The Association of Corporate Counsel ACC is the world's largest organization serving the professional and business interests of attorneys who practice in the legal departments of corporations, associations, nonprofits and other private-sector organizations around the globe. This Wisdom of the Crowd ACC member discussion addresses how to negotiate a limitation of liability clause in a consulting agreement to sufficiently protect your company's confidential information and intellectual property, under US law.
I'm currently negotiating a consulting agreement that contains a limitation of liability clause tied to fees paid. The consultant will have intimate access to our client info and intellectual property, so I attempted to carve out an exception as it related to a breach of confidential information and IP.
The potential damages resulting from a breach in these areas would far exceed the amount of fees paid to the consultant. The consulting company says it cannot have unlimited liability in any area and we are at a stalemate. I can add the ability to obtain an injunction but that only potentially mitigates the damage; it doesn't compensate us.
The consulting company's insurance does not provide coverage. Does anyone have any ideas of how to break the stalemate so we can move forward? I cannot get my head around the idea that allowing this provision is tantamount to permitting a third party to purchase our confidential info and IP for a song.
This is one of these recurrent questions where it is difficult to balance risks and rewards. I only see four possible options for you to solve the deadlock:. It's not unusual for the consulting firm to require a limitation of liability. My firm always did so. However, when it came to the protection of intellectual property rights we were sensitive to the situation. Typically what we did, and you should ask for, is a i higher limit of liability on IP breaches say double the value of the services and ii a clear statement that any exclusion of liability for consequential damages does not apply to a breach of the IP clause.
