Non-disclosure agreements or NDAs have been a mainstay of the business world for decades now, as entrepreneurs and businesses endeavour to reach advantageous agreements and develop potentially profitable products.

These legal contracts forbid signatories from disclosing confidential, sensitive or proprietary information.

But did you know that they have also begun to find a place in divorce settlements? The trend setters were wealthier divorcees who began to see the potential utility of the NDA in helping prevent confidential business data and personal information from leaking out into the public domain.

Confidential in the courtroom

But why? As any divorce lawyer will confirm, being casual and careless with the details of your divorce settlement is already frowned upon. Everyone involved in financial settlements has a ‘duty of confidentiality’, a requirement placed upon them to protect the details of this component of divorce from disclosure. But this duty applies only to the financial settlement, the part normally referred to ‘financial remedies’ by family lawyers. Any confidential or sensitive information that might come to light outside it will not be protected by this standard duty. This means an NDA can be an attractive additional tool.

NDAs have traditionally been seen as the domain of big business and the wealthy. They cost money to draft effectively and their whole purpose is to conceal information that might lead to financial loss or be generally damaging if it became known. Even though NDAs can apply equally to both parties, restricting disclosure by either, within a family the incentives are clear and this means there is often an imbalance of power if one spouse is wealthier and they insist the other sign an NDA. But equally, a canny spouse will cotton on to the underlying message of an NDA demand: that they are in possession of valuable information and so have power too.

In any case, the appeal of the non-disclosure agreement is by no means restricted to the wealthy, and we have one thing to thank for that: the ubiquity of social media. Reputations can be significantly damaged by a single post on Twitter, Facebook or Instagram– and that damage may linger for years, even if the subject of the post is not especially noteworthy. A timely NDA can help the vulnerable avoid such risks.

Keeping secrets secret

Within a divorce, properly drafted NDAs serve to protect a variety of sensitive information the recipient spouse may have learned during the marriage, and which may have contributed to its breakdown, for example:

  • Details of personal and professional relationships – e.g. business investors, funders or employers.
  • Sensitive financial information
  • Potentially embarrassing or compromising details, such as extra marital affairs or problems with alcohol or drugs.

The fine print

An NDA can be standalone or part of a larger legal framework – so for example, a divorcing couple intent on an NDA might ask their legal representatives to draft a standalone document, or they may choose to incorporate the agreement into the financial settlement itself.

Non-disclosure agreements can only be used to protect information concerning legitimate business activities: anything illegal is excluded by definition.

Nuptial agreements

Pre- and postnuptial agreements have no automatic legal standing in family courts– courts must be convinced the parties were fully informed and that they make fair provision for both spouses. Despite this, they have been a familiar inclusion in divorce proceedings for years and they have never been more popular.

Yes, their overall function is quite different: nuptial agreements attempt to define who will receive which assets (money or property) in the event of a divorce. Nevertheless, it has become increasingly common for NDAs to be incorporated into nuptial agreements, especially amongst divorcing spouses who fear that a heavy-handed nuptial agreement may not cast them in the best light, or who simply wish to ensure the security of sensitive information.

Do judges always respect NDAs?

Just as the family courts continue to insist that nuptials agreements signed by both parties may not, in fact, be fair and therefore not binding, non-disclosure agreements may also conflict with judicial priorities.

Family courts of the 21st Century place greater emphasis on transparency than those of previous decades, in an effort to increase public trust in a supposedly secretive system. This has meant the publication of divorce rulings with names and other details attached and it is easy to see how this could conflict with NDA restrictions. Seek advice from an expert family lawyer if this is a matter of concern,

Legal perspectives

Legal advice may cost money but it can pay dividends if you are set on the use of an NDA in your divorce. A good lawyer will work to steer reluctant parties to the dotted line, addressing concerns and offering mutually acceptable compromises. They will be able to ensure the NDA is drafted in a way that will be acceptable to family court judges. A key part of this process is ensuring that both parties receive independent legal advice.

An expert lawyer will also provide guidance on the sensitive issue of enforcement if an NDA is breached. If not handled correctly, any measures taken, such as court action, could lead to further confidential information escaping into the public domain, so caution and careful consideration are essential.