By: Sharon Toerek, Principal, Toerek Law and Author, the Agency Protection System
One of the areas where agencies are the most vulnerable, and about which I get the most questions from my agency clients, is during the new business process.
Agencies want to strike the right balance between demonstrating their talent and ideas to a prospective client, while protecting the agency from having its work or ideas taken without the agency giving its permission or receiving compensation. So it’s critically important for agencies to be protected when communicating with prospective clients.
There are a number of things your agency can do to proactively secure your intellectual property during the new business process – including steps like using copyright notices or inserting rights ownership clauses in your proposal documents. But the best and first place to start in securing protection for your agency is by using a Mutual Non-Disclosure Agreement.
What does the Mutual Non-Disclosure Agreement do, and when should an agency use one?
The agency should use the Mutual Non-Disclosure Agreement when communicating with a prospective client to share your recommendations, strategies, proprietary processes, sample creative concepts, or speculative work. The agreement should not only contain confidentiality language that protects both your agency and your prospective client from the disclosure of proprietary information, but it should also specifically identify the concepts and information the agency presents during the “pitch” or new business process as the agency’s intellectual property.
The Mutual Non-Disclosure Agreement contains a promise from your agency to keep your prospective client’s information confidential. It also contains a promise from your prospective client to keep your agency’s information (including concepts, proposals, recommendations, and ideation) confidential.
Additionally – and this is the language that many nondisclosure agreements miss – it should also contain an acknowledgement from the client that the creative ideas and strategies your agency identifies during the new business evaluation are the property of the agency until the parties agree otherwise.
The agreement should contain a mutual promise of the parties to return confidential information to the other. In some cases, it’s also important and appropriate to include language that designates the parties interactions (for example, the fact that the parties are talking about doing business together) confidential.
Finally, the Mutual Non-Disclosure Agreement should make it clear that both Client and Agency can independently pursue opportunities with their own proprietary information.
Sounds Great! But what if the Client won’t sign the agency’s Mutual Non-Disclosure Agreement?
Most prospective clients are accustomed to entering into nondisclosure agreements when they are evaluating a potential partner, like your agency. It does happen, occasionally, though, that the client will not sign an agreement like this – either as a matter of corporate policy, or because they are evaluating many potential partners at once. If this happens, first make sure there’s a solid explanation and a good reason to move forward with this prospect before investing time and energy in pursuing them. And then, look to some of the other strategies the agency might employ to protect its intellectual property without a Mutual Non-Disclosure Agreement.
However, it’s far more likely that a prospective client will be willing to sign a nondisclosure agreement; they just don’t want to sign YOUR agency’s version of the agreement. What then?
If the prospective client presents its own proposed non-disclosure agreement, use your agency’s Mutual Non-Disclosure Agreement as a guide to review whether the client’s form contains all the necessary provisions your agency needs for protection, or where you might need to negotiate changes. Compare the two documents to make sure your agency has necessary protections, and to identify any areas where the parties might have a “disconnect” on ownership of your agency’s intellectual property.
If the client’s expectation is that you will sign its form agreement, and that agreement doesn’t adequately protect your agency, propose using your form – pointing out that the promises in it are mutual between the parties – or incorporate terms from your form into the prospective client’s document.
Your agency may never have more leverage to protect its intellectual property than it does during the new business phase of the relationship. Take advantage of this opportunity and take steps to make sure you don’t inadvertently leave the agency unprotected.
What’s the easiest way to make sure the Agency doesn’t miss something here? By being proactive and having a toolkit of ready legal agreements, templates and checklists prepared and available for communication between your agency and prospective clients, as well as the many other routine legal matters the Agency will face regularly. This makes the process as frictionless as possible, saving the agency time and money, and stress. Having the right legal tools available also puts your agency in a stronger position to evaluate contracts, like nondisclosure agreements, that are presented to it by other parties for review.
I hope you found this information helpful! To make the agency new business legal process as efficient as possible, I included an easy-to-use template for a Mutual Non-Disclosure Agreement (and other documents the Agency will need to manage its client relationships and business affairs) inside my Legal + Creative Agency Protection System. You can learn more about the system here.
And while you’re there, you can also download a number of free checklists and tools that your agency can use right away.