Stop the Insanity!

Anyone out there remember Susan Powter?  She was a blond, cropped hair diet guru from the 90s.  Her catchphrase was “Stop the Insanity!” and it was all about controlling your own behavior.

One of the most common contracts people end up tossing over the fence to the other party is a non-disclosure agreement (NDA).  Also known in some circles as a confidentiality agreement, the basic purpose of the document is to promise that whatever one side shows, the other will keep secret.  There are two basic forms of this document, the one-way NDA and the mutual NDA.

We negotiate these agreements because a business owner feels that there may be secret information shared between the parties.  OK.  It’s possible.  But not likely.

Yet we keep going through the motions.

We need to stop the insanity, too.  But we won’t (remember, in most cases, we’re advisors, not decision makers).  So, here’s my two-part advice for making the NDA a painless formality that will require virtually NO time that could be spent on better things:

1.  Draft/configure a Mutual NDA.  And I mean 100% mutual.  Each party promises to keep the other party’s stuff secret for a fixed period of time (about 5-7 years) after the deal is done or the contract is terminated.  If you have to include something special in the language because of your regulated industry (insurance, utilities, banking, government), do so only to the extent necessary and state in each required section the cause of the language.

For example:  “Section 9: In compliance with _____ Act, and as applicable, the parties agree to…” making the obligations mutual again.  Remember, however, that although you might be bound to follow one of these regulations, the other side might not, which is the reason for the “as applicable”.  Check with your counsel on the specific language you will need to add.

2.  When needed, send it to the other side and tell them that you’ve drafted it with 100% mutuality in mind and the goal of not having to discuss it at all (this is the kind way of saying that it’s non-negotiable).  If they fight you on the regulation-required language, point out the “as applicable” clause.  Total non-starter.

Ta-da!  🙂


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