The latest developments have highlighted the risk of hiring an external consultant to work on a project without an enforceable confidentiality agreement. Increasingly, consultants are using the work experience of industrial clients as a springboard to later sell this expertise in prosecuting these clients and others in the sector. As a contractor, you will be well served if you have strict confidentiality agreements to prevent a sensitive information advisor from returning years later and using the same information against you in future legal action. When developing a confidentiality agreement, there is often a tension between the client`s desire to keep confidential information confidential and an advisor`s possible obligation to disclose the information to state regulators. Reporting obligations imposed by federal, regional and local laws may limit a client`s ability to obtain full protection against disclosures by an advisor. In the environmental context, z.B. when contamination of hazardous substances is detected as part of the transactional diligence, anyone who has “controlled” the release facility is required to report it to the EPA if the extent of the contamination exceeds the quantities to be reported. In some states, such as New Jersey, “anyone who has discovered a rejection from an underground store is required to report it to public authorities. Under these conditions, even the best written confidentiality agreement does not protect the information discovered by a consultant from disclosure. An appropriate confidentiality clause should take into account the consultant`s need to comply with mandatory reporting obligations, while preserving a company`s desire to maximize confidentiality and retain control over any communications with regulators that may be necessary.

The need for strict confidentiality agreements was highlighted in environmental product liability disputes, which culminated last week with a $236 million ruling against ExxonMobil. One of the applicant`s main witnesses was an expert who previously worked as an advisor to a defendant on projects directly relevant to the litigation issues and exposed to the confidential information provided by the defendant.