💡 Plain English Explanation

For professional services firms such as law firms, accounting practices, consulting agencies, and advisory businesses, client information represents one of the most sensitive categories of confidential data. This clause specifically addresses the protection of client identities, the nature of engagements, and the terms under which services are provided.

Client confidentiality is often a regulatory and ethical obligation beyond mere contractual duty. Lawyers have attorney-client privilege, accountants have confidentiality rules under professional standards, and consultants frequently handle competitively sensitive information. This clause ensures that when one professional services firm shares client-related information with another party, that information receives appropriate protection.

This clause typically protects three categories:

⚠ Why This Clause Matters

For the Professional Services Firm: Your client relationships are your most valuable asset. Disclosure of client identities can lead to poaching, competitive disadvantage, or breach of professional obligations. Many clients require confidentiality as a condition of engagement, and any leak could trigger malpractice claims or regulatory sanctions.

For the Receiving Party: Understanding exactly what client information you must protect helps you implement appropriate safeguards and train your personnel. Overly broad provisions may be unworkable if you handle high volumes of information from multiple sources.

Regulatory Considerations: Professional services firms operate under ethical rules that may impose confidentiality obligations independent of any NDA. This clause should complement, not conflict with, those professional responsibilities. In some cases, even acknowledging a client relationship may violate professional rules.

📄 Clause Versions

Balanced Version: Provides reasonable protection for client information while acknowledging practical business realities. Includes appropriate carve-outs for publicly known relationships and information that becomes public through no fault of the receiving party. 
"Client Information" means any information relating to the Disclosing Party's clients, customers, or prospective clients, including without limitation:

(a) the identity of any client or prospective client, and the existence of any client relationship or potential engagement;
(b) the nature, scope, and subject matter of any client engagement, matter, project, or representation;
(c) engagement terms, including fee arrangements, billing rates, retainer structures, and other commercial terms;
(d) client contact information, key personnel, and organizational details;
(e) client communications, instructions, objectives, and strategic considerations; and
(f) any information provided by clients to the Disclosing Party in connection with any engagement.

The Receiving Party acknowledges that Client Information may be subject to professional confidentiality obligations, attorney-client privilege, or other legal protections beyond this Agreement, and agrees to treat all Client Information with the highest degree of confidentiality.

Client Information shall not include information that: (i) is publicly known through no breach of this Agreement; (ii) the Disclosing Party has expressly authorized for disclosure in writing; or (iii) is required to be disclosed by law, provided the Receiving Party gives prompt notice to allow the Disclosing Party to seek protective measures.
Disclosing Party Favor: Maximum protection for client information with broad definitions and strict obligations. Suitable for firms handling highly sensitive matters where even acknowledging a client relationship could cause harm. 
"Client Information" means all information of any kind whatsoever relating to, derived from, or concerning any client, former client, prospective client, or referral source of the Disclosing Party, including without limitation:

(a) the identity, existence, or contact information of any client or potential client, regardless of whether such relationship is publicly known;
(b) all information regarding the nature, scope, status, or outcome of any engagement, matter, transaction, dispute, or advisory relationship;
(c) all financial and commercial terms, including fees, billing rates, rate structures, alternative fee arrangements, success fees, retainers, payment terms, and revenue generated from any client relationship;
(d) all communications between the Disclosing Party and any client, including privileged communications, work product, and attorney-client communications;
(e) client strategies, objectives, business plans, competitive positions, and confidential business information shared with the Disclosing Party; and
(f) the fact that any engagement is being considered, is in progress, or has concluded.

The Receiving Party shall not directly or indirectly disclose, confirm, or deny any Client Information to any third party, including by implication or inference. The Receiving Party shall implement security measures at least as protective as those used to protect its own most sensitive information, and in no event less than industry-standard practices for professional services firms.

Any disclosure required by legal process shall be made only after exhausting all available objections and protective measures, and only to the minimum extent legally required. The Receiving Party shall immediately notify the Disclosing Party of any actual or suspected unauthorized access to Client Information.
Receiving Party Favor: Narrower definition with clearer boundaries on what constitutes protected client information. Includes practical exceptions for information legitimately obtained from other sources. 
"Client Information" means information specifically identified by the Disclosing Party as relating to its client relationships and designated as confidential, limited to:

(a) the specific identities of clients expressly disclosed under this Agreement, to the extent such identities are not publicly known or readily ascertainable;
(b) non-public details of specific engagement terms, including negotiated fee arrangements, that are expressly disclosed as confidential; and
(c) substantive client communications and work product specifically shared under this Agreement and marked as confidential.

Client Information shall not include:
(i) information that is publicly available or becomes publicly available through no fault of the Receiving Party;
(ii) information regarding clients whose identity or relationship with the Disclosing Party is publicly known, including through press releases, court filings, regulatory submissions, or published case studies;
(iii) general information about the types of clients served or practice areas, without specific client identification;
(iv) information independently known to the Receiving Party prior to disclosure;
(v) information received from third parties without restriction on disclosure; or
(vi) information that must be disclosed to comply with applicable law, regulation, or professional obligation.

The Receiving Party's confidentiality obligations under this section apply only to information expressly identified as Client Information at the time of disclosure. General references to client matters in casual conversation or meetings shall not create confidentiality obligations unless specifically designated.

💬 Key Considerations