Recently I’ve been asked to review several confidentiality agreements. Design professionals frequently receive confidential information necessary to perform their services. Sometimes, information of this nature may constitute a “trade secret.” In most states, the common law protects clients from the disclosure of designated “trade secrets,” “confidential information,” or “proprietary information.” In addition, clients will often require that an express confidentiality provision be included in the professional services contract or, alternatively, will request that the design professional sign a separate confidentiality agreement. Clients have many reasons for this desired confidentiality. Disclosure of the information could adversely affect the proposed acquisition or sale of property, place the client at a competitive disadvantage to its competitors, or subject the client to various statutory or common law liabilities for site cleanup or personal injury.

 

Design professionals, however, may be required by law or professional responsibility rules to disclose certain information to regulatory authorities. For example, while performing services, the design professional may learn that a soil sample indicates that a site contains hazardous waste. A licensed professional’s public health and safety obligation generally requires that this information be disclosed to protect innocent third parties from potential injury or to comply with federal and state statutory and regulatory reporting requirements.

 

Accordingly, confidentiality provisions in contracts should include exceptions for disclosure required by legal or ethical obligations. Here is an example of a provision that recognizes the client’s rights to confidentiality while acknowledging the design professional’s disclosure responsibilities:

 

Sample Provision:  Consultant shall maintain the confidentiality of the Project information including but not limited to the nature of the Project, the location of any sites under consideration or selected sites, together with any other information supplied to Consultant by Client and designated by Client to be confidential or proprietary, except (1) when such confidential information becomes generally known to the public through no fault of Consultant or (2) when disclosure is required pursuant to applicable governmental regulations or with an order of a court of competent jurisdiction.

 

If the client requests the execution of a separate confidentiality agreement, the above referenced exceptions for disclosure should be included. In addition, the design professional should take care to be sure that the separate confidentiality contract is coordinated with the terms of the professional services contract and does not include conflicting terms. In particular, the design professional should be certain that the separate confidentiality agreement does not include express warranties or guaranties or alter the ownership and use-of-documents provision or choice-of-laws provision contained in the professional services contract.