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Join us for our new blog series. We’re coming together as a team to share our best tips on making life easier for in-house counsel and the business teams who depend on them.

LATEST POST:

Top Tips for NDAs: Part 3.

In Part 1 of this post, we suggested starting with a mutual NDA to reduce markups and negotiations. We also said that there are instances where a one-way NDA is more appropriate. For example, with certain vendors or in your employment agreements. But even if you anticipate that only one party will be sharing confidential information, it’s not a bad idea to default to a mutual NDA because (1) the terms are typically fair and reasonable, (2) thereby making negotiations fast and easy and (3) so that you are covered if both parties end up sharing information. Reality check – three months into a partner collaboration, who will remember the NDA is only one way? Who will call legal or pull up the NDA and read it? Exactly – no one.

But just because you have an NDA in place, it doesn’t mean you should provide TMI (too much information) to the counterparty. Can the information be framed in an anonymous or pseudonymous manner? Can some pieces of the information be left out while still preserving the essence of the information you are trying to convey? Examples include test data or marketing campaigns with some elements redacted.

Don’t forget that in a mutual NDA, both parties have agreed to keep the other party’s information in confidence and to use reasonable measures to protect it. Do you want this responsibility for information that you really don’t need to know? If you don’t need the information, tell the counterparty that you don’t want it.

It’s so easy to slip up on your obligation to protect confidential information from disclosure, whether your own or someone else’s. Think about a stolen laptop, a phishing email, or an employee unfamiliar with security protocols. Once the information has been disclosed, often there is no remedy that is satisfactory to the aggrieved party. Assuming you are even aware of the disclosure, it takes time, money and effort to sue the counterparty. Injunctive relief will stop the counterparty from continuing the disclosure but sometimes, that initial disclosure is enough to cause you irreparable harm. Think about trade secrets or if your competitor has seen your roadmap or your coding genius. Alternatively, if you bring a claim for breach of contract, it is very difficult to quantify your damages and to convince the court that your calculations are reasonable. Of course you think your company is the next [insert Facebook, Google, Amazon, Tesla] and you are poised to disrupt the industry, but will the court agree with you?

I hope this series has provided you with some tips for handling NDAs and some issues to think about as your build your company and put in place privacy and security protocols. As always, someone at Inter Alia Law would be happy to discuss your legal contracting needs.

Each Inter Alia lawyer has worked both in-house and in private practice. We love solving problems for our clients, and this blog gives some insight into how we do this practically and efficiently. If these tips speak to you, or you think we could help you, please contact darlene@interalia-law.com.

Top Tips for NDAs: Part 2.

Further to Part 1 of this blog post, here are some additional tips when reviewing NDAs:

 

1. Remedies.
Okay, this part will sound very legal but the concept is simple. In a typical breach of contract case, the common law remedies are damages, restitution or rescission. These are monetary remedies and unfortunately, none of these are helpful in a breach situation where the Recipient is making your Confidential Information public or using it for inappropriate purposes (See Tip #3 of Part 1). In this situation, the Discloser will want to run to court to get an injunction to stop the Recipient. This calls for an equitable remedy, which is specific performance. Make sure the confidentiality agreement states that in addition to monetary damages, the Discloser is entitled to specific performance or equitable relief.
2. Termination of confidentiality obligation.
Make sure the contract is clear on when the Recipient’s confidentiality obligation ends. It can be two years, five years or even indefinite. It doesn’t really matter as long as (a) it’s appropriate given the type of information that is being disclosed, and (b) it’s clear what happens to the Confidential Information once that obligation terminates. Upon termination, my preference is always to keep that information confidential indefinitely or to destroy that information. Many contracts require the Recipient to return the Discloser’s Confidential Information, although, I’ve never seen it actually happen. Can you imagine the headache if you missed that provision and three years later, the Discloser asked for every copy of it’s Confidential Information back? Again, I’m assuming that there is no one at the Recipient who is policing this so watch for this up front.
3. Exceptions to the Rule.
Of course there are exceptions to the tips listed above. These tips are great for garden variety NDAs with potential vendors and customers. Whether you review these types of confidentiality agreements yourself or use external counsel, it shouldn’t take more than 30 minutes of review. Short and sweet. But if you are involved in a financing or M&A activity, then the NDAs should definitely go to external counsel for a thorough review. Why? Because in these sorts of situations, disclosure is usually one way, involves highly sensitive information (financials, forecasts, disputes, technology roadmaps, source code, sales pipeline) and the consequences can be disastrous if this information gets into the wrong hands. In these cases, external counsel rates are definitely justified.

Each Inter Alia lawyer has worked both in-house and in private practice. We love solving problems for our clients, and this blog gives some insight into how we do this practically and efficiently. If these tips speak to you, or you think we could help you, please contact darlene@interalia-law.com.

Top Tips for NDAs : Part 1.

