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Loose Lips Sink Ships

September 1, 2009

In this bylined article in Corporate Counsel Magazine, partners Jonathan Rosenberg and Abby Rudzin discuss the importance of preventing leaks with director confidentiality programs. Leaks occur for numerous reasons including financial gain, political motivation, and accidental mishaps. In order to prevent the many causes of leaks, general counsel must determine what confidentiality programs are most appropriate for their company.

“Well-structured confidentiality programs can prevent leaks by establishing clear policies and procedures for protecting information and penalizing breaches. An education component can ensure that directors fully understand their obligation not to disclose. A broad confidentiality agreement also avoids the need for situation specific confidentiality agreements later in a director’s service,” says Rosenberg and Rudzin. However, they also emphasize that separate confidentiality agreements can be beneficial in certain circumstances: “Separate confidentiality agreements also help to underscore the importance the corporation places on confidentiality, while allowing agreements to be custom tailored to each class of director (e.g., independent directors and company insiders)… And since general corporate governance guidelines are often merely aspirational policy statements, the separate confidentiality agreement serves to create an enforceable contractual commitment.