Non-disclosure agreements (NDAs) need to move fast, not get stuck in negotiation. How can parties to an NDA make this a reality?
This deep dive looks at who NDAs affect, how and why parties might choose to negotiate them, and how to make this easier. Use the navigation below to find out more, or explore our deep dives on other contracts, like MSAs.
What’s an NDA?
A non-disclosure agreement (NDA) is a contract in which parties agree on confidential material they’d like to share with each other and prevent from being shared with third parties. These agreements keep sensitive or proprietary information – like commercial terms, product information or trade secrets – confidential or private.
NDAs are among the most common contracts in the business world, with wide-ranging applications, from sales to employment to publishing. They can be unilateral, meaning only one party is bound by non-disclosure duties, or they may be mutual, meaning both parties are.
Who do NDAs affect?
NDAs affect numerous teams in a business, and in different ways.
Various people might need to send out NDAs, including salespeople, legal counsel, HR teams, finance, operations and procurement. Anyone who needs legal certainty around confidentiality is a potential user.
Legal counsel typically own the NDA template, and usually have the approval rights too (although a particularly sensitive NDA may need to be approved by someone specific in the leadership team).
Authorized signatories internally need to sign the NDA.
The NDA counterparty could be practically any company, organization or individual. At Juro, we see NDAs across a huge variety of companies, from B2B SaaS providers and marketplaces to retail, media and fintech.
How to approach NDA negotiations
NDAs aren’t typically heavily negotiated; they sit towards the bottom end of the scale when it comes to levels of contract negotiation. But they are widely used, making them a classic example of a high-volume, low-negotiation contract that’s perfect for automation and self-serve.
There are exceptions, of course. But although transactions like M&A deals will be under NDA that might be more heavily negotiated, there are fewer such contracts.
You might choose not to allow any negotiation. The best way to achieve friction-free self-service with little to no involvement from the legal team beyond creating the initial templates is to prevent any changes to the standard form.
But in practice, this might be tricky; if a huge enterprise deal worth hundreds of thousands of dollars is on the line, and the counterparty wants to keep the negotiations confidential for 10 months rather than the standard 12, you might want to soften your approach for good commercial reasons. Some of the most commonly negotiated (or at least queried) areas of NDAs are:
Agreement length (the period for which the party or parties are bound by confidentiality)
The definition of ‘confidential information’
The extent of indemnification duties and liabilities if the NDA terms are breached
Any notice requirements
Negotiation of any of these terms would be a matter for the legal team, bearing in mind the commercial considerations already discussed.
The best way to achieve friction-free self-service with little to no involvement from the legal team beyond creating the initial templates is to prevent any changes to the standard form
How to make NDA negotiation easier
An NDA is often a precondition for the discussions that follow, so it’s important to get it signed quickly. For example, a potential customer might want a SaaS vendor to sign an NDA before beginning commercial discussions that might reveal details of how their business operates, or of their existing vendor contracts.
NDAs that are managed across multiple systems can move more slowly and be harder to manage. The typical combination of Word, email, DocuSign and shared drives is common, but it can lead to data and audit trails being lost as files move between services. Version control is difficult too: people looking for NDA templates will likely find different NDA iterations saved in different places, reflecting past commercial positions.
Find out more about negotiating NDAs in our free eBook, 'Contract automation: start small, win big'.
The following steps can help you to make your NDA negotiations easier:
Look at previous NDAs to see which clauses were most often negotiated or queried. Can you soften any of these terms ahead of time to get a signature more quickly?
Create one template from which all NDAs will be generated – and make sure anyone who’ll be creating contracts knows where to find it.
Incorporate legal design principles so that your NDA is clear, accessible and jargon-free.
Codify a playbook for fallback positions so that colleagues can negotiate confidently within the rules that legal counsel set. If your contract collaboration platform has conditional logic functionality, you can also bake these positions into your template.
Check your contract collaboration platform has in-browser negotiation, so that discussions can happen quickly and are properly recorded.
NDAs that are managed across multiple systems can move more slowly and be harder to manage. The typical combination of Word, email, DocuSign and shared drives can lead to data and audit trails being lost as files move between services
Useful features for negotiating NDAs
If you want to make your NDA negotiations easier, look out for the following features:
Internal and external commenting, so that internal colleagues and external counterparties can see, make and track changes to the contract.
Visual timeline and audit trail, so that you can see when counterparties have viewed the contract and address any hold-ups.
Audit history, so that you can easily compare different versions during negotiations.
Two-way CRM integration, so that your sales and legal data is always in tune and up to date.
Integration with Slack and email, so that parties can be notified of negotiation as it happens.
Analytics, so that bottlenecks can be identified quickly.
If your contract workflow is supercharged with all these features, your commercial and business teams will be able to better collaborate on NDA negotiations, leading to a faster time-to-close and, with any luck, happy faces on both sides of the agreement.
Is negotiating NDAs a pain point for your business? Is your SaaS company or marketplace growing so fast that the contract process is out of control, with friction pre-signature and a lack of visibility post-signature?
If so, get a free Juro account and see if you could benefit from a contract collaboration platform that enables businesses to agree and manage contracts all in one unified workspace.