Data Processing Agreement Cost

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What does a data processing agreement cost? If you have a website collecting data from users, this may be a question you ask. Let’s explore this question and review some general information about data processing agreements and why these contracts are used.

How Much Does a Data Processing Agreement Cost?

A data processing agreement, sometimes abbreviated as a DPA or a GDPR data processing agreement, is a legally binding contract between a data controller and a data processor.

A data controller is a person or entity who determines the purpose and means of data processing, like a company with a website. A data processor is a third-party service that processes the data on behalf of a controller.

It is prevalent for companies to hire third parties to process and analyze customers’ data. Types of companies that usually participate in data processing include:

  • Online retailers
  • Online service providers
  • Professional service firms
  • Financial institutions
  • Technology firms
  • Medical providers

Suppose you have ever ordered and paid for a product online. In that case, it is very likely that the company you purchased from collects data and has a DPA with a third party to analyze data.

Many companies who engage in data processing choose to hire an attorney to draft their data processing agreement. Data processing agreements are required by law in most places in the world, so it is vital that this document is prepared correctly and contains all necessary information.

Based on ContractsCounsel’s marketplace data, the average cost of a data processing agreement is $785.00.

Is a Data Processing Agreement Necessary?

Yes. Data processing agreements must comply with General Data Protection Regulations (GDPR). The GDPR was enacted by the European Union in 2018 and applied to any organization that targets or collects data about people in the EU.

Even if your website is based in the United States, if any EU citizens access it and your website collects their data, your website must be GDPR compliant and have a DPA.

Suppose your company doesn’t handle any data from EU customers. In that case, it is still a good idea to have a data processing agreement, even if it isn’t required by law.

This legal contract defines the rights and obligations of controllers and processors. It helps ensure a good business relationship between your company and the third party who processes data.

What is Included in a Data Processing Agreement?

Data processing agreements must be very detailed and adhere to the requirements set by the GDPR. The contract should lay out the duties of each party, and the scope of the data being processed. DPA’s should include the following information:

General information about data collection.

The agreement must address the following information concerning data:

  • The subject matter of data processing
  • The duration of data processing
  • The nature and purpose of the data processing
  • The type of personal data involved

The categories of the data subject

  • Responsibilities of the controller. Under the GDPR, the controller must establish lawful data processing and protect data subjects’ rights. The controller will also be responsible for providing the processor with clear instructions for handling data.
  • Responsibilities of the processor. Processors have several important responsibilities that should be laid out in the DPA. For example, the GDPR holds processors responsible for information security, reporting data breaches, record keeping, deleting or returning data, and cooperating with authorities for inquiries.
  • Technical and organizational requirements. The final part of a data processing agreement is how the data will be encrypted, accessed, and tested. In addition, the agreement should clearly state how both parties will maintain their processing systems and services.
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Data Processing Agreement Drafting

Data processing agreements are significant contracts required to operate your company legally in specific locations or with clients. If this agreement isn’t drafted correctly, it could leave a company vulnerable to legal actions like lawsuits.

When you hire a technology lawyer to draft a data processing agreement, the lawyer usually starts with a consult. First, the lawyer will meet with the data controller and learn about the kind of data that is processed. After this consultation, the lawyer will draft a customized data processing agreement.

Data Processing Agreement Review

Suppose you have prepared your own DPA or are faced with signing a DPA another company prepared. In that case, it is always a good idea to have the contract reviewed by an experienced lawyer.

Data processing agreements are specialized contracts that must follow GDPR requirements and be full of technical terms and industry jargon. A lawyer with experience with DPAs can ensure that all the information is accurate and that you fully understand the terms and conditions.

Data Processing Agreement Drafting Cost

Hiring a technology lawyer to draft a data processing agreement will incur legal fees because it requires the lawyer’s time and specialized knowledge.

ContractsCounsel’s marketplace data shows the average data processing agreement drafting costs are $800.00 across all states and industries.

Data Processing Agreement Review Cost

If a company uses its own data processing agreement and hires a lawyer to review the contract, it will be charged for the lawyer’s services.

ContractsCounsel’s marketplace data shows the average data processing agreement review cost is $600.00 across all states and industries.

How Do Lawyers Charge for Data Processing Agreements?

Hourly Rates for Data Processing Agreements

Hourly rate fee structures are a common way that lawyers can bill their clients. Under this fee agreement, a lawyer will log the hours they spend working on a client’s case and then bill their client for the total number of hours. Billing is done in increments like monthly, or for shorter projects, in one large bill when the job is complete.

Hourly rate fee structures ensure that lawyers are fairly compensated for their time working on a client’s case or project. Lawyers with particular expertise like technology or intellectual property can charge higher hourly rates than lawyers in more common fields like family law.

For clients, an hourly rate fee structure isn’t always ideal because they won’t know the total cost of legal fees until the job is completed.

ContractsCounsel’s marketplace data shows that the average hourly rate for a technology lawyer ranges from $250 - $400 per hour.

Flat Fee Rates for Data Processing Agreements

Flat fee rate structures are becoming more popular when lawyers are hired for specific projects like drafting or reviewing a data processing agreement. A flat fee rate allows an attorney to estimate the amount of time a project will take and quote a client a fee to be paid upfront.

Clients benefit from this fee agreement by knowing the total cost of their legal bill before agreeing to services. In addition, lawyers benefit by collecting money at the beginning of a job rather than chasing down a client for payment after the work is complete.

ContractsCounsel’s marketplace data shows the average flat fee rate for a data processing agreement is $785.00.

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