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Do you need a signed confidentiality agreement before you send a firm an RFP?

General counsel, of the species homo lex riskus aversus, instinctively want to clothe their request for proposal in the chain mail of a non-disclosure agreement (See my post of May 3, 2007: NDA’s and confidentiality commitments.). “Upon penalty of legal annihilation, you must preserve the confidentiality of this document, selection process, and its conclusion.”

To a slight degree, the general counsel may want to thwart a deluge of solicitations from law firms. That worry is misplaced. The firms that have been included will not want to open the gates for other competitors, so they won’t talk. Other firms that manage to find out will recognize that you have already invited a set of firms and that they face an uphill struggle to be included. A more important objection is that you want to choose a good firm, so why not let hopefuls present their favors?

A general counsel might impose silence on recipients of the RFP because of some belief that the methodology of the process is more clever than others have achieved, and its disclosure would fritter away a trade secret. Unlikely, I submit, as many big companies have opened the kimono afterwards to spell out every step of their process (See my post of Sept. 12, 2008: detailed article on Pfizer’s RFP process; Aug. 21, 2005: publicity and competitive secrecy.).

The strongest argument for confidentiality is the proprietary information in the RFP about the company and its legal affairs, such as the number of product liability cases pending, the sub-leasing activity of the company in the Northeast, the anticipated acquisitions of privately-held companies for less than $10 million in the next two years, or the EEOC charges filed against the company during the previous three years. This information deserves to be protected, although the more aggregated the data is the less the need (See my post of Sept. 13, 2006: aggregate outside counsel spend need not be protected.).

Even if the RFP issuer has studded the RFP with complete historical information, what risks do you incur if that information were published on the front page of a newspaper? Little, I suspect, except perhaps mild embarrassment. Forward-looking estimates have more legitimate sensitivity.

In the end, the bother, time and logistics to obtain an executed confidentiality agreement from each firm amounts to overkill. State clearly in the RFP that all information in it – even the document itself and the process it is part of – are confidential and may not be disclosed and leave it at that.