Why starting off with an NDA is a waste of time and effort.

Just about every freelance client engagement I have, starts of with the client asking me to sign a non-disclosure agreement, or NDA, often without them really understanding what they are asking. It often leads to a lot of time wasted, as I have to explain why the NDA is not worded properly, does nothing to protect me, them or their intellectual property.

An NDA is a legal and binding document that can create tremendous amounts of problems and challenges for freelancers. I have learned to not sign an NDA until such time that I’m contracted to work on the project. Even then, I insist on my attorney reviewing the NDA, at the client’s cost, to ensure it’s a fair and appropriate NDA. That way, I protect my ability to work and earn an income.

In this article, I’ll talk about:

What an NDA is

When you need an NDA

When do you not need an NDA

Ideas are not what you must protect

How to make sure your NDA is effective and fair

What is an NDA?

Lets take a moment to think about the purpose of an NDA. The whole purpose of the document is to protect your intellectual property and trade secrets from being copied or stolen. That’s a very noble pursuit and I strongly encourage you to sign an NDA at the appropriate time.

When you need an NDA

That brings us to the big question : When is the right time to insist on an NDA? Definitely when you are going to share trade secrets and intellectual property with whoever is going to work on your product. It’s critical that the NDA is properly worded and the scope well-defined. For example, it’s not realistic to expect a developer to sign an NDA stating that he or she can never work on a product similar in any way, shape or form to your product.

How so? Well, let us say, for instance, that you are building a point of sale application for mobile shoe repairers. That can be classified as a financial services application, meaning that the developer can never ever work on any other financial services application, like a mobile banking solution, without technically being in breach of the NDA. Seems rather silly, doesn’t it? Yet, this is what is often expected, as the NDA is not tailored to suit the rights it is supposed to protect.

When do you not need an NDA?

It is almost never required to start of an engagement with an NDA. In fact, the few times that I have signed a properly worded and fair NDA, it turned out to be completely useless. You really should rather focus your energy on making sure your product and idea explanations contain no trade secrets, but are still coherent enough that a developer can get a good understanding of what you require.

Doing that ensures that you get accurate time and cost estimates, without giving away the secret that’s going to make your venture stand out from the rest. Your purpose during an initial engagement is to determine whether you and the developer will be able to work together and, until that is determined, there’s no point in sharing sensitive information with them.

Ideas are not what you must protect

Instead of protecting your idea, you need to protect the execution of that idea. Have you ever watched Dragon’s Den or Shark Tank or some other show where contestants try to land an investor for their business? Have you noticed just how much information about their business and idea they share, on television, with a wide audience, freely? What NDA did the audience members sign to protect those ideas? That is correct, none! In fact, the ideas are shared freely, because that is not where the business value is to be found.

You should protect your business secrets, the things that distinguish your venture from others like it. If you have a ride hailing service, there’s nothing secret about that and it’s not a unique idea. The formula that you use to determine prices is, however, something that you can and should protect with an NDA.

How to make sure your NDA is effective and fair

So how do you make sure that your NDA is correct and fair? That’s a tough one to answer, except perhaps to state that you will definitely need to get legal advice. What you want to do is protect your rights, but also those of the developer. Failing to do so, will most likely mean the developer won’t sign the NDA and will not work on the project, wasting a lot of time and effort for both parties.