Let’s face it—drafting Data Processing Agreements (DPAs) can be one of the most daunting tasks for in-house legal teams. Balancing strict compliance with practical implementation is tricky. We often get tangled in legal jargon and complex clauses, making it hard for everyone to grasp their responsibilities. Plus, keeping up with ever-changing regulations adds another layer of complexity. 

If this sounds all too familiar, you’re not alone. In this guide, we’ll break down the essentials of crafting a robust DPA and provide you with a practical, easy-to-use template to streamline the process. Ready to simplify your DPA workflow and ensure airtight compliance? Let’s dive in.

What is a Data Processing Agreement (DPA)?

A Data Processing Agreement (DPA) is a contract between a data controller and a data processor. Its primary purpose is to ensure that data processors comply with data protection laws like the GDPR. 

Under GDPR, it’s mandatory to have a DPA in place to ensure compliance. It’s not just a good practice; it’s a legal requirement. Always ensure your agreements are up to date and cover all necessary aspects to protect personal data.

When is a Data Processing Agreement (DPA)?

You need a DPA when you involve a third party to handle personal data. This includes scenarios like:

• Using cloud services: Storing or processing data in the cloud
• Outsourcing IT services: Hiring external companies for IT support or data management
• Engaging marketing firms: Sharing customer data for targeted campaigns

Why should you use a Data Processing Agreement (DPA)?

As in-house legal counsel, it’s essential to understand why a DPA is not just beneficial but necessary.

• Legal compliance: By using a DPA, you ensure your organization complies with GDPR and other data protection laws. This helps you avoid hefty fines and legal complications. Remember, non-compliance can result in fines up to 4% of your annual global turnover or €20 million, whichever is higher

• Data protection: A DPA clearly outlines how personal data should be processed and protected. This includes specifying the technical and organizational measures that the processor must implement. By setting these standards, you minimize the risk of data breaches and misuse of personal data

• Trust building: Clients and customers need assurance that their data is handled securely and responsibly. A well-drafted DPA demonstrates your commitment to data privacy and security. This not only builds trust but also enhances your organization’s reputation. According to a Cisco Data Privacy Benchmark Study, 94% of companies said their customers would not buy from them if they don’t adequately protect their data

Cons of using a Data Processing Agreement (DPA)?

While DPAs are essential, they come with their own set of challenges. Here’s what you need to be aware of:

• Complexity: Drafting a DPA can be complex. You need to ensure it covers all necessary legal and technical aspects. This requires a deep understanding of data protection laws and your organization’s data processing activities. It can be challenging to navigate all the legal jargon and ensure nothing is overlooked

• Cost: Implementing a DPA can be expensive. You might need to hire legal experts to draft or review the agreement. There are also ongoing costs related to maintaining and updating the DPA as regulations change and your data processing activities evolve

• Time-consuming: Creating and negotiating a DPA takes time. You need to coordinate with multiple stakeholders, including legal, IT, and your third-party processors. This process can be lengthy and requires careful attention to detail to ensure all parties agree on the terms

Despite these challenges, the benefits of having a DPA in place often outweigh the cons. It provides legal protection, ensures data security, and builds trust with your clients and customers. But be prepared for the investment of time, money, and effort required to get it right.

What if I don’t have a DPA?

If you don’t have a DPA, your organization faces several risks:

• Legal non-compliance: Without a DPA, you fail to comply with GDPR and other data protection laws. This non-compliance can result in significant fines
• Increased risk of data breaches: A DPA outlines the security measures that processors must follow. Without it, there’s no guarantee that your data processors will implement adequate security controls, increasing the risk of data breaches
• Lack of accountability: Without a DPA, roles and responsibilities for data protection remain unclear. This can lead to confusion and lack of accountability in handling personal data, making it difficult to enforce data protection standards
• Damaged reputation: Data breaches and non-compliance can severely damage your organization’s reputation. Clients and customers expect you to protect their data. Failing to do so can erode trust and lead to loss of business
• Operational disruptions: In the event of a data breach, not having a DPA can complicate the response process. You might face delays in identifying and mitigating the breach, which can exacerbate the damage and prolong recovery efforts

To mitigate these risks, ensure you have a well-drafted DPA in place with all third-party processors. This agreement is crucial for legal compliance, data protection, and maintaining the trust of your stakeholders.

What to include in a Data Processing Agreement (DPA)?

Including the following elements in your DPA, you ensure legal compliance, enhance data protection, and build trust with your stakeholders. Make sure to review and update your DPA regularly to adapt to changes in data processing activities and regulations.

• Scope of processing: Clearly define the types of personal data processed and the specific processing activities. Outline the purposes for data processing and ensure they align with GDPR requirements
• Security measures: Specify the technical and organizational measures in place to protect personal data. Include encryption, access controls, and regular security audits. Make sure these measures meet GDPR standards
• Breach notification: Establish protocols for data breach notifications. Specify how and when the processor must notify you of a breach. Include timelines and required information, such as the nature of the breach and affected data
• Sub-processors: Define rules for engaging sub-processors. Require prior approval for any sub-processors and ensure they meet the same data protection standards. Include terms for accountability and liability
• Data subject rights: Ensure the processor respects data subject rights. Include procedures for handling requests for data access, correction, deletion, and portability. Make sure the processor can support these rights as required by GDPR

Also read: How to Handle and Resolve Breach of Contracts

Download the free Data Processing Agreement (DPA)

This Data Processing Agreement template has been carefully crafted by the legal experts at SpotDraft to ensure it covers all essential aspects of data protection.

