This clause restricts advisors—such as accountants, lawyers, consultants, or financial advisors—from disclosing confidential information they learn while providing services to your company. It creates a legal obligation for these third parties to maintain secrecy about your business operations, financial data, strategies, client lists, and other sensitive information. The clause typically survives the end of the advisory relationship, meaning the confidentiality obligation continues indefinitely or for a specified period after services conclude.
This clause matters because advisors often gain deep access to your most sensitive business information. Without explicit confidentiality protections, they could share trade secrets with competitors, discuss your financial condition with other clients, or use insights gained from your engagement to benefit rival companies. The clause creates legal recourse if an advisor breaches confidentiality, allowing you to pursue damages or injunctive relief.
Ensure this clause clearly defines what constitutes "confidential information" and includes standard exceptions (publicly available information, information independently developed, information required by law). Verify the clause applies to the advisor's employees and subcontractors, not just the primary advisor. Consider whether the confidentiality period is reasonable—perpetual confidentiality for trade secrets is standard, but shorter periods (2-5 years) may apply to other business information. Request that advisors return or destroy confidential materials upon engagement termination, and consider requiring certification of compliance.
Frequently Asked Questions
What does this clause mean in simple terms?
This clause restricts advisors—such as accountants, lawyers, consultants, or financial advisors—from disclosing confidential information they learn while providing services to your company.
Why should I care about this clause?
It creates a legal obligation for these third parties to maintain secrecy about your business operations, financial data, strategies, client lists, and other sensitive information.
What are my options?
The clause typically survives the end of the advisory relationship, meaning the confidentiality obligation continues indefinitely or for a specified period after services conclude.
How does this affect small businesses?
This clause matters because advisors often gain deep access to your most sensitive business information.