Prior to the start of consulting work, your client will usually request that you sign a letter of confidentiality or a non-disclosure agreement. This is a document that an organization uses to state that employees or parties who are doing business with the company are required to keep private information confidential. A confidentiality agreement is typically customized for the individual and may include the name and address of both parties, their signatures and the date. The consultant should treat this as a legal agreement.
Why do businesses request a confidentiality agreement?
Business owners and their representatives need to know that a consultant has their best interests at heart. They want to know the consultant will never reveal business secrets gleaned through observations and conversations or by seeing documents and data. In fact, businesses are usually advised to request letters of confidentiality even when a consulting contract covers just a short time span. It’s considered good practice and good protection.
What types of information might be revealed?
If you’re new to consulting, you’ll find that organizations may need to reveal their inner most secrets to a consultant in order to get the job done. This could include financial information, trade secrets and internal personnel issues. In fact, managers may reveal more than is necessary to a consultant, enjoying a sympathetic ear from someone who is outside of the company’s politics.
Do businesses trust consultants?
There’s no one answer to whether businesses trust a consultant, but some do have the misconception or fear that consultants can’t be trusted and are likely to reveal company secrets. Because most consultants are trying to retain their clients and to get referrals, it is unlikely they will reveal confidential information. They may, however, inadvertently mention something to someone else in the course of a conversation. Businesses believe that signing a letter of confidentiality will help the consultant remember to be tight-lipped.
What about conflicts of interest?
During the interview stage, some businesses may ask if you will continue to work for their competitors. This is a tricky question and you should think long and hard about the best answer. You may find that it’s appropriate to tell your potential client that although you work for competitors, their business needs are unique and that you tend to individualize the advice and work that you perform for each company. Therefore, it really isn’t a conflict of interest.
On the other hand, if the contract is long and lucrative, or if the client is very important to your business, you may decide to agree that you won’t work for competitors. Whichever approach you take, stick to your word so that you can build a trusting relationship.
Should you sign a confidentiality agreement?
You may find that signing a confidentiality agreement is a condition of doing business with a particular organization. If you have hesitations, however, you may want to bring the letter to a lawyer to ensure your interests are also protected. By doing this, you can make sure the confidentiality letter is a fair and legal agreement for all concerned.