Helping companies do the best possible due diligence

Are You a Member of the Confidentiality Cult?

(Part One of a two-part article)

Confidentiality agreements, also known as non-disclosure agreements or NDAs, are so prevalent at many levels of business as to be ubiquitous, especially in the United States. Yet, more often than not, these documents and their use are extraordinarily misunderstood, fatally constructed, or incredibly mismanaged. Even more amazing, often all of these issues exist in organizations simultaneously.

Intellectual property is the very foundation of society. Without ideas, and the ability to protect them, society would come to a screeching halt. Confidentiality and non-disclosure agreements are essential to this equation:

But, over the past few decades, a confidentiality cult has evolved, countless people thinking that they are not allowed to blink unless everyone executes everyone’s confidentiality agreement. The range of inanities is astonishing:

1. How can I trust you if you don’t sign our agreement?
2. Before we can talk about anything, we must spend countless weeks or months with the decision makers on both sides, the executives, the senior team members, the Board Members, your lawyers and our lawyers, and anyone else we can convince to be a part of this miasma.
3. Oh and let us not forget, we really like to spend lots and lots of money, before we even know if we have anything worth talking about at all.
4. Our lawyers insist everyone must execute confidentiality agreements. (For any purpose!)

This approach tells more experienced people that they are dealing with someone who simply is naïve… who has been ill-informed by the countless confidentiality cult members and is now a cult member themselves, the zealot guarding all the so-called secrets at all costs.

And, perhaps most disturbing, are the many lawyers, accountants and other professionals who believe that they must take this stance, otherwise they are not adequately protecting their clients.

Enlightened people know that ultimately there are two ways to protect intellectual property:

• One: Simply never disclose the truly confidential or proprietary aspects of a business, product, service or innovation outside of the inner circle.
• Two: If you must disclose confidential information, simply make confidential disclosures in stages, after developing good foundations at each stage for ongoing communications

The quickest way to damage a potential relationship with that wonderful introduction you worked so hard to find is to insist that nothing can be discussed until “we get the NDA out of the way”. If you approach people this way, the more sophisticated the business person, the more you are going to never develop that relationship.

Part Two: Rational Due Diligence Applied to Confidentiality Agreements

Charles F. Bacon, CEO & Keeper of the Vision
charlesbacon@superdiligence.com
Due Diligence, Inc.