As a business consultant, you have to have access to sensitive client information in order to offer the valuable advice you're being paid to give. Your ability to synthesize a lot of information and make recommendations is what makes you valuable — but it also exposes you to potential liabilities, especially when it comes to matters of confidentiality and protecting intellectual property.
For that reason, the non-disclosure agreement (NDA) is one of the contracts that consultants come across most often. You're most likely to need an NDA in your practice in two situations:
- Your client asks you to sign the agreement to ensure that you don't expose any of its trade secrets or proprietary information.
- You ask a contractor, subcontractor, or employee working with you to sign one to ensure that they don't leak any sensitive client information, during or after their time with you.
To get an idea of what this contract looks like, download the free non-disclosure agreement below.
What's in a Non-Disclosure Agreement?
In a typical NDA, the legal language essentially requires that the contracted party (i.e., either you the consultant or the contractor you've enlisted to help you) not reveal any intellectual property they have access to while working with the client (client lists, confidential company information, trade secrets, and more).
It's common for an NDA to outline…
- Term of the contract (though it usually specifies that the parties can't reveal confidential information even after the term has expired).
- Use of confidential information, including how the contracted party is allowed to use it for business purposes, how they must return it, and what they should do in the case of a court order asking for the information.
- How any disputes will be handled (e.g., litigation or arbitration).
- Conditions under which the contract becomes invalid (e.g., if one of the parties dies).
As with any contract, the details of a non-disclosure agreement depend on the two parties involved, the type of information or intellectual property involved, and the nature of the business relationship in question.
How Can a Non-Disclosure Agreement Help a Consultant?
Your clients may require you to sign an NDA before you start working for them, so in that circumstance, the NDA isn't so much helpful as it is a normal part of doing business. When it comes to working with contractors of your own, however, an NDA can be highly valuable. That's because this document helps you manage your liability exposures. In the event that your contractor breaches the non-disclosure agreement and your client is damaged, you could face serious consequences, including a lawsuit from your client.
If the NDA your contractor signs has the right legal wording in it, though, you may be able to recover some of your losses by pursuing legal action against them. Of course, the crux here is having the right legal wording. That's why it's always a good idea to work with an attorney when drafting an NDA or any other contract. While the free sample available here is useful as an illustration, it is not meant to be used as legal advice or an actual legal document.