oneNDA is a new initiative that “set out on a mission to standardise the NDA so that lawyers can spend less time on them and more time on more valuable work.” For more about oneNDA, go here.
This week they released their “simple, plain English, open-source NDA,” also called, somewhat confusingly, oneNDA. My verdict is that it’s mediocre and doesn’t live up to the hype.
NDAs and Me
Because nondisclosure agreements (NDAs) are a nuisance, and because pretty much all companies have to deal with them, it seems that anyone interested in turning contract drafting into more of a commodity process starts with NDAs.
That was the case with me. About ten years ago, with the help of Business Integrity, the developer of the document-automation software Contract Express (now owned by Thomson Reuters), I built a highly customizable automated NDA. It was a thing of beauty. (For years, Thomson Reuters featured a screenshot of it on the home page for Contract Express.) But from a business and marketing perspective, it was a failure.
My automated NDA served its purposes as a proof-of-principle, and I’m confident it will rise again in some other form. But meanwhile, oneNDA caught my eye because the people behind it, Electra Japonas and Roisin Noonan, had obviously managed to attract significant attention—no mean feat.
So I emailed them in April to ask if they were interested in chatting. Soon after I met with Roisin on Zoom. The conversation turned a little tetchy when Roisin explained that oneNDA was a crowdsourcing play. I’ve long thought it obvious that crowdsourcing contract content is a terrible idea (see for example this 2014 blog post), and I was surprised to have it rear its head again. We quickly wrapped up our meeting and that was that.
Shortcomings in oneNDA’s Document
Now they’ve made available the fruit of their efforts. In the half hour I spent reading it, I spotted about 30 things I would have done differently. Some involve mistakes, others involve uncertain judgment. Some involve what’s said, others involved how it’s said. Some are trivial, others matter. I’m not going to list all my points—it wouldn’t make for scintillating reading, and I’m not inclined to do oneNDA’s work for them. Instead, I’ll mention just three examples I found interesting.
First, the one-page preamble touting the benefits of oneNDA says, “No more battle of the forms.” The term “battle of the forms” refers to a buyer and seller of goods exchanging preprinted order forms with their own different terms on the back and then proceeding with the deal without signing a final contract or reaching agreement on the terms. “Battle of the forms” has nothing to do with NDAs, so it’s odd that oneNDA refers to it. If instead they mean that oneNDA will result in less time wasted in dickering, they should have said so.
Second, here’s the first exception to the definition of the defined term “Confidential Information”: “in the public domain not by breach of this Agreement”. As I explain in this 2018 blog post, use of the phrase public domain in this context is a mistake. I’ve long used it as a sign that the people responsible for an NDA don’t know what they’re doing. [Updated 16 Nov. 2021: For my revised take on this issue, see this blog post.]
And third, here’s section 2(a) (emphasis added): “The Receiver may share the Confidential Information with its Permitted Receivers … but only if they: (i) need to know it, and only use it, for the Purpose, and (ii) have agreed to keep it confidential and restrict its use to the same extent that the Receiver has.” So you’re allowed to disclose only if you’re somehow able to see into the future and know that the further recipient will only use it for the permitted purpose? That makes no sense.
These three glitches don’t represent intractable problems—they could be easily fixed. But they suggest a general cluelessness. The cumulative effect of these three points and the others I spotted is that oneNDA’s contract incorporates a decent helping of the systemic dysfunction of traditional contract drafting. It’s hardly ideal as a foundation for an initiative that proposes to change how we use NDAs.
Explaining the Shortcomings
What explains the dysfunction? After all, according to the preamble, “The terms of oneNDA have been discussed extensively between some of the brightest legal minds in the industry.” That reeks of hubris. oneNDA might have on their steering committee people from well-known companies and law firms, but that’s no guarantee of contract-drafting quality.
Traditional contract drafting consists of copy-and-pasting, on faith, from precedent contracts of questionable quality and relevance. And that’s aggravated by entrenched legalistic hairsplitting. So it’s simple for me to demonstrate the pervasive shortcomings in contracts prepared by all sorts of august organizations. (For example, see this recent blog post for links to my analyses of the Salesforce master subscription agreement, and see this 2016 blog post for my dissection of a specimen of “Magic Circle” drafting.) That’s likely the background that oneNDA’s “brightest minds” brought to the task of creating a standard NDA.
However bright those people might be, there’s nothing to suggest they’re contract-drafting specialists, and that’s who you need to optimally express a transaction in a contract. (For more about contract-drafting specialists, see this 2017 blog post.)
And more to the point, I don’t need to concern myself with who prepared oneNDA’s document, as I’m equipped to evaluate their work. (For more about me, go here.) That’s what I’ve done, and I’ve found it wanting.
