Author Topic: Client wants me to sign NDA before they will talk about contracts  (Read 2459 times)

jedi

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Former employer wants me to sign a very general NDA before they will discuss client project offer and rates. Below is sample:




While prospecting contractual work with us and/or our clients, we may disclose to you certain proprietary, copyrighted, and trade secret information in oral, written, or electronic form relating to us or its clients' past, present and future research, development, business activities, products, and services, which is confidential to us and/or its clients ("Confidential Information"). In consideration of such disclosure, you agree as follows:

1. You will not disclose the Confidential Information in any manner to any third party.

2. You will not copy any Confidential Information for any purpose without our express prior written consent.

3. Nothing in this Agreement shall prohibit or limit you from using information you can demonstrate is (i) previously known to you, (ii) independently developed by you, (iii) acquired by you from a third party not under nondisclosure obligations to us, or (iv) which is or becomes part of the public domain without your breach.

4. We grant no license under any trade secrets, copyrights, or other rights by this Agreement or any disclosure of Confidential Information hereunder.

5. You acknowledge that the Confidential Information disclosed to you hereunder is owned solely by us and/or its client(s) and that the threatened or actual breach of this Agreement would cause us and/or its client (s) irreparable injury for which monetary damages would be inadequate. You agree that we shall have the right to seek an immediate injunction enjoining any such breach or threatened breach of this Agreement. You shall be responsible for all costs incurred enforcing the terms of this Agreement.

6. The Agreement shall become effective as of the date any Confidential Information is first made available to you and shall survive return of the Confidential Information to our firm.



What advice would you recommend about this?

- jedi

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Standard, scary NDA
« Reply #1 on: April 18, 2009, 05:51:12 PM »
The NDA sounds like the usual crap. This one is crappier than usual because decent, fair NDAs are bilateral (bind both parties identically.) In other words the agreement is silent in the sense that it does not acknowledge that you have any knowledge that must be likewise protected.

You're just dribbling out the particulars of this deal, which is frustrating in order to help advise you. You mention two parties, and this is not insignificant:

"Former employer" (A)
"client" (as in "client project") (B)

This smells to me like A is a bodyshop or consulting company and B is the actual "user" (end user) business or organization. B needs the programming support. A is along for the ride to scrap commissions.

True? If so, then my take is that the NDA extends to your knowledge of the client itself being in bed with A.

Just keep one thing in mind. Building a consulting business is VERY difficult. Doing so using the contacts delivered to you by an intermediary like a bork is well nigh impossible. Why: it's THEIR client, not yours.
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jedi

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Client wants me to sign NDA before they will talk about contracts
« Reply #2 on: April 18, 2009, 06:36:30 PM »
Goddard,

Sorry, I did change the names to avoid giving the name of my former employer who is pushing this NDA on me before they offer me a contract 1099 with their client.
A is my former employer (a consulting firm and partner of large vendor) and B is their client and C would be me the contractor to provide services for A (former employer) to B (client).

Should I have an attorney review this and make changes to protect myself before I agree to it? Or just walk away and pursue other non-scary contract work?

-jedi

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Client wants me to sign NDA before they will talk about contracts
« Reply #3 on: April 18, 2009, 07:25:57 PM »
Ok, that's what I figured. Thanks.

Should you have an attorney review it... sure. But keep in mind that most contracting agreements are scary.

Now, completely spurious non legal advice presented by a poseur (me) follows:

The real problem that you have at present, without a business entity that you work through (LLC or corp.) is that you are the party who is responsible for the NDA terms. This is an instance in which a corporation works to your advantage - by making yourself the signatory to the NDA, you open yourself up personally for any actions that A or B could bring to bear against you. By making the corporation the signatory you somewhat deflect the liability onto your corporation. BUT CHECK THIS ASSERTION OUT WITH AN ATTORNEY.

I probably wouldn't sign this unless I had a corp or LLC to work through...
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jedi

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Client wants me to sign NDA before they will talk about contracts
« Reply #4 on: April 19, 2009, 05:42:32 AM »
Ah yes, good point, yet another valid reason to setup a corp or LLC! This is my plan- setup a new LLC, have attorney review the NDA and have the former employer put the corp on NDA terms. This will keep the risk away from me so if the LLC violates any terms of the NDA, I am not personally liable.

TRexx

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Client wants me to sign NDA before they will talk about contracts
« Reply #5 on: April 19, 2009, 09:35:08 AM »
When I was PHB in a consulting company I made lot of sales calls. It was not uncommon for the client to make everyone in attendance sign an NDA that held them personally liable for revealing any secrets. And even when our company had a blanket NDA with a client they always made the individual people we assigned sign one as well.

Richardk

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Client wants me to sign NDA before they will talk about contracts
« Reply #6 on: April 19, 2009, 12:42:25 PM »
All of this sounds pretty standard until they get to the "You shall be responsible for all costs incurred" part, combined with it being one-sided like Goddard mentioned and it starts to stink but again, pretty common.

TRexx, even though the company had a blanket NDA, was the personal one all that different? Also did they ever go after an individual or consider it? I know in the past, companies included everyone but the one with the deepest pockets was always of most interest. Also if the blanket one covered everybody then why bother with another round of individual NDA's?

