Educational Hypotheticals: These case studies are hypothetical scenarios created for educational purposes. They illustrate common NDA issues but do not represent actual clients, companies, or matters. Any resemblance to real situations is coincidental. These examples are not legal advice - consult an attorney for guidance on specific situations.
The Competitor Client Conflict
Management Consultant | Technology Sector
The Situation
A strategy consultant ("DataStrat Consulting") was engaged by TechCorp Alpha to develop a market entry strategy for a new AI product line. Six months after completing the engagement, DataStrat was approached by TechCorp Beta - Alpha's direct competitor - seeking help with their own AI strategy. Alpha's NDA included broad confidentiality provisions but no explicit non-compete.
The Problem
DataStrat's team had gained substantial knowledge during the Alpha engagement. While they wouldn't share Alpha's specific strategies with Beta, they worried that their general expertise about the AI market - gained through the Alpha work - might inadvertently benefit Beta. Alpha's NDA defined "Confidential Information" broadly as "all information disclosed during the engagement."
- Could DataStrat work for Beta at all?
- How could they prove they weren't using Alpha's confidential information?
- What if Beta's strategy happened to resemble Alpha's?
The Resolution
DataStrat's NDA with Alpha included a residuals clause that preserved their right to use "general ideas, concepts, know-how, and techniques retained in the unaided memories" of their personnel. This clause - which DataStrat had negotiated into the agreement at the outset - proved crucial.
DataStrat implemented information barriers: the Beta engagement team had no overlap with the Alpha team, and no Alpha materials were shared. They could provide strategic consulting to Beta using their general AI market expertise without accessing Alpha's specific confidential information.
Key Takeaway
Residuals clauses protect consultants' ability to use accumulated expertise across engagements. Without this clause, DataStrat might have faced claims from Alpha even though they maintained strict information barriers. Always negotiate for residuals language before signing a consulting NDA.
Negotiate Proactively
Request residuals clauses upfront, before issues arise. It's much harder to add protections after signing.
Document Information Barriers
When working with competitors, formal barriers and documentation protect against later accusations.
The Regulatory Disclosure Dilemma
Registered Investment Advisor | Wealth Management
The Situation
A wealth management firm ("Pinnacle Wealth Advisors") had signed comprehensive NDAs with their high-net-worth clients promising strict confidentiality of all financial information. During a routine SEC examination, regulators requested access to client files, account information, and communications for a sample of clients.
The Problem
Several clients' NDAs contained absolute confidentiality language without regulatory carve-outs. One particularly privacy-conscious client, upon learning of the SEC request, demanded that Pinnacle refuse to disclose their information, citing the NDA's promise of "complete confidentiality." The client threatened breach of contract claims if Pinnacle complied with the SEC.
- Could Pinnacle refuse the SEC's request based on client NDAs?
- Would disclosure to the SEC breach contractual confidentiality obligations?
- How should Pinnacle handle the client's demand?
The Resolution
Pinnacle's legal counsel advised that regulatory examination authority supersedes contractual confidentiality. Under the Investment Advisers Act and SEC rules, RIAs must maintain and provide access to books and records - this obligation exists regardless of client NDAs. The NDA couldn't contractually override statutory regulatory authority.
Pinnacle complied with the SEC examination while notifying the client that regulatory disclosure was legally required. The client eventually accepted this explanation, and Pinnacle updated all client NDAs to include explicit regulatory compliance carve-outs.
Key Takeaway
NDAs cannot override regulatory examination authority. Financial advisors should always include regulatory compliance carve-outs in client NDAs to set proper expectations upfront. This protects both the advisor and the client relationship by avoiding surprises.
Include Regulatory Carve-Outs
All financial services NDAs should explicitly acknowledge regulatory disclosure requirements.
Set Client Expectations
Explain regulatory requirements to clients during onboarding, before issues arise.
The Portfolio Permission Problem
Creative Agency | Brand Development
The Situation
A boutique branding agency ("Elevate Creative") completed an award-worthy rebrand for a consumer products company. The work had been publicly launched for six months. When Elevate submitted the work for a prestigious design award and featured it prominently on their website portfolio, the client's legal team sent a cease-and-desist letter citing confidentiality violations.
The Problem
Elevate had assumed that once work launched publicly, it could be featured in portfolios. However, their NDA with the client contained broad confidentiality language covering "all deliverables and work product" with no exception for publicly launched work or portfolio use. The client argued that strategic rationale, rejected concepts, and internal discussions shown on Elevate's portfolio site were confidential.
- Was the publicly-launched visual identity itself confidential?
- What about behind-the-scenes process images and strategy documents?
- Could Elevate keep the work in their portfolio?
The Resolution
After negotiation, the parties reached a compromise. Elevate could display the final launched creative assets (which were already public), but had to remove strategy documents, internal presentations, and rejected concepts from their portfolio. They withdrew their award submission, as it included confidential process documentation.
Elevate revised their standard NDA to include explicit portfolio carve-outs for publicly-launched work, with a separate process for approving case study content that included strategy or behind-the-scenes material.
Key Takeaway
Don't assume publicly launched work is automatically cleared for portfolio use. Creative agencies should negotiate explicit portfolio rights upfront, distinguishing between (1) final launched assets, (2) process documentation, and (3) detailed case studies. Get clear permissions before showcasing sensitive project details.
