All companies have secrets to keep and non-disclosure agreements are usually used to hide those secrets. They can also be used to stop the consequences of leaking those secrets. While some people include NDAs into every conversation possible.

However, while some companies believe that these agreements are only useful after a breach has occurred, the truth is that they are often not necessary once sensitive information has been compromised.

For example, in case when an employee gets fired, he might threaten to release company data to competitors if not hired back. When the company has the power to point out that violating his NDA contract would result in a hefty fine, the employee would immediately feel obliged to give the company access to all of his company documents to confirm that he had deleted all of his documents.

Basically, a signature on a piece of paper can prevent a disaster. Just such a preventive approach will preserve your company’s information, too.


Forestalling a breach with an effective NDA
An NDA tells recipients that they have a legal obligation to not share company secrets. It also makes them think about the consequences of their actions. Studies show that people tend to remember what they wrote down longer physically than by doing it verbally. Signing the NDA activates the person’s visual perception and eye-hand coordination, to make that warning stick.

An NDA isn’t always an end-all. Having someone sign one might present you as an authority, but sometimes when given to the wrong people, it might make others suspicious of you as you appear distrusting.


To have an effective NDA, know that it should:

1. Detail a specific penalty for violating the agreement.
Many contracts also include legalese stating that employees can’t leak company information, but fail to provide specific penalties. This avoids being sued if the information was leaked. In fact, knowing that the information revealed was confidential could result in a judge awarding you less than the value of the leak. This would help avoid being under-compensated and emphasize the seriousness of the contract to those who sign it.


2. Be short.
The contract should be brief and contain the necessary information. Having a lengthy document can be very distracting for the other party and might motivate them to seek legal counsel, delaying the process.


3. Clearly define what is confidential.
Defining what is secret information and how it should be handled can help employees and partners understand their responsibilities and how they should store and protect information. For instance, a manager would hold a software developer to a higher standard if their data was hacked, than an assistant who got her laptop stolen at the airport.


4. Include a non-compete clause.
A non-compete clause can prevent someone from sharing your confidential information for one to two years after it has been received.


5. Be simple.
Access software such as Lexyom’s Dashboard to help you draft an effective digital NDA in few minutes and save your time.


6. Be handed to the right people.
Employees should be the first people to sign NDAs. Most breaches happen when a former employee takes your customer list to a competitor.

If you ask someone to sign an NDA when they have no significant information to discuss, it shows that your priorities are not aligned and can end a deal. For instance, never ask investors to sign NDAs. Execution, management, and timing are the core elements of any successful venture and not the idea alone.

The Uniform Trade Secret Act requires employers to maintain certain levels of secrecy in order to protect their trade secrets. To avoid violating this law, they should make sure to complete and enforce the NDA. It’s also equally important that employees complete the NDA prior to distributing any confidential information since it won’t do any good after the fact.


Don’t wait until a breach occurs to fall back on your NDA. Start proactively preparing and enforcing your NDA today.

Lexyom’s NDA service saves you time and effort so you can keep creating something to protect. Log on to your Dashboard, create your account with Lexyom, and get your NDA ready in just a few minutes.

Legally Yours,