Some clients, especially those without in-house counsel, struggle with confidentiality agreements and non-disclosure agreements (NDAs). NDAs are ubiquitous, follow a fairly standard format, and are fairly short documents. “Surely I don’t need to run this past my external counsel at their hourly rate?!?” thinks the CFO and CRO. I agree – you don’t. But you need to know what to look for; otherwise, you’ll be sorry when and if something goes wrong. Over the next few posts, we’ll cover a few tips that are helpful when reviewing NDAs:

1. Make it mutual.
If a potential vendor or customer sends you a one way agreement, send it right back and ask for their mutual version. There are some circumstances where a one way confidentiality agreement is appropriate (e.g. particularly where agreeing to keep another party’s information confidential could present potential issues for future items on your own product roadmap), but the beauty of the mutual version is that mutual agreements tend to be fair and reasonable because you don’t know which side of the fence you will be on when something goes wrong – the Discloser or the Recipient. Right off the bat, this will eliminate markups and negotiations.
2. Definition of Confidential Information.
Sometimes you see language that requires the Discloser to mark their information as “Confidential” in order for that information to be given confidential treatment. Let’s be real. Who is policing this on the Discloser’s side? No one. So, particularly if you are the Dicsloser, make sure the definition of Confidential Information is broad enough to include all information that is disclosed, or at the very least, information that a reasonable person would consider to be confidential. Yes, you are punting the issue a bit, but building in this concept should be non-controversial.
3. Confidentiality Obligation.
There should be two parts to the confidentiality obligation. First, the Recipient must keep the Confidential Information confidential. Pretty obvious. Second, the Recipient may only use the Confidential Information for the specific purpose of the NDA. I’m surprised at how often the second part is missing. This prevents the Recipient from using the Discloser’s Confidential Information for a purpose that is not connected to the reason the information is being disclosed in the first place (e.g. a proposed transaction). This is always a concern when working with sales partners or technology partners. Also, make sure that the purpose is clearly defined. With vendors and customers, the purpose can be a generic “explore a commercial relationship” but with sales or technology partners, it’s better to be more specific with the purpose so that it’s clear when and how the Recipient may use the Discloser’s Confidential Information.

… STAY TUNED FOR PART 2 and PART 3.

Each Inter Alia lawyer has worked both in-house and in private practice. We love solving problems for our clients, and this blog gives some insight into how we do this practically and efficiently. If these tips speak to you, or you think we could help you, please contact darlene@interalia-law.com.

Top 5 Tips for Corporate Governance

The ultimate goal of corporate governance is to provide strong decision-making processes, which lead to transparency for stakeholders within and outside of the company.

The bad news is that stakeholders love transparency, and without good corporate governance practices, you could be leaving important things on the table.  Think transparency-focused potential investors and customers.  Think better financing conditions.

The good news is that there is no one-size-fits-all solution which requires you to adopt policies and measures that just don’t work for the company.  This means that your approach can be tailored to your needs and to your reality.

Our Top 5 Tips:

    1. Start with a precedent for the documents listed below;  precedents are readily available and are often a really good place to start – they will serve as a road map and give you an idea of what to include;
    2. Draft charters for the board of directors and any board committees which clearly define the roles and responsibilities of the board and each committee;
    3. Draft terms of reference for the chair of your board and for your CEO;  this is essentially a job description for each of these positions;
    4. Draft an ethics policy; this serves as a code of conduct for employees, officers and directors in conducting the affairs of the company;
    5. Regularly review the charters, terms of reference and ethics policy;  it may sound obvious, but don’t start with a “Cadillac version” of any of these documents, which may include roles, responsibilities, descriptions and practices that just don’t work for your company – gradually build up to this version by regularly reviewing, amending and adding to the documents;

We can help you draft some or all of the following:

  • charters for the board of directors and any board committees which clearly define the role of the board and each committee, if any.
  • terms of reference for the chair of your board.
  • terms of reference for your CEO.
  • an ethics policy.

To get started, please contact darlene@interalia-law.com.

TOP 5 TIPS TO FREE UP TIME FOR IN-HOUSE LEGAL TEAMS.

Counting down from #5…

by Mike Anderson, Vivian Leung, and Chris Sanz.

Tip #1: Improve Dense, Confusing, or Outdated Templates

When in good condition, templates can ease cognitive load. A great template can make an in-house lawyer welcome drafting a deal from his or her own paper.  It’s possible to make it easy and quick to find the fields that require input. With a bit of work and some time to focus on the templates, it’s possible to trust your terms and give your teams the parameters that make it easier for you to work from templates rather than from scratch.

If any of this isn’t ringing true, you need to improve your templates.

