Nondisclosure agreements, or NDAs, are an essential part of business relationships. With so many forms floating around, most companies are inundated with seemingly countless variations of NDAs, each one requiring legal review and tracking to ensure compliance. Automated NDAs can solve these issues by simplifying the process.
In this article we will cover:
- Why NDAs are so expensive and time-consuming
- How automated NDAs simplify the process
- Why automated NDAs actually improve your control and oversight
NDAs: Necessary time sinks
NDAs protect your confidential business information. From vendors to clients to employees, NDAs for maintaining security and mutual confidence across a variety of relationships. NDAs protect trade secrets, client lists, marketing ideas, intellectual property, and myriad other sensitive information. They’re essential to most businesses.
While NDAs are often relatively short documents, they include some important provisions. They determine what information needs to stay confidential and how long the confidentiality must last. They also make clear what documents or materials must be returned at the end of a business partnership.
Most businesses are swimming in NDAs, and they take up an enormous part of a legal teams’ time. Big companies have hundreds of them that are in-term at one time, which make up nearly 30% of their day-to-day work.
NDAs are important, but they can also be expensive and time consuming. There are so many reasons why managing them can be needlessly complex:
- So many forms. Nearly every business—and their outside counsel—has its own preferred boilerplate NDA. Some may vary their forms based on the type of information the NDA intended to protect or the identity of the other party. As time goes on, they might be tweaked, but some existing NDAs are still written using the older versions. Despite a legal team’s best efforts, multiple versions of NDAs will be floating around at any given time.
- So much time. Each new version of an NDA requires legal review. The more the NDA diverges from your company’s boilerplate, the more carefully it must be reviewed. And because many businesses deal with such a large number of NDAs, managing and overseeing each different one often takes up a large amount of a legal team’s time.
- So many people. Your own team may involve several layers of review and approval for even a simple NDA before it goes out to the other party.. When you add in the counterparty’s review and approval processes, you have several places where the NDA can get help up.
So much uncertainty. The more versions of NDAs there are, the more carefully you have to track their compliance. How long does the NDA last? What sort of information is protected? Are there exceptions? Who’s bound by the NDA? It’s hard to develop systems that consistently track all this information to ensure that you remain in compliance and in control of all of your NDAs.
Simplify by automating NDAs
Automating your NDAs wil help address the major issues that come with creating and managing your NDAs. Automating NDAs means that your NDAs will be standardized, and you’ll have advanced software to to enable digital drafting, approval, execution, review, and tracking — all in one place.
Standardize Your Forms with Ironclad
Kenneth Carter, General Counsel to Bitmovin and the former global head of public policy for Android, is developing a universal NDA form. The form was inspired by the paradigm shift that occurred when Android made its platform open-source. If the universal NDA form is adopted by all companies, everyone would save countless hours in the NDA process from drafting to tracking, because they would all be working off the same basic form.
Until the universal NDA is widely adopted, standardizing your own form into a customizable form, built easily with standard blocks, will save you hours of work. This isn’t a novel concept.
Many companies have attempted to standardize their own, and many have failed because of the difficulty in streamlining the process. Without a single, easy place to keep and retrieve updated language, people pull provisions from all different sources and may not be aware of the latest language. New versions just keep popping up. That’s where Ironclad’s digital contracting and contract management technology comes in.
Ironclad’s technology allows a legal team to create standard NDA forms with different components. Business users can then use conditionality to build their own self-service NDA using the blocks created by legal. Ironclad keeps track of the most recent standard language so no one is pulling language from old agreements. The standard forms stay standard, making reviewing a breeze.
NDA automation improves control and oversight
Some people may feel uncertain about anything that involves automation—it feels like you’re ceding all of your control to software. But automating NDAs actually prevents errors in the negotiation, review, and execution process, allowing you to more easily, and more accurately, track your NDAs later on.
Manual Contracting Involves More Risks
- Forgetting an important provision. If you’re working on NDAs by yourself, and you don’t have formal legal training, you might forget critical clauses.
- Using an outdated form. While NDAs are not the most complicated contracts, the law can and does change. Ensuring that your forms are in compliance with the latest laws governing business confidentiality and trade secrets is important.
- Failing to get the appropriate approval. While this may not directly involve legal risk, the approval process at most larger companies is sacred. Failing to get the appropriate approval can be disastrous. Outstanding emails are hard to track, and using email to seek approval can lead to mistakes.
- Execution errors. While there are still some organizations using manual execution, most businesses have adopted electronic signatures. But an electronic signature is not always simpler. If you’re not carefully tracking the execution and storing properly executed copies, you might not be able to prove the other party’s consent to the agreement later on.
- Losing track of it. Managing NDAs, from tracking their status to keeping track of their provisions once they are executed to storing them in an organized, accessible fashion, is difficult. Mistakes at any point in the process opens the company up to significant risk.
- Data security issues. NDAs often define confidential information without specifically stating the confidential information itself. However, the mere existence of an NDA between certain parties may be something your company would like to remain confidential. If you don’t have a secure place to store and communicate about your NDAs, you could be at risk for a breach.
Automating NDAs Decreases Risk
Using Ironclad to automate your NDAs will minimize your risk. Ironclad’s features address risk due to human error and other sources in many ways. Here are a few ways that it can help you:
- Keep your current forms and provisions all in one place to prevent the use of old or outdated provisions.
- Simplify execution using Ironclad’s system and store executed versions easily. Automate NDA signature blocks to prevent execution errors.
- Store all of your NDAs in one place where they can be searched by provision type and length, to make management and tracking much simpler.
Ironclad’s Workflow Designer allows even non-lawyers to draft NDAs. Businesspeople can use drag-and-drop technology to build an NDA with the current provisions necessary for the circumstances. The Workflow Designer also manages the approval process using conditionality, preventing unnecessary holdups in house. And the Dynamic Repository not only keeps NDAs in one place, but allows you to search based on term length, renewal date, and other criteria.
Use Ironclad’s Technology for Efficient NDAs
Ironclad’s digital contracting software for NDAs drastically cuts down the time spent during each stage of the contracting process. No tracking different emails. No confusion about which version you should be working with. No execution issues. Automate NDA review as well as NDA signatures and save time.
Anushree Bagrodia, counsel at Mastercard, has already converted to Ironclad for their NDAs. They came to Ironclad to address efficiency issues, and their results were a dramatic change. “We’re only a couple of months into rolling out Ironclad for NDAs,” he says, “and we have standardized and automated our templates, implemented e-signatures, and have an integrated end-to-end solution for our NDAs. It has been incredible.”
NDA automation is the solution
NDAs consume time, talent, and resources. Piecemeal drafting and execution creates countless versions, all requiring significant time and energy to draft, review, and track. The potential risks associated with improperly drafted or reviewed NDAs can be quite expensive. As so many companies have discovered, Ironclad’s automated NDAs save time and money and give you greater control over the process. Sign up for a consultation here.
- NDAs: Necessary time sinks
- Simplify by automating NDAs
- NDA automation improves control and oversight
- NDA automation is the solution
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Ironclad is not a law firm, and this post does not constitute or contain legal advice. To evaluate the accuracy, sufficiency, or reliability of the ideas and guidance reflected here, or the applicability of these materials to your business, you should consult with a licensed attorney. Use of and access to any of the resources contained within Ironclad’s site do not create an attorney-client relationship between the user and Ironclad.