Negotiate Portfolio Rights Upfront
Include specific language allowing portfolio use of launched work in every client agreement.
Distinguish Content Types
Different rules may apply to final deliverables vs. strategy documents vs. process materials.
The Expert Witness Conflict
Expert Witness | Product Liability Litigation
The Situation
A mechanical engineering expert ("Dr. Chen") was retained by plaintiff's counsel in a product liability case involving a manufacturing defect. Two years after that case concluded, defense counsel in an unrelated case against the same manufacturer reached out to retain Dr. Chen. The original plaintiff's counsel, learning of this, claimed Dr. Chen was conflicted based on the NDA from the first engagement.
The Problem
Dr. Chen's first engagement NDA included broad language prohibiting work "adverse to" the retaining party. The plaintiff's counsel argued this prevented Dr. Chen from ever testifying against them, even in unrelated matters. The new engagement involved completely different products and issues, but was also a product liability case against the same manufacturer.
- Did the original NDA prohibit working for opposing counsel in a different case?
- What information from the first case, if any, was relevant to the second?
- Had Dr. Chen's opinions in the first case been disclosed, creating public positions?
The Resolution
After review, Dr. Chen determined that the new case involved different products, different alleged defects, and different time periods. The confidential information from the first case was not relevant to the new matter. The first case had concluded with testimony, making Dr. Chen's prior opinions a matter of public record rather than confidential.
Dr. Chen accepted the new engagement with full disclosure to new counsel about the prior matter. The prior counsel's objection ultimately failed because the NDA's "adverse" language was meant to cover the specific litigation, not create a permanent conflict.
Key Takeaway
Expert witnesses should carefully review NDA conflict provisions before accepting new engagements, especially involving parties from prior cases. Well-drafted expert NDAs should define the scope of conflict restrictions and acknowledge that completed matters with public testimony may not create ongoing conflicts for unrelated matters.
Define Conflict Scope
Expert witness NDAs should clarify what "adverse" means and how long conflict restrictions last.
Maintain Engagement Records
Keep clear records of what information was confidential to evaluate future conflicts accurately.
The Broker Transition Dispute
Insurance Broker | Commercial Lines
The Situation
An insurance brokerage firm ("Shield Insurance Partners") served a manufacturing client for eight years, placing their property, liability, and workers' compensation coverage. When the client signed a broker of record letter transferring the account to a competing brokerage, the successor broker requested loss runs, policy summaries, and claims history from Shield.
The Problem
Shield refused to provide the requested information, claiming their NDA with the client required confidentiality even after the relationship ended. The successor broker needed the information to accurately assess renewal options. The client was caught between two brokers, with renewal deadlines approaching.
- Could Shield refuse to share policy information after receiving a BOR letter?
- What information belonged to the client vs. to Shield?
- How could the client get their own insurance information?
The Resolution
The client's NDA with Shield had failed to address broker transitions. After direct intervention by the client's CEO and threat of regulatory complaint, Shield eventually provided loss runs (which could also be obtained directly from carriers) and basic policy summaries. They refused to share proprietary renewal strategy documents and internal risk assessments.
The transition was delayed and contentious. The client ultimately switched brokers but had to obtain much information directly from carriers rather than through a smooth handoff.
Key Takeaway
Insurance broker NDAs should include clear provisions for account transitions. Clients own their policy information and loss history - these should transfer with appropriate authorization. Brokers may protect their proprietary analysis and strategy documents, but cannot hold client data hostage during transitions.
Plan for Transitions
Include explicit BOR transition provisions in broker agreements specifying what information transfers.
Distinguish Ownership
Clearly separate client-owned data (loss runs, policies) from broker proprietary analysis.
The Perpetual Obligation Trap
Technology Consultant | SaaS Implementation
The Situation
A technology consultant ("CloudPath Solutions") completed a SaaS implementation project for a healthcare company five years ago. The consultant was now writing a book about cloud implementations in healthcare and wanted to include anonymized lessons learned from various projects, including this engagement.
The Problem
CloudPath's NDA with the healthcare client contained perpetual confidentiality obligations with no exceptions for anonymized information or aggregated learnings. The broad definition of confidential information arguably covered implementation approaches, challenges encountered, and solutions developed - exactly the type of lessons the consultant wanted to share.
- Could CloudPath write about the engagement even without naming the client?
- At what point does specific knowledge become general industry expertise?
- What if the client was identifiable through project details?
The Resolution
CloudPath faced a difficult choice. Without a residuals clause or anonymization carve-out, the NDA technically prohibited sharing even anonymized lessons. CloudPath decided to request permission from the former client. The client's legal team took three months to review the request and ultimately denied permission, concerned about competitive implications.
CloudPath had to omit that project entirely from their book, despite it being one of their most instructive engagements. They revised their standard NDA to include both residuals clauses and specific carve-outs for anonymized, aggregated information.
Key Takeaway
Perpetual confidentiality with broad definitions can haunt consultants for years. Always negotiate reasonable time limits (except for true trade secrets) and explicit carve-outs for anonymized information. Your accumulated expertise and lessons learned are valuable - don't sign them away indefinitely.
Limit Duration Reasonably
Perpetual obligations for general business information are excessive. 3-5 year terms are standard.
Include Anonymization Rights
Carve out rights to use aggregated, anonymized information that doesn't identify specific clients.
Apply These Lessons to Your NDAs
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