Are NDAs worth the paper they’re printed on?

Non-disclosure agreements, also known as NDAs, are one of the most widely used contracts in the business world today. Estimates suggest that over 2 million NDAs are signed in the United States each year. This is the most commonly signed business contract by a factor of 3x.

Do they work? NDAs allow businesses to share “confidential” information with a strong caution to the counterparty that this info should NOT be revealed publicly or fall into the hands of competitors. However, these documents are extremely rarely enforced and have huge safe harbors for the defendant, such as “known at the time of disclosure”, “in the public domain”, etc.

Should we sign them anyway? - NDAs are often given to new hires (a good reminder). And many new business relationships start with a mutual NDA. This is a bit of test to see how easy to do business with your company is.

Look out for the HORRIBLES! NDAs can also contain less common provisions that go beyond basic confidentiality. For instance, some include non-compete clauses restricting the ability to do work for a competitor. Others contain non-solicitation provisions prohibiting soliciting customers/employees. Or overbroad indemnity clauses. These provisions should NOT be signed early in discussions with a potential partner/customer.

We have found AI tools that can quickly examine the agreement to spot any unusual clauses and ensure your interests are protected. NDAs are ubiquitous and IMHO, not really all that important or enforceable. We still recommend having them and reviewing them in a quick and efficient manner.

REACH out if you’d like our assistance at d at ai4.legal