An NDA/CDA is an essential part of doing business, particularly in industries where Intellectual Property is being exchanged. This webinar covers the challenges of managing NDAs: including risks, clauses to be aware of, & processes, & procedures that can help. Contract management software like ContractWorks can support in the overall management of non-disclosure agreements minimizing risk and saving businesses time and money.
2. Agenda
● Background/opening comments
● Challenges of managing NDAs
● Risks of NDAs in general….and risks of poor
management
● NDA clauses to watch out for
● Who cares?
● Processes/procedures that could help
● How software, including ContractWorks, can assist
3. Background/Opening comments
● About us
○ SecureDocs, Inc.
○ ContractWorks
● Goals of webinar
○ Open eyes to issues around NDAs
○ Provide ideas and perhaps some motivation to improve processes
○ Demonstrate how ContractWorks could help some companies
● What we are not going to do:
○ Make you sit through an infomercial
○ Provide legal advice. These are observations and suggestions based on
experience and speaking to customers…
4. Why do companies use NDAs?
“A company with trade secrets or protected information always has to balance
the advantages of collaboration (shared research and development, new
sources of investment, expanded markets, a potential sale of the company or
its ideas) against the risks that the collaborating party will carelessly disclose
the company’s secrets or even misappropriate them.”
5. Why do companies use NDAs?
Upsides
● Protective framework for working with business partners
● To help facilitate the exchange of ideas or information while minimizing risk of
IP being misappropriated
● Sets the right tone for an engagement
● If well constructed they can be enforceable
● Provide the basis for an injunction to prevent a pending breach
● These days, in certain circles, NDAs are an expected part of doing business
6. Why can NDAs be problematic?
Time is precious, logistics hard There are risks
7. Why can NDAs be a nightmare?
Logistics + operational overhead
● Created/updated/improved
● Negotiated
● Executed
● Stored
● Tracked
These are HARD for any company, NDAs are not usually a priority yet many
companies manage a very high volume.
8. Why can NDAs be a nightmare?
Risks
● Hidden obligations
○ Inbound NDAs need to be reviewed by legal
○ Outbound NDAs may be redlined and pushed back over several rounds
● Carry future legal risk - breaches can be real, perceived or completely false
● Carry transactional risk, NDAs get exposed during due diligence
○ M&A deals
○ Raising capital
9. Exacerbating factors
● You have a high volume of NDAs in play
○ NDA intensive industries:
■ Life Sciences
■ Healthcare
■ IP heavy
● You’re signing other companies’ NDAs
○ Need to be reviewed
○ Redlined and negotiated
● You are subordinate in the relationship - Other side has leverage
○ Small company trying to work with a big company….they may have other choices
○ You need the deal more than they do
○ You want to agree to what they are asking for….but it may be too much
10. Criticisms of NDAs
● The contract is only as good as the person signing it
○ If your partner breaches the contract, you can take them to court for damages
be expensive and time consuming
○ It can also be difficult to quantify the damages
● Hard to enforce
○ There as a deterrent rather than a guarantee
○ Often designed to focus attention on privacy or handling of proprietary information with little
expectation of ever taking action
11. Criticisms of NDAs
● Companies sign too many of them
○ Sales teams too eager to sign
○ Little push back
○ Volume causes problems keeping track
● Early stage investors will not sign them
○ If you are asking for money from a VC or Angel don’t expect them to sign an NDA
○ There are very few original ideas and investors rarely look at just one company in an emerging
space…..so don’t want to be restricted by an NDA
○ They have the money so it’s tough for most companies to argue
13. Who cares?
● Most of the time: No one!
● If your company is threatened with a lawsuit: Everyone (particularly senior
management)
● You: If you’re responsible for NDA management you may want to know what’s
out there before it lands back on your desk
● The other parties with whom you have signed NDAs
● Investors or buyers: They will care about the content of your NDAs and they’ll
really care about a possible breach
14. What clauses are commonly negotiated
● Right to assign
○ If you have expectations of an M&A transaction in your future this may be one to consider
● Non-solicitation
○ If you work in a tight knit industry with limited talent, this can be restrictive
● Choice of law
● Indemnification
○ Sometimes slid in, not typical or desirable in most industries
● Entire agreement clause
○ May conflict with other contracts or Terms you have with the other side
15. Process improvements
5 things you could do today (without buying software!)
● Have a single point person own NDAs (sorry!)
● Centralize storage - sounds easy….but might be tough to get people to
comply, requires education
● Provide sales with pre-signed non-negotiable template
● Put a set of written guidelines in place to standardize the language that the
company will and will not agree to
● Review whether you really need to be sending or signing so many NDAs
16. What can software can do?
● Potentially it can make life harder!
○ People have to care
○ With low volume it could take more time than it saves
○ There has to be an awareness and appreciation of risks...if they exist
● If problems are big enough software can-
○ Save you a lot of time
○ Help you manage your obligations
○ Mitigate risk
○ Navigate transactions without issues
17. ContractWorks
● Customers
○ Contact your Account Manager, or reach out to me, and schedule
a quick call to help get set up to manage NDAs more effectively
● Non-customers
○ www.contractworks.com
■ Ease of use
■ Ease of adoption
■ Electronic signature built in
■ $500/mo for unlimited documents and unlimited users
18. Contact us
● Copies of this deck
● Ideas and feedback as we develop content
● Questions?
● See a demo or set up a trial
● www.contractworks.com
● will.reynolds@contractworks.com - 805 617 2160
● info@contractworks.com