ContractPilot processed over 1,000 non-disclosure agreements from startups, freelancers, and small firms. The data reveals patterns that should worry anyone who signs NDAs without careful review.
Why We Did This
Every lawyer has a gut feeling about what makes a “bad” NDA. But gut feelings aren’t data. We wanted to answer a simple question: when people sign NDAs — the most common commercial contract in business — what are they actually agreeing to?
We analyzed 1,000 NDAs processed through ContractPilot’s risk engine. The contracts came from a cross-section of industries: technology (38%), professional services (22%), creative and media (15%), healthcare (12%), and other sectors (13%). Company sizes ranged from solo freelancers to mid-market firms with up to 500 employees.
We anonymized everything. No names, no companies, no identifiable details. Just clauses, patterns, and risk scores.
Here’s what we found.
Finding #1: 73% of “Mutual” NDAs Aren’t Actually Mutual
This was the most alarming finding. Nearly three-quarters of NDAs labeled “mutual” contained asymmetric obligations when we examined the operative clauses.
The most common pattern: the definition of “Confidential Information” was drafted broadly for one party and narrowly for the other. Party A’s confidential information included “all information, whether written or oral, tangible or intangible, disclosed in connection with discussions between the parties.” Party B’s confidential information was limited to “documents specifically marked ‘Confidential.’”
Same NDA. Same “mutual” label. Drastically different protection.
The second most common asymmetry appeared in remedy clauses. In 41% of the “mutual” NDAs we reviewed, only one party had the right to seek injunctive relief. The other party was limited to monetary damages — which in a confidentiality breach scenario means proving a specific dollar amount of harm, a notoriously difficult task.
What this means for you: Don’t trust the title. Read the operative clauses. If both parties are labeled as “Disclosing Party” and “Receiving Party,” verify that every obligation imposed on the Receiving Party applies equally regardless of which entity fills that role.
Finding #2: 68% Lack a Meaningful Return-or-Destroy Clause
When an NDA expires or is terminated, what happens to the confidential information? In theory, the receiving party should return or destroy it. In practice, 68% of the NDAs we analyzed either had no return-or-destroy provision at all, or had one so vaguely written that it was essentially unenforceable.
The most common gap: no timeline. “Receiving Party shall return or destroy all Confidential Information upon termination” sounds definitive, but without a deadline (“within fifteen business days”), there’s no way to establish a breach. “Eventually” isn’t a contractual obligation.
The second most common gap: no certification requirement. Even when the NDA required destruction, only 12% required the receiving party to certify in writing that destruction was complete. Without certification, how do you prove compliance?
And here’s the modern wrinkle that almost no NDAs address: electronic copies. If your confidential information was shared via email, it exists in sent folders, backup systems, cloud syncs, and potentially archived servers. A clause that says “destroy all copies” is functionally meaningless if it doesn’t address electronic retention or provide an exception for copies retained in automated backup systems with a requirement to destroy those upon next rotation.
What this means for you: Your NDA should specify a timeline (15-30 days), require written certification, and address electronic copies explicitly.
Finding #3: The Average Risk Score Was 58/100 — Mediocre
ContractPilot assigns a risk score from 0 to 100 for each contract, where 0 is extremely risky and 100 is very well-protected. The average NDA in our dataset scored 58.
That’s a D+. Passing, but barely.
The distribution was revealing:
- 80-100 (Well-Protected): Only 9% of NDAs. These were almost exclusively drafted by law firms for specific transactions, not pulled from template libraries.
- 60-79 (Adequate): 34% of NDAs. These covered the basics but had gaps — usually in remedies, survival periods, or exception definitions.
- 40-59 (Risky): 41% of NDAs. The largest group. These had functional core terms but contained at least two high-risk clauses that could cause material harm.
- Below 40 (Dangerous): 16% of NDAs. These had fundamental structural problems — missing key clauses, internally contradictory terms, or enforceability issues.
The NDAs most likely to score below 40 were templates downloaded from the internet and used without modification. Roughly 23% of the NDAs in our dataset appeared to be direct copies of free online templates with only the party names changed. These scored an average of 37.
What this means for you: If your NDA came from a Google search and you filled in the blanks, it’s probably not protecting you the way you think it is.
