Which State for Governing Law or Venue?

Dear Rich: I am working on a contract where one party (the one providing the services and technology) is based in Texas and the client is based in California. Both parties want the governing law and venue to be in their respective states. Any advice? You're dealing with two concepts: (1) A “choice of law” or “governing law” provision in which the parties agree that a particular state’s laws will be used to interpret the agreement, and (2) we think when you refer to "venue," you're talking about a "jurisdiction" provision—sometimes called forum-selection clauses— require the parties consent in advance to the jurisdiction of a specific court and give up the right to complain about jurisdiction in other locations.
What really matters? Both provisions are important but of the two, we think the venue/jurisdiction provision is more important. That's because state laws may differ on some issues -- for example, Delaware favors corporations, etc.-- but for the most part choice of law doesn't make much difference. But jurisdiction provisions can create more expense and inconvenience because they determine where you must travel to in the event of a dispute. For example, a resident of California may not want to spend several weeks conducting business from a Texas hotel room, and vice versa. Despite the fact that the chances of triggering the provision are statistically very low -- so few contracts devolve into lawsuits -- lawyers like to puff up their chests and "stand their ground" on this issue with the "bigger" party usually getting its way.
Compromise? There are a couple of workarounds. You can leave out jurisdiction entirely and then either party may file where they live (assuming they can get personal jurisdiction over the other party). Or you can set up an either/or provision such that the party filing the lawsuit can choose the state law and jurisdiction. So the Texans can file in Texas, and if the Californians are suing, they can file in Cali. If you can't reach a compromise, you may have to bite the bullet and hope that you're never dragged into a lawsuit.
FYI, DR readers, two states, Idaho and Montana, refuse to honor forum selection provisions. In some other states, courts enforce these provisions only if the parties have some contact with the state beyond the contract provision—for example, they must do business with the state’s citizens even if they live (or the agreement is signed) in a different state.

Can NDA be Governed By Two States?

Dear Rich: I’m working on a Non-Disclosure/Trade Secret Agreement for an employee that we have in California. Our main office is in Kansas City, Missouri. Is this wording legally appropriate?

Governing Law and Jurisdictions: This Agreement will be governed and interpreted according to the substantive laws of the State of Missouri and the State of California. Parties hereby expressly consent to the exclusive jurisdiction of the state and federal courts located within Platte County, in the State of Missouri, USA with respect to the interpretation and enforcement of the provisions of this Agreement. 

Can the laws of 2 states govern an agreement? If not o.k., could you please make a verbiage recommendation? We're hesitant to suggest specific verbiage for your contract ... that might cross the imaginary line between providing legal information and providing legal advice. But we can help you avoid ambiguities in your agreement.
Jurisdiction provision. You've combined two provisions (governing law and jurisdiction) which is not uncommon. The jurisdiction provision (also known as "forum selection") requires that any lawsuits arising from the agreement will be filed in Missouri. In normal circumstances, a California citizen may not be obligated to defend a lawsuit in Missouri (but the jurisdiction provision is intended to give consent in advance). Keep in mind that jurisdiction provisions are not uniformly enforced. For example, Idaho and Montana won't enforce them at all while other states require that the parties have some contact with the state beyond the contract provision.
Governing Law. This provision (also known as "choice of law") allows the parties to choose which state's laws will be used to interpret the agreement. If two states are named there will likely be some ambiguity, and ambiguity may be interpreted against the drafter (your company). It's true that this may not be a major issue for your NDA because both Missouri and California have adopted trade secret laws based on the Uniform Trade Secrets Act. Still, there are some substantive issues on which the two states differ and your clause may create unneeded confusion. As a general rule, we believe California law is more likely to favor employee rights than Missouri -- for example, California has strict rules prohibiting noncompetes. Because you are forcing any cases to be filed in Missouri, it would be less ambiguous to use only Missouri law.  Finally, although you are probably aware, NDAs are only enforceable to protect company trade secrets. We've posted some examples of NDAs at this site.