Attorneys’ Fees

Attorneys’ Fees

The high cost of legal representation and other costs of enforcing an NDA via litigation or other legal action can preclude a party from effectively protecting its rights under an NDA. Depending on the situation, the parties may agree to include a clause that allocates such costs, including attorneys’ fees, to the party that ultimately loses the dispute. Such a clause may benefit a party who is concerned about protecting its disclosed information and who can absorb the risk of having to pay legal costs in the event it loses a dispute arising from the NDA. Conversely, a party with limited financial resources and low confidence in its ability to comply with its obligations under an NDA may be inclined to resist the inclusion of such a clause.

Exemplar N3-1

In the event there is a material breach under this Agreement, and it becomes reasonably necessary for any party to employ the services of any attorney to enforce this Agreement, the losing party to the controversy arising out of the breach shall pay to the successful party reasonable fees (including attorneys’ and experts’ fees) and, in addition, such costs (whether taxable or not) and expenses as are incurred in enforcing this Agreement.

For a related discussion on shifting the risk and cost of attorneys’ fees and related legal expenses under an indemnification clause, see the section entitled “Indemnification”.