Our recommendation:

  • Reformat the templates you use most; front-load the business terms on page 1 (charts are great for this); 
  • Match your intake forms to the new format. Suddenly, your business teams will be giving you a first draft, and deal writing is greatly streamlined;
  • Ensure confidence in your standard terms. Invest in your standard terms. Consider reviewing them with your external counsel or getting another set of trusted eyes to review them. Have sales, finance and product review them to make sure they reflect how your business works;
  • Tackle common sticking points.  If you’re always arguing about a point, think about whether you need to be. Sometimes, you can address contentious issues in your template terms with a “pre-negotiated” solution that gets you what you need. Speeding up negotiations will save the legal team time and your business teams will love you for it; and
  • Focus on strategic thinking. If you do all this, drafting will become more about strategic thinking (where your value truly lies) than fretting over spelling, formatting, version control, and the like.

Each Inter Alia lawyer has worked both in-house and in private practice. We love solving problems for our clients, and this blog gives some insight into how we do this practically and efficiently. If these tips speak to you, or you think we could help you, please contact darlene@interalia-law.com.

Tip #2: Minimize Impractical Outside Advice

In-house legal teams use outside counsel to make their jobs easier, not harder. That said, we all have (somehow) received an email or memo from outside counsel that reads more like a treatise than a solution.

This can be a huge drain of time and money.

Our recommendation:

  • Find outside counsel that fit your style;
  • Give outside counsel facts to assume – shortcut their work, and stop them from going on a tangent about unrelated stuff;
  • Clearly communicate your ask (e.g. I want an answer by phone call, or a point form email); and
  • Give feedback when you get an unhelpful answer

Each Inter Alia lawyer has worked both in-house and in private practice. We love solving problems for our clients, and this blog gives some insight into how we do this practically and efficiently. If these tips speak to you, or you think we could help you, please contact darlene@interalia-law.com.

Tip #3: Stand Down Sheriff

It can feel like the wild west when companies have a high turnover, fast pace, or general lack of process. For start-ups and scale-ups, this is common. In these situations, legal teams may be asked to act as the ‘Sheriff’. 

This puts in-house counsel in the position of checking other people’s work and ensuring all cross-department approvals have been received before contracts can be drafted. In higher risk cases, legal should certainly be double-checking; but generally, it’s not a great use of in-house lawyers’ time, because these matters are easily delegated to business teams. This is particularly true on deals that are low-risk overall. 

Our recommendation:

  • Work with senior leaders to ensure all teams are aligned on approval processes (best practice is for each department to pre-approve a ‘menu’ of terms, so that approvals are only necessary when picking off-menu);
  • Specify that no terms should be sent to legal unless approved through the process (this lets you ‘deem’ approval has occurred);
  • Create workflow or use workflow software to ensure that requests and documents are properly shepherded through the approval process.  This also provides a trail of who provided the approval and when; and.
  • Continue to double check approvals for higher-risk items only.

Each Inter Alia lawyer has worked both in-house and in private practice. We love solving problems for our clients, and this blog gives some insight into how we do this practically and efficiently. If these tips speak to you, or you think we could help you, please contact darlene@interalia-law.com.

Tip #4: Find a Home for Misfit Issues

In-house lawyers are sent “misfit issues” that don’t have a natural ‘home.’  Often, these problems are complicated and related to new business activities that the company hasn’t fully thought through yet.

While it’s tempting to take on these issues to show your value as a team player, they can be huge time drains.

Our recommendation:

  • Make an assessment of whether the issue is a good issue for the legal team to address, or whether it requires more work from the business team first;
  •  Recommend the department that should lead (with reasons); and
  • Provide helpful business or legal advice for that department to consider and explain the things that need to happen before legal can add value.

Each Inter Alia lawyer has worked both in-house and in private practice. We love solving problems for our clients, and this blog gives some insight into how we do this practically and efficiently. If these tips speak to you, or you think we could help you, please contact darlene@interalia-law.com.

Tip #5: Turn Down the Volume on The Loudest Voice

The person most comfortable seeking ASAP drafts and sending daily (if not hourly) follow-ups may wind up setting priorities for an in-house legal team.

We call that person the “loudest voice”.

Often, the loudest voice isn’t running the most important deals.  It’s tempting to complete work for them just to silence the noise.

But this can pull you away from true priorities and cause legal to waste time.

Our recommendation:

 

  • Set clear legal team priorities (e.g. the higher the revenue, the higher the priority) or have senior leadership prioritize deals for you;
  • Set clear legal team timelines (e.g. 7 days for a draft from template, 14 days for a draft from scratch);
  • Get buy-in from senior leadership; and
  • Refer the loudest voice to the priorities and timelines set with buy-in to keep things objective and not personal. If that doesn’t work, referring the loudest voice directly to senior leadership helps put the resource allocation decision in the right hands.

Each Inter Alia lawyer has worked both in-house and in private practice. We love solving problems for our clients, and this blog gives some insight into how we do this practically and efficiently. If these tips speak to you, or you think we could help you, please contact darlene@interalia-law.com.

2019 Best Law Podcast Award.

2018 Best Business of Law Blog Award.
Thank you Canadian Law Blog Awards

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