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OPINION
AEC firms should carefully assess confidentiality clauses in contracts to avoid uninsured risks, especially amid growing cyber threats. Navigating confidentiality clauses
A EC firms should be careful not to overlook the growing number of longer and more complicated confidentiality agreements currently finding their way into proposed design contracts. In some cases, these clauses have the potential to create exposures which may not be covered under professional liability or other insurance policies typically carried by design firms. Furthermore, the rapidly changing environment, including an increase in sophisticated cyber-attacks and the widened use of artificial intelligence, can make these clauses more problematic.
Lauren Martin
That’s more reason for design firms to become educated on the potential exposure and take steps to avoid it. Nondisclosure agreements are becoming a more routine part of doing business – and it’s completely understandable for owners to want their proprietary information protected. Nonetheless, you should read and understand these agreements and the confidentiality clauses in your contracts and be aware of the potentially uninsured exposures they can create. Your professional liability insurance coverage responds to confidentiality clauses the same way it applies to other contractual clauses. There will be coverage afforded unless you exceed obligations that would be owed in the absence of the contract.
In other words, you are covered for your negligence, but not for warranties, guarantees, or obligations that exceed the professional responsibility of your peers. Certainly, you have coverage under your professional liability insurance for your normal obligation to keep client information confidential while the firm is providing professional services. Yet, there likely may be no coverage if the disclosure occurs outside of the scope of providing professional services. It’s hard to imagine a situation where a design professional would intentionally disclose confidential information, but there are situations where unintentional disclosure can occur. Indeed, there are the “old-fashioned” ways, such as if untrained junior
See LAUREN MARTIN, page 10
THE ZWEIG LETTER NOVEMBER 18, 2024, ISSUE 1562
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