Non-disclosure agreements: Loose lips can sink ships

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There are many circumstances where a non-disclosure agreement (NDA) will be required of a firm. These documents are necessary for an increasing number of opportunities today, including commissions from government agencies with secrecy or security criteria, corporate enterprises with competitive positioning, patents, and trade secrets, or even opportunities for invited lists of proposing firms. In each of these cases and more, the NDA is a legal agreement between two or more parties protecting confidential information. Regarding architectural practice, NDA documents may be of three general types: a unilateral document where a client discloses proprietary information to the architect; a bilateral document where two firms choose to protect information exchanged with the other; or a multilateral document where multiple parties agree to protect exchanged information.

NDA documents will typically list the parties, define the information covered, set a period of non-disclosure, list any exclusions, and set types of permissible disclosure. It is essential that firm owners fully understand the ramifications of these agreements. Firms should seek legal council’s review or negotiation before signing the document. The NDA should clearly state what information is confidential and for how long. Often, a firm might limit the time of non-disclosure to the completion of the project, limit the extent of non-disclosure to key information, or limit damages that are imposed. In every case, the document should exclude any obligation when the firm is legally compelled to disclose the information.

Once signed, it is the firm’s responsibility to preserve the confidentiality of shared information. This might be as simple as excluding visitors from your studio, or as significant as a secure and separate work area with a dedicated encrypted data network. Make sure the responsible project team is fully aware of the specific NDA strictures and regularly monitor that team’s compliance. Make sure that all other teams in the studio—along with the administrative staff—are generally aware of the NDA document to avoid inadvertent compromise. And make sure that the marketing team is aware of the need to exclude the project or its information from the firm’s website and other business development communications.

The firm should also modify its standard consulting services agreement to incorporate the non-disclosure agreement, thereby imposing the NDA terms on engineers and other professionals sub-contracted for the project. The consulting services agreement should also include indemnity language that protects the firm in this regard.

Regarding staff, a firm is well served by addressing the need for non-disclosure agreements in the employee handbook. The handbook terms should deal with all individual responsibilities, including exclusion of the project, or its information, from the many forms of social media. The firm’s employment agreements—if any—should similarly incorporate non-disclosure language reflective of that required of the firm.

Of course, the firm may also require non-disclosure of its own proprietary information. These might include copyrighted elements of, or whole-building designs, automated workflow routines and software customizations, document templates of all sorts, office standards for building code and accessibility requirements and families of documentation details.  Incorporate language that restricts use of this information into client agreements for services, particularly if those agreements transfer ownership of construction documents and other materials. Similarly, incorporate language into consulting services agreements, particularly if a high degree of shared proprietary information is required. Finally, incorporate non-disclosure language of the firm’s information into the firm’s standard employment agreement.

Remember, whether a firm or employee, non-compliance with a non-disclosure agreement could get you fired. Or worse.

AIA has provided this article for general informational purposes only. The information provided is not legal opinion or legal advice. The Risk Management Program posts new materials and resources periodically.

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