The Consultant's Dilemma
Consultants face a unique challenge: they gain expertise by working across multiple clients, yet each client wants exclusive protection for their information. The key is structuring NDAs that protect genuinely confidential information without creating conflicts that would prevent you from serving other clients or using your accumulated expertise.
What Should Be Protected
A well-drafted consultant NDA should clearly identify what constitutes confidential information:
- Client-specific data: Financial projections, customer lists, pricing strategies, and operational metrics unique to the client
- Strategic plans: Unreleased product roadmaps, M&A targets, market entry strategies, and competitive positioning
- Proprietary processes: Manufacturing methods, algorithms, formulas, and trade secrets you observe during the engagement
- Personnel information: Compensation data, performance evaluations, and organizational restructuring plans
- Third-party information: Customer and supplier data that the client has confidentiality obligations to protect
What Should NOT Be Restricted
Equally important are proper carve-outs that preserve your consulting practice:
- General knowledge and skills: Expertise you bring to the engagement and lessons learned that don't reveal specific client information
- Industry knowledge: General industry trends, best practices, and benchmarking data (without attributing to specific clients)
- Your methodologies: Frameworks, templates, and approaches you've developed and use across engagements
- Publicly available information: Information that becomes public through no fault of yours
- Prior knowledge: Information you knew before the engagement or learned from other sources
Mutual vs. One-Way NDAs
As a consultant, you should generally push for mutual NDAs:
Client protection: Client's confidential business information, strategies, and data are protected from disclosure.
Consultant protection: Your methodologies, frameworks, pricing, client lists, and proprietary approaches are equally protected from the client sharing them with competitors or using them without permission.
Duration and Scope Considerations
Pay attention to these terms that can significantly impact your practice:
- Confidentiality period: Perpetual confidentiality is often excessive. 2-5 years is more reasonable for most consulting engagements, with shorter periods for rapidly-changing industries.
- Non-compete provisions: Be wary of NDAs that include hidden non-compete language preventing you from working with the client's competitors.
- Non-solicitation: Understand any restrictions on working with client employees or subcontractors you meet during the engagement.
- Residuals clause: Include language allowing you to use "residual knowledge" - general impressions, ideas, and know-how retained in unaided memory.
Subcontractors and Team Members
If you work with subcontractors or team members, the NDA needs to address:
- Your obligation to ensure subcontractors sign comparable NDAs
- Whether subcontractors must sign directly with the client
- Your liability for subcontractor breaches
- Approval process for bringing on additional team members