Confidential Information

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As discussed by this week’s guest commentators, what information is confidential and how information is disclosed are key issues in litigation funding contracting that raises serious issues. The model contract offers a definition of Confidential Information with two alternate approaches to the confidentiality of the financing contract itself, suggests parties consider adding a definition of “Proprietary Information”, and imposes protections against disclosure. The proposed language is below, interspersed with comments in italics; a clean version of the language is in Defined Terms and The Contract at left.

These provisions are independent of the special definitions and terms relating to information and material protected from discovery by either attorney-client privilege or work-product doctrine. Those topics involve their own definitions and provisions, and will be discussed in future posts.

Confidential Information shall mean:

(i) the Common Interest Material;

(this definition is part of the provisions relating to discovery-protected material)

[(ii) discussions and negotiations related to this Agreement, including drafts of this Agreement;]

(note, the contract itself is not deemed confidential. We recognize this is a big departure from current practice, but is the correct approach in our view.)

[ALTERNATE:  (ii) this Agreement, including: (a) its existence and the existence of the financing it provides; (b) its terms; (c) the parties to it; and (d) any discussions and negotiations related to this Agreement, including drafts of this Agreement;]

(this approach is more typical of current practice, to our knowledge.)

(iii) to the extent not already covered as Common Interest Material, the Claim, including: (a) information of any type relevant to understanding the Claim; (b) the parties’, Litigation Counsel’s or Funder’s Representatives’ strategies, tactics, analyses or expectations regarding the Claim or Award; and (c) any professional work product relating to the Claim or the Award, whether prepared for Plaintiff, Litigation counsel, Funder or Funder’s Representatives.

(This language is intended to be extremely broad, as it is limited by exception thereafter.)

(iv) [Add customized provisions]

(We are including only information types common to all deals; the parties will need to customize the definition significantly to ensure protection for all the information needing protection. This is particularly important because the Funder is under no obligation, other than those created by the contract, to protect the large amount of Plaintiff’s sensitive information that it will have access to.)

Notwithstanding the foregoing, information is not Confidential Information that (a) was or becomes generally available to the public other than by breach of this Agreement; (b) was, as documented by the written records of the receiving party, known by the receiving party at the time of disclosure to it or was developed by the receiving party or its representatives without using Confidential Information or  information derived from it; (c) was disclosed to the receiving party in good faith by a third party who has an independent right to such information; or (d) is required to be disclosed by law.

4.2 Non-Disclosure Generally: During the term of this Agreement and for [X] years following its termination, the recipient of Confidential Information shall not disclose, use, or make available, directly or indirectly, any Confidential Information to anyone, except as needed to perform its obligations under this Agreement or as the disclosing party otherwise authorizes in writing. When disclosing, using, or making Confidential Information available in connection with the performance of its obligations under this Agreement or as permitted by the disclosing party, recipient shall enter into an agreement with such secondary recipients to preserve the confidentiality of the Confidential Information on terms no less restrictive than as set forth in this Agreement. The recipient agrees that neither the execution of this Agreement nor the provision of Confidential Information thereto enables the Recipient to use the Confidential Information for any purpose or in any way other than as specified in this Agreement.

(If a subset of information has been defined as “Proprietary Information” a term should be added describing how that information should be handled.)

[Proprietary Information]:

(If either party has a subset of Confidential Information that it believes is so sensitive it must be destroyed or returned rather than kept secret for a fixed number of years after the Agreement’s termination, or otherwise treated more secretively than Confidential Information is, they should define it here. Then they should insert under “Common Interest and Confidentiality” a provision 4.4 describing how Proprietary Information must be handled.) 

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