10 Techniques for Drafting NDAs to Protect High-Risk Disclosures

Standard NDAs work for most business disclosures. But you may need enhanced protection when you're sharing the trade secrets and proprietary processes that give you a competitive advantage.

Here are 10 ways that I add additional operational protections for higher-risk NDAs:

1. Remove the right to disclose to representatives - One of the first things I do is remove the blanket rights of the counterparty to disclose to named categories of authorized representatives (groups like affiliates or contractors). Instead, the counterparty must secure our approval in writing in advance of making any disclosure to a third party, even to its affiliates.

2. Add formal process for disclosure approval - I add a requirement that the counterparty submit a list of names and titles of those to whom they'd like to grant access to the information. For each one, they have to explain why each person needs to know and how they would be involved. This requirement helps us monitor how they are sharing the information. 

3. Require signed statements from each recipient - I'll also require that the counterparty secure a signed acknowledgement from each person about the confidential nature of the disclosed information. These forms say that the individual understands the nature of the information and agrees to comply with the heightened terms. 

4. Restrict disclosure to any competitors - I may add a blanket prohibition on disclosing any information to competitors. The provision would require the counterparty to verify that no one on the list works for a company that competes with my client's products and services. 

5. Clarify the counterparty's responsibility for breaches by its representatives - I may require the counterparty to be jointly and severally liable for any breach of the NDA by their representatives. I sometimes go beyond the standard liability to clarify that the counterparty is responsible for the representatives' disclosure without a need to prove that the information improperly disclosed originated from the counterparty. 

6. Restrict backups and system access - I may impose additional limits on the security of systems and backups. These limits include restrictions on where the digital files and messaging will be stored to ensure there's no access by other employees outside the approved list.

7. Use a higher standard of care - I may adjust the reasonable efforts standard for protecting confidential information. Instead, I sometimes add that the counterparty has to protect the information we disclose with the highest level of protection and security that the company uses for its most valuable company information. 

8. Broaden confidential information definition - When the only things I'm disclosing are our crown jewels, I often expand the definition of confidential information so that everything disclosed is confidential information.

9. Narrow the exceptions - In keeping with the broader definition, I also narrow the exceptions to that defined term. I'll add modifiers, exclusions, and conditions to minimize what is not protected by the NDA.

10. Add a longer term - I may extend the term and post-term obligations beyond the standard approach. If I have significant concerns, I may extend the NDA term to ten years.

Of course, not every disclosure merits this level of protection. But when the stakes are high and my client has the leverage to insist on additional requirements, these ten techniques enable my client to better protect themselves and their competitive advantage.