etiquette for Startups Approaching Advisors via business2community.com
Please Steal My Scope of Work. I Want You to Have it. via masonpelt.com
The Problem With Non-Disclosure Agreements (NDAs) via pointsandfigures.com
Why I Don’t Sign NDAs via markwelchblog.com
Mason Pelt is not a lawyer, this doesn’t constitute legal advice. These are his personal opinions and are general business advice.