Finding #4: Only 31% Had Adequate IP Carve-Outs
This one matters enormously for technology companies and startups. When you share confidential technical information under an NDA, you need clear boundaries around what is and isn’t covered — especially regarding independently developed technology.
Only 31% of NDAs in our dataset had IP carve-outs that we scored as “adequate” — meaning they clearly defined what constituted independent development, allocated the burden of proof, and included temporal limitations.
The most dangerous pattern (found in 22% of NDAs): no carve-out at all. This means that if the receiving party independently develops something similar to your confidential information — with no access to it — you could theoretically claim they misappropriated your trade secrets. It also means the reverse: if you independently develop something, the disclosing party could make the same claim against you.
The second most dangerous pattern (found in 47% of NDAs): a carve-out so broadly written that it effectively gutted the NDA’s protection. Language like “information that the Receiving Party can demonstrate was independently developed” without specifying documentation requirements, timing, or the standard of proof is an escape hatch wide enough to render the NDA meaningless.
What this means for you: Your NDA should define independent development with specificity, require contemporaneous documentation, and allocate the burden of proof to the party claiming the exception.
Finding #5: 84% Use Survival Periods That Are Either Too Short or Undefined
A survival clause determines how long confidentiality obligations last after the NDA terminates. This might be the single most important clause in the entire agreement, and 84% of NDAs get it wrong.
The breakdown:
- No survival clause at all: 19%. When the NDA expires, so do your protections. Immediately. Everything the other party learned about your business, your technology, your strategy — they can use or disclose the next day.
- “Indefinite” or “perpetual” survival: 23%. This sounds protective, but courts in many jurisdictions view perpetual obligations with skepticism. Some courts have refused to enforce indefinite confidentiality periods, viewing them as unreasonable restraints. It’s better than nothing, but it’s not the ironclad protection it appears to be.
- Survival period too short (under 2 years): 18%. For most business information, a one-year survival period isn’t long enough. Trade secrets can retain their value for decades. Customer lists and pricing strategies are competitively sensitive for years. A 12-month window invites the receiving party to simply wait it out.
- Survival period matched to information type: 8%. Only 8% of NDAs differentiated survival periods based on the type of information. This is best practice: trade secrets should survive indefinitely (or as long as they remain trade secrets), while general business information might have a 3-5 year period.
- Fixed period, 2-5 years: 24%. A reasonable middle ground, but often applied as a blanket period to all information regardless of sensitivity.
What this means for you: Use tiered survival periods. Trade secrets: indefinite, or “for as long as the information qualifies as a trade secret.” Business information: 3-5 years. General information: 2 years.
The Bigger Picture
The data tells a consistent story: most NDAs provide the illusion of protection without the substance. They make both parties feel like their information is safe. But when tested — when a breach actually occurs and lawyers get involved — the gaps in these agreements become expensive realities.
The irony is that NDAs are simple documents. They’re not 50-page enterprise agreements with complex payment schedules and multi-party structures. A well-drafted NDA is 4-6 pages. The clauses that matter are well-understood. There’s no reason 73% of them should have asymmetric obligations or 68% should lack adequate return-or-destroy provisions.
The reason they do is that nobody reviews them carefully. They’re treated as formalities — something to sign quickly so the real conversation can start. And that complacency is what makes them dangerous.
Want expert help? See our guide to AI contract review tools or learn our 10-minute review framework.
What You Should Do Next
Whether you’re about to sign an NDA or you have a stack of signed NDAs governing your current business relationships, here’s what we’d suggest:
For your next NDA: Don’t sign it as-is. Upload it to ContractPilot and get a risk score. If it scores below 60, push back on the specific clauses flagged. The risk report gives you the language to do it — you’ll know exactly what to change and why.
For your existing NDAs: Review the ones governing your most sensitive relationships. If they were signed without legal review, they probably have at least two of the five issues we’ve identified. Knowing your exposure helps you plan — whether that means renegotiating terms or being more careful about what you disclose.
For your own template: If you send NDAs to partners, vendors, and collaborators, run your template through ContractPilot. You might be asking people to sign something that doesn’t even protect you.
Your first three contracts are free. Start with the NDA you’re most worried about.
This analysis was produced using anonymized data from contracts reviewed by ContractPilot AI. No individual contracts, parties, or identifying information were disclosed. ContractPilot AI provides AI-powered contract review for solo practitioners, small firms, and businesses. $49/month.
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