The Broader Context
oneNDA’s document presents other issues. For one thing, it’s aggressively short. That involves trade-offs, and I’m not confident they’ve made the right call (although I acknowledge that I myself could be more vigorous about cutting fat). Furthermore, they offer only the most rudimentary customization. I’m inclined to offer more customization, and I don’t think that vitiates the idea of a standard. But those topics are beyond the scope of this post.
In one respect, the shortcomings in oneNDA’s document are benign, as it’s more sensible than the wretched NDAs plenty of companies find themselves signing. The bar is low for standard NDAs—standardized mediocrity is better than an endless procession of different—and generally crappy—NDAs.
So if you find that oneNDA saves you time, great. But I’m not heralding it as the new standard in NDAs. I’d like to think that something better will come along. Ideally, something more ambitious too, because the real prize is bringing standards to contracts that people actually care about. When it comes to contract drafting initiatives, NDAs can take their place in line with other kinds of contracts.
It is not plain English either.
Hi there Cheryl. No, I don’t expect it is.
Hi Ken, I think you are doing important and much needed work by independently analysing an industry standard document that is intended to be legally binding. In my view, the oneNDA is likely here to stay, since it has a lot of industry backing. However, if the oneNDA is materially deficient as an industry standard, perhaps you could publish the “oneNDA rebuttal”. This would be a standard response document, to be used by any party that receives the oneNDA for signature, but who does not think the oneNDA is up to scratch. If the “oneNDA rebuttal” gained traction as an industry standard, it would force the oneNDA to be revised to address the deficiencies in the current version; and then everyone wins. I know you said you would not publish your list of points, but I would argue that this is exactly what is needed to provide balance and improvement to the quality of NDAs being used, and it would be essential to address this early on. What do you think?
Hi Dana. I’m glad you think my comments have some value. But my points regarding the drafting of oneNDA aren’t the sort of thing that those proposing to enter into an NDA would want to get into: you want it to be a frictionless process. So it’s up to oneNDA to do whatever they see fit. Ken
Hi Ken, thanks for your feedback. I have yet to see anyone else critique the oneNDA objectively. So I think your comments have tremendous value. In my post above, the situations I was thinking of are where company A already has a standard NDA but the counterparty wants to use the oneNDA. If Company A can send back the official “oneNDA rebuttal”, it would act as a ready-made proof that the document is not up to scratch.
Ken – I’ve long admired your work, including your efforts to chip at the foundations of legal waste by finding one simple agreement (an NDA) on which we all should be able to agree. Alas, even that seems a fraught effort. I think it might be because standardizing around an NDA or another generally applicable transaction is always open to the argument that “I’m different,” and that opens the seal to wasteful negotiation.
A recent funding raise by Pacasso (helping people jointly buy vacation homes) made me think that there might be a wider chink in the law establishment armor – prescribing “best practices” in a specific area. Just as SAP convinced everyone (rightly or wrongly) that they knew the best way to organize ERP functions, perhaps a lawyer could create an “opt-in” standard version of one specific, opinionated, transaction document licensed for free reuse. Since I’m in tech transactions, it seems that a large portion of the SaaS service terms could be standardized like that. The real challenge would be proving that it is indeed the best way to do it. Perhaps that could be achieved through a consortium of just a few leaders — a much easier task than convincing everyone that one approach is good enough.
Has that been tried?
Hi Alan. There’s no easy answer, but I see room for progress. If I find myself back in this arena, I’ll speak up then!
Feeling dismayed you haven’t dunked on waypointnda.com yet!
Nah, then I really would have people hatin on me!
Not sure what you mean. Waypoint’s terms are closer to the norm, so harsh comments would ruffle more feathers?
Just being facetious. I only critique initiatives that have a high profile and exhibit a combination of hubris and incompetence. I’m afraid Waypoint didn’t make the cut.
Lavishing attention exclusively upon the unworthy may not promote the change you wish to see in the field!
We haven’t courted eyeballs on LinkedIn or Twitter. We’d rather have eyeballs like yours. And not mostly for praise: we set out to make Waypoint unremarkable. Working together, we did feel compelled to slip a few worthy improvements in.
You make a good point. But mostly out of fatigue, the only template initiative I want to talk about is the one I’m involved in, if that ever happens.
I read the news that OneNDA has now amassed 1,000 users, which is unquestionably a fantastic accomplishment. But, it was disappointing to see that the founder is still salty with you for daring to provide a counterargument and publicly called you out once more (even if not by name). You were apparently right when you said that oneNDA reeked of hubris!
Hi Edgar. Yes, evidently they still feel miffed. Regarding the thousand users, my post is clear that my critiques have nothing to do with how popular oneNDA is or might be.
Incidentally, I leave it to others to determine what’s required for an entity to be considered an adopter and to remain an adopter. Also, what proportion of the universe of potential adopters do the actual adopters represent, and what proportion constitutes success?