TRexx

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Client wants me to sign NDA before they will talk about contracts
« Reply #7 on: April 19, 2009, 01:51:10 PM »
Quote
TRexx, even though the company had a blanket NDA, was the personal one all that different? Also did they ever go after an individual or consider it? I know   in the past, companies included everyone but the one with the deepest pockets was always of most interest. Also if the blanket one covered everybody then why   bother with another round of individual NDA's?
They were essentially the same. I suspect they made us all sign individual, annual NDAs because they wanted to be sure each person understood what was expected. I don't recall anyone one ever violating an agreement (or getting caught). Violation of an NDA is pretty hard to prove, unless the offender is dumb enough to leave a paper trail.  And it's been my experience that they rarely let outsiders see the really secret stuff anyway.

I was doing a gig for a part of IBM the was working on components for the AS/400 before it was announced.  Everything connected with that project was kept in separate locked rooms.  All the paper was strictly controlled and we had regular security audits.  I was there for almost 6 months before I had the "need to know" what was going on in that room.  Down the hall we had another group working on stuff for what became the PS/2. I never got into that room.    



jedi

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Client wants me to sign NDA before they will talk about contracts
« Reply #8 on: April 19, 2009, 06:27:18 PM »
OK are these sorts of NDAs actually enforceable in California? Just wondering if they would hold up in court or not.

-jedi

Dennis Nedry

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NDA's are tough to enforce
« Reply #9 on: April 19, 2009, 06:47:09 PM »
I don't like to sign anything anymore.  There are so many PITA, ankle biting contracts.  My policy is to resist signing anything.

How will they enforce the NDA?  And what constitutes a breach?  And how do they prove it?

I don't see it being cost effective to pursue.

In other words, I think NDA's are a pile of sh!t.  But you still do them.

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Client wants me to sign NDA before they will talk about contracts
« Reply #10 on: April 20, 2009, 02:01:13 AM »
Dennis, it's too late in this instance, because they beat you to the punch. When you get your LLC, you and your lawyer should draw up your own contract and NDA / non-compete language that you can present to prospective clients. Make it something that is fair to both parties and will hold up in you state... and concise - long legal docs will scare away many clients. Then in the future, you control the contract language - "It's my standard contract... here, sign it please so we can get to work."

Just a thought,
-DG

Origisaurus

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Client wants me to sign NDA before they will talk about contracts
« Reply #11 on: April 20, 2009, 03:32:47 AM »
Quote from: jedi
OK are these sorts of NDAs actually enforceable in California? Just wondering if they would hold up in court or not.  
 
  -jedi
This is your homework assignment.  CA has some unusual employment laws, e. g., non-compete contracts are illegal.  You can research this on line.


David Randolph

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Client wants me to sign NDA before they will talk about contracts
« Reply #12 on: April 20, 2009, 05:40:58 AM »
Jedi:
Sign it. It is pretty standard. The only thing I would make sure of is the time limit. Most NDA's have a limit of 3-5 years on the information. (Non-competes have to be limited to 6 to 24 months.) Something that doesn't have a time limit isn't enforceable.

Secondly, if you expect to need to have similar "confidential information", start keeping an "engineering notebook" of things you do on your own. An engineering notebook lists everything done that day with the date on it and you can sign the bottom of the page. Then, you have an audit trail that you can bring into any formal complaint.

NDA's almost never get prosecuted. It takes a pretty blatent violation to get any legal department involved. NDA's exist to set expectations. A violation would have to be worth the $50,000 - $100,000 it would take to enforce the NDA. Instead, the company would start with a letter that they think you have violated it, then a letter from the lawyer demanding that you cease, then they will file with the courts. If you respond to the first letter with proof that you have not violated the NDA, then they may not take it any further.

codger

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Client wants me to sign NDA before they will talk about contracts
« Reply #13 on: April 20, 2009, 06:34:51 AM »
David, You said, "A violation would have to be worth the $50,000 - $100,000 it would take to enforce the NDA. "

I dispute this statement. Having worked with corporate legal counsels for several years - in large companies, I learned that the companies don't consider staff attorneys or attorneys working on retainer as an additional cost. It's a fixed overhead. As a result, they always look for ways to keep them busy. This is why we frequently see big corporations pursuing relatively small cases.

Years ago, I made the mistake of using a client company's name in a press release. A local newspaper reporter called them to verify my claim. Sure enough, within two days I received a call from a corporate attorney threatening a lawsuit, as they felt I had somehow violated my NDA. (I didn't, but I backed down. Who can afford lost income and out of pocket legal expenses to do battle the big guys?) This is why I favor the British system. In the US, you can sue anyone for any reason, and if you lose, your costs are minimal. In Great Britain, if you sue and lose you become liable for all costs arising from your suit. Needless to say they have far fewer lawsuits initiated than in the US.

Jedi, The list of terms you supply appears to be standard stuff. IANAL, but I would suggest that you sign it. Too much hesitation on this may raise a red flag with the client. They may sense that you either don't intend to comply, or worse, have negative experience with non-compliance in your past.
« Last Edit: April 20, 2009, 06:38:43 AM by codger »

jedi

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NDA update
« Reply #14 on: April 20, 2009, 07:50:42 AM »
I just spoke with an attorney and cannot get appointment until next Thursday unfortunately. She did hint at the fact that I should consider other clients that do not require an NDA and I did send her a copy of the agreement. The client is willing to do Corp to Corp and I will try to get them to accept my Corp as the NDA instead of being personally liable. -jedi