Three Reasons Why Not To Sign Non Disclosure Agreements

John Reeve | November 10th, 2009 | ,

In the nine-plus years that Pelago has been designing and developing web sites and web-based applications, we’ve been asked more than once to sign a Non Disclosure Agreement (NDA) before putting together an estimate. Whether they are trying to protect a business process or an idea, the client usually has a genuine concern for keeping information private. Given the client’s good intentions, why don’t we sign NDAs? We have a few good reasons…

The client’s idea is rarely unique

There is a big difference between having a unique idea and being first to market. The prospective clients we’ve met with in the past have always fallen into the latter category. For example we’ve heard several pitches that involve launching a social network for people who are in to “fill-in-the-blank.” Creating a social network is not a unique idea, nor is building one for a given subculture. First to market may gain a startup some points with their target market, but in the long run it’s going to be the quality and marketing of the social network that maks a successful startup. Using an NDA for web developers are not going to stop competitors from besting one another.

It takes a lot of effort to copy an idea

The second most concern we’ve heard from prospective clients is that someone is going to copy their idea if it is leaked. Aside from the first point I made above, it takes a lot of work to start a company. It takes a lot more than just an idea. Most startups invest an inconceivable amount of time, money and resources in turning an idea into a working web site or web-based application. If devoted to an idea, a startup is going to be light years ahead of anyone trying to copy them. They’ll have developed business processes and intellectual property which are difficult to duplicate. As a web design and development agency, we have our own clients and products to focus on. We hardly have the time to copy an idea, much less share it with others.

What if we’ve already seen your idea?

We have developed over 300 web sites and web-based applications for over 100 clients. We’ve seen a lot of ideas. In fact, we’ve even seem the exact same idea, several times, from two different prospective clients, and only a few months apart. Had we signed a Non Disclosure Agreement for web development with one, we could have potentially been in hot water with the other. And simply because we listened to their idea? No, thanks. In fact, web designers and developers stand to benefit by NOT signing NDAs. Without shackles on our creative processes we can specialize in a given industry. We can become specialists not only in web design and development, but within a target market where we can share our expertise with our clients.

Often times a client will still decide to work with you without a Non Disclosure Agreement for website development in place. Just be sure to hold your ground. It may not seem like a big deal at the time, but the NDA could get you in trouble down the road. What happens if a past client decides another client infringed on their intellectual property rights and your web design and development agency is the only common denominator between the two? If the client refuses to work with you without an NDA in place, walk away. It’s the best advice we can give.

11 Responses to “Three Reasons Why Not To Sign Non Disclosure Agreements”

  1. Amber Weinberg says:

    Good points and I hate signing them as well. I’m I’m business for myself so I don’t like people telling me who I can or can’t work with. I will, however sign one for an agency if it’s only about not taking their clients or using the work you do for theme on your portfolio. Sometimes you just have to pick your battles.

  2. pfft says:

    good luck not signing an NDA and getting that client.

  3. John Reeve says:

    Sure, some clients have not signed, but most of them have. It’s more important that you earn their trust. Once you’ve done that, the NDA becomes unnecessary. In nine years we haven’t signed one NDA and we’ve done just fine ;)

  4. Vivzizi says:


    Most NDA’s in ANY business are rediculous now and a huge potential litigation bomb later.

    Basically an NDA is something that puts you on their short list for future possible litigation.

    I had run in with people who wanted me to sign NDA’s before designing their website and I countered them this way.
    “Don’t tell me your unique idea. Just tell me what the website needs to do.”
    I don’t need to know you want to make a social network for people who refuse to sign NDA’s. I just need to know that you want the user to be able to communicate with others in a certain way. I don’t care who they are or what group they are in. I am NOT going to be advising you on that group or how to market “your” business idea or how to improve it so I don’t need to know the niche AT ALL.

