NDAs: A Logistical and Legal Nightmare!

NDAs: A Logistical and Legal Nightmare!

• 1.
  NDAs: A Logistical andLegal Nightmare! Presenter: Will Reynolds CEO SecureDocs, Inc.
• 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 ● Aboutus ○ 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 companiesuse 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 companiesuse 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 NDAsbe problematic? Time is precious, logistics hard There are risks
• 7.
  Why can NDAsbe 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 NDAsbe 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 ● Youhave 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
• 12.
  Polling Question: Whereare your signed NDAs?
• 13.
  Who cares? ● Mostof 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 arecommonly 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 thingsyou 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 softwarecan 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 ○ Contactyour 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 ● Copiesof this deck ● Ideas and feedback as we develop content ● Questions? ● See a demo or set up a trial ● www.contractworks.com ● [email protected] - 805 617 2160 ● [email protected]