Saturday Morning Sales

Kevin Latchford

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Opinion: NDA's Should Seldom Be Signed - May 2, 2015

The NDA. The Non-Disclosure Agreement. A legal agreement that seems to be at its height of popularity. What does this have to do with sales you may be wondering? Everything. And, here is my opinion.

To put a few things about me into perspective so you’ll understand where my opinion comes from, let me first start by pointing out that my father was a corporate attorney specializing in contracts, and my roommate from college is managing partner of a very successful law firm. While I am not an attorney, I have a pretty good grasp on contract law. And, now that I’ve been in my own career for over twenty years, I can’t help but think “wow, when did sales become so enamored with legaleeze?”

Contracts are a way of life in business, especially in sales. A purchase order is a contract. There are service level agreements (SLA’s) which are contracts. There are employee contracts and non-competition agreements. Ok, Ok there are contracts. But, I’ve never seen anything quite so obnoxious as the constant use these days of the NDA. Certainly, they have their place too in business, but everyone seems to be carrying one with them everywhere they go, and no one wants to even have a general conversation without a signature. And, what make matters worse, they are blanket NDA’s with nothing specific being covered. In other words, they basically cover everything that “might” be said rather that what “will specifically” be said in a conversation.

Think about it for a moment. If, as a sales person, you are bound by a NDA for every (or even every other) conversation you might have with a prospective customer, then you will run out of topics to discuss rather quickly. In my opinion the NDA should not be a tool utilized for an initial conversation. So, how do you deal with the request (demand)?

First of all, you need to understand your own company policy with regards to the NDA. Does your legal counsel have a certain position the company takes on whether a NDA will or will not be executed. Second, you should have a standard response for the customer or prospect when asked. And, third and finally, do not waiver and sign one and not another. Your policies should be across the board.

The NDA has its place, but get through the initial conversation, and make sure you and your customer or prospect are interested in furthering the relationship. Have your attorney draft the NDA, not the customer or prospect, and make sure there is a place to be very, very specific on what is to be covered by the NDA. And, it must be limited in timeframe, none of this lifetime stuff, or even 2 years. The NDA should survive one year at most.

Hopefully you’ll not need to deal with the NDA, but if you do, I hope my opinion sheds a little light on this popular contract.

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