    I other businesses I don’t sign NDA’s either. NOt for job interviews either ( although sometimes I give THEM a piece of paper that says if they use any info I GIVE THEM during an interview they must compensate me.

    One of the keys to having an enjoyable life is avoiding lawsuits.

    One way to avoid lawsuits is not EVER sign something that says you will owe someone else money or damages if you disclose what THEY should be keeping secret.

    Keep the secret part of your idea secret. I don’t want to know it. Just tell me the non secret stuff.

    If I have to know the secret stuff to work on your idea then I am in fact INVENTING what you claim is YOUR secret idea and I won’t do THAT for standard pay.

    Incidentally often if you do sign an NDA the first thing you will learn is the idea is something you have already heard of and the second thing is they will want you to improve their secret idea.

  5. Ryan Waggoner says:

    The first two are not reasons not to sign an NDA…they’re reasons why an NDA is stupid. But you’re not putting yourself in jeopardy by signing under those reasons.

    The third one is a more legitimate concern, but you have two options:

    1. If the idea is already public, just point them to it as soon as they tell you what it is. “Hmm…an online classified site. That’s an interesting idea; have you heard of Craigslist?”

    2. If the idea is not public and you’re under NDA for it from another client, just tell them immediately that you have a conflict and can’t take the conversation any further. This is the right thing to do anyway, regardless of NDA status.

    I’m not advocating that you sign everything blindly, but NDAs are almost completely worthless most of the time anyway, as any competent attorney could find plenty of examples of public ideas (see your point #1).

  6. Robin says:

    A good NDA will have an exceptions clause that lists the situations in which the NDA would be void. These typically include: the confidential information was already public at the time it was disclosed; the confidential information was already or subsequently disclosed to you by someone NOT under NDA restrictions; you yourself had already developed the same confidential information at the time it was disclosed; you were forced to disclose it by force of law, etc.

    If you are working with a business that feels the information it needs to share with you is a trade secret, it is both arrogant and unprofessional for you to second guess that customer. Especially if they are a startup, that trade secret may be literally the only value that company has. I would never work with a supplier who refused to sign my NDA.

  7. Laura says:

    To Vivzizi, in order to do a good design for someone, you don’t think you need to know who you are designing for? That seems a little silly to me. A social network designed for attorneys should be drastically different in design than one created for BMX riders. It is important to know that information to provide your client with the best design.
    I don’t want to sign a bunch of NDAs either, nor have I, even for clients who think they’ve come up with the next big thing.

  8. John says:

    I usually just go by one rule. “1 reason to sign an NDA” …I will only a sign an NDA if their current idea or concept is already patented and copyrighted (or Trademarked in the event of an image). This way, it would make sharing or copying the idea or concept kind of useless to begin with.

  9. Gary says:

    But John, your argument completely eliminates the possibilities, and does not acknowledge the inventor’s POV. What if someone does have a totally unique and consumer-desirable invention? An inventor has no way of knowing if you DO think it’s worth copying. I’m not clear about the hot water you speak of re: you signing an NDA. You offer no protection to the inventor.

  10. John Reeve says:

    Gary, in this article I am speaking from experience with web design and development. I do not have any experience with consumer targeted inventions. It could very well be different for inventors.

  11. Gary says:

    Thanks for the clarification, John!

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John Reeve
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John Reeve

John is a co-founder, web designer and developer at Pelago. His blog posts are inspired by everyday encounters with designers, developers, creatives and small businesses in general. John is an avid reader and road cyclist.
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Jennifer Payne
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Jennifer is the Director of Quality and Efficiency at Pelago. Her blog posts are based largely on her experience working with teams to improve harmony and productivity. Jennifer is a cat person.
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Michael Payne
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Michael is a co-founder and product architect at Pelago. His contributions stem from experiences managing the development process behind web sites and web-based applications such as Intervals. Michael drives a 1990 Volkswagen Carat with a rebuilt 2.4 liter engine from GoWesty.
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