do I need an NDA?

Recently we got the following question from “Kinda Green” through our contact us form:

You see I have a fabulous web idea and want to secure it legally.  I would like to use a confidentiality or non-disclosure document when discussing my ideas and thought you might know a lawyer I could contact for this kind of thing?

Many small companies struggle with when to engage legal counsel.  I mean, really, the words alone - lawyers, legal, lawsuit, counsel - strike fear into most people.  And, sure, I know lots of lawyers that this person could contact but that really isn’t the best use of funds for this scenario.

Small businesses need to spend that rare resource, cash, as efficiently and effectively as possible so you need to leverage many sources.  In this case Kinda Green wants a non-disclosure agreement (”NDA”) in order to protect the fabulous web idea.  Now, in the early days, many of us operate under the ‘karmic NDA’ when we are discussing with friends and family (e.g. they care about us so much they would never jeopardize our idea - the NDA is implied!) but sometimes, when discussing with third parties, it is smart to get them to sign an NDA before talks begin.

So, what is an NDA?

An NDA is essentially a contract between two parties that outlines confidential information the parties wish to share with one another for certain purposes (usually “business arrangements”) but wish to restrict the use of the information.  Typically the information to be shared is non-public business information that allows the parties to discuss and better understand the processes used, the ideas considered, the product lines to be built, etc. to evaluate the potential business relationship between the parties.  These days most NDA’s are “mutual” which means both parties are restricted in their use of the materials provided or discussed.

Right then.  Where do I get an NDA?  Cheap.

If Kinda Green went to one of my lawyer friends she would be looking to spend between $250-500 for a boilerplate NDA customized for her company.  But an NDA doesn’t really need to be that customized so this is money better spent elsewhere.  You can purchase an NDA template online or a “self counsel” legal kit from your local stationary store which will cost between $10 - $25.  Or you can ask a friend you trust in a similar industry to give you their NDA and change the company name, etc. which is exactly what Kinda Green did … for free.  Yes, it was from me and I will also make it available on our website as soon as I have spoken to my counsel about the legal ramifications.  Hah!

Now, I’m not suggesting you always borrow (aka leverage) from others when it comes to legal documents.  Once your company gets up and running you will need legal counsel for, say, an enterprise software agreement, terms of use for your website, etc.  But there are definitely areas you should spend on and those you can leverage instead.  And, to be honest, I am trying to convince a lawyer friend of mine to help write just this for Business Ready.

Doug, are you ready to help us get Legal Ready?  People are starting to ask.  Call me.