Legal Aspects of Sharing Business Documents
As a commercial lawyer in PJ O’ Driscolls Solicitors in Bandon I think its a great idea to share a fairly standard legal document such as an NDA.
However, as a heads up, in these matters it is the background legal (and commercial) advice that is as important as the document itself, so, in the same spirit, please see some material legal and commercial pointers which I hope might be useful:
- Do not rely on an NDA as it will be very hard to prove the other party took your confidential information!
- bearing that in mind if you want to keep it confidential, then, keep it confidential ! Be very wary of letting too many cats out of the proverbial bag, because, apart from a third party walking off with your idea (or unprotected name) it also can mean that the information is “out there” in the public domain which could hurt your chances of, for example, having a patent granted later on as it might be perceived as no longer being an “invention” as it would already be perceived as being part of the state of the art;
- if handing information over actually mark it “CONFIDENTIAL” so that there can be no doubt in anyones mind as to it’s confidential status;
- don’t let me put you off !! .. it is very important to use an NDA if only for the simple commercial reason that it focuses the parties on the existence of, and, importantly the ownership of the IP in question (which normally includes know how/trade secrets) and that you view it as something protectable and therefore, valuable!
I would however grant a serious note of warning on using anothers legal businesses document in so far as it has no doubt been tailored to suit heir own business needs, not yours, and, most times, it’s what is not already contained within an agreement that is the pitfall, and not necessarily how you tailor what is already there…
Finally, (phew!), legal (I am just focusing on legal documents, not business plans/pitches etc) documents such as shareholder agreements can be very complex and, they govern the relationship between parties (to include investors for example) for years to come on matters such as
ownership, time spent, division of profits, transfer of shares, exit events/strategies etc and therefore each one has to be (sometimes heavily) individually tailored to suit the individuals concerned.
The sharing of information is a good thing, especially in the start up market where cost-is-king, but, in essence, some information should be just that, for information purposes only and not used to govern financial and legal relationships going forward.
Sorry for the long post, typical lawyer eh !!
I would add that if a start up member of Open Coffee wants to have a background chat on a commercial legal matter then I am happy to have a quick chat with them to (hopefully) give some pointers and basic advice and, at no charge.
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7 Responses to “Legal Aspects of Sharing Business Documents”
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I was wondering when the legal aspects would pick up.
At the moment, each document has a small heading describing their purpose. Would you be interested in adding to those headings to include the legal angle you mention above, or to include a document in the list which outlines your recommendations to any users of these documents?
David – thanks for the information, it is good to hear from a lawyer. Very interesting stuff Gordon and Diarmuid, I look forward to following up one to one with both at the next OCC. Thanks Conor et al – sorry that I had to leave early, had to make it to a 12.30 appointment.
David – that was really interesting. Great to have legal input and a weather eye on things contractual. Look forward to hearing more at the next OCC
A NDA is fairly standard in terms of the clauses it contains. It is also easy to cutomize without resorting to a law firm. It is to be put in perspective though.
It helps formalize a business relationship and adds a serious tone to the discussions. As always, business ideas are often “out there” and it is just a matter of time before they are picked up by someone else.
The art of success lies in the resources allocated to the execution of a business idea. No NDA can ever protect you from bad faith or bigger organizations with large litigation departments.
Your comments are very well taken. A “standard” NDA should always be looked at as a way of formalizing a business relationship. If that relationship breaks for any reason, it is very hard to enforce in cases where you’re outbalanced and the stakes are uneven at the onset.
It merely boils down to a matter of trust and good faith. Something a NDA will never inspire nor protect.
Thanks for the comments.
In reply to Gordon above, yes, I am happy to put together a “10 Key things to look out for” list under documents as they are added.
I shall have this to you shortly.
As promised, I have sent an article that I have put together especially for OC on the subject of NDAs to Conor to post in the appropriate spot as was requested by Gordon above.
I shall provide other articles shortly to reflect the documents being posted.
I have posted up the document along with the rest of the OC documents.
http://corkopencoffee.org/documents/
Thank you David.