How to download the template:

• Click below to navigate to the download page
• Provide the necessary information in the form to help us understand your needs better
• Once you submit the form, the template will be sent directly to your inbox, ready for you to use and customize as needed

Note: While this template provides a robust framework to start from, it is crucial to tailor the details to your specific circumstances. 

Download the Template

Best practices for drafting a Data Processing Agreement (DPA)

#1 Use clear and concise language

When drafting a DPA, it’s crucial to use clear and concise language. This ensures all parties understand their obligations and responsibilities, which is essential for compliance and effective data protection.

“Avoid unnecessary complexity and shoot for short sentences. Always ask yourself if what you wrote down is clear – could a judge or jury understand the section if there was ever litigation?  If not, rework it.  For example, think about this statement, ‘This Agreement will terminate on August 31, 2021.’  Does this mean that it terminates when the day starts? When the day ends? And when does the day end? At the end of the business day, at midnight, and in what time zone? The better sentence is ‘This Agreement will terminate on August 31, 2021, at 11:59 p.m. Central Time.’ Be precise and concise!”

~Sterling Miller, CEO, Hilgers Graben
Ten Things: Making Contracts Easier to Sign

• Avoid legal jargon: Keep the language simple. Instead of using complex legal terms, explain concepts in plain English. For instance, instead of “data subject,” you can say “individual” or “person whose data is being processed.”
• Be specific: Clearly define key terms and responsibilities. For example, specify what “personal data” means in the context of your organization. Detail the exact data processing activities, such as collecting, storing, or sharing data
• Use short sentences: Break down complex ideas into shorter, more digestible sentences. This makes the DPA easier to read and understand. For example, instead of “The processor shall implement appropriate technical and organizational measures to ensure a level of security appropriate to the risk,” you could write, “The processor must use security measures that match the risk level”
• Structure the document well: Use headings and subheadings to organize the agreement. This helps the reader quickly find relevant sections. For example, separate sections for “Data Security,” “Breach Notification,” and “Sub-Processors”
• Provide examples: Where possible, include examples to illustrate complex points. For instance, when describing data security measures, you might say, “This includes using encryption, regular software updates, and employee training on data protection”
• Review and simplify: Regularly review your DPA to remove unnecessary complexity. Ask colleagues to read through it and identify any parts that are difficult to understand. Simplify those sections.

#2 Define the scope of processing

This ensures clarity on what data is being handled and how it will be used. Here’s how you can effectively define the scope of processing:

• Specify types of personal data: Clearly outline the categories of personal data being processed. This includes data such as names, addresses, contact information, and any sensitive data like health records or financial details. Be specific about the data types to avoid any ambiguity
• Detail processing activities: List out all the data processing activities involved. This might include data collection, storage, analysis, sharing, and deletion. For example, you can state, “The processor will collect and store customer contact information for the purpose of marketing communications”
• Align with organizational purposes: Ensure the processing activities align with your organization’s data processing purposes. Every activity should have a clear purpose that supports your business objectives and complies with legal requirements. For instance, “The data collected will be used exclusively for improving customer service and personalizing user experiences”

• Use clear language: Describe the scope in plain language to ensure all parties understand what is covered. Avoid vague terms like “handle” or “use” and opt for more precise descriptions like “store,” “analyze,” or “transmit”
• Include limitations: Set clear boundaries on what data can and cannot be processed. This prevents misuse and ensures compliance. For example, “The processor shall not use the personal data for any purposes other than those specified in this agreement”
• Update regularly: Review and update the scope of processing as your data processing activities evolve. Any changes in data types or processing activities should be reflected in the DPA to maintain its relevance and accuracy
• Provide examples: Use examples to illustrate the scope of processing. For instance, “If we collect email addresses, we will use them to send newsletters and promotional offers, but not for sharing with third-party advertisers without consent”

#3 Include robust security measures

Implementing robust security measures ensures that personal data is protected against unauthorized access, breaches, and other security threats. Here’s how you can include and manage these measures effectively:

• Detail technical measures: Specify the technical controls in place to protect data. This includes encryption, firewalls, and access controls. For example, you can state, “All personal data must be encrypted both in transit and at rest using industry-standard encryption protocols”
• Outline organizational measures: Describe the organizational policies and procedures for data protection. This might include employee training, regular security audits, and incident response plans. For instance, “Employees will receive mandatory data protection training annually, and the organization will conduct quarterly security audits”
• Regularly review and update measures: Cyber threats evolve, so it’s essential to review and update your security measures regularly. Include a clause in your DPA that mandates periodic reviews. For example, “The processor will review and update security measures at least once a year or whenever significant changes occur”
• Specify breach notification protocols: Clearly outline the steps to be taken in the event of a data breach. This should include how and when the processor must notify you, the information to be provided, and the immediate actions to be taken to mitigate the breach. For instance, “The processor must notify the controller within 24 hours of detecting a data breach, providing details of the breach and steps taken to mitigate it”
• Adopt industry standards: Ensure that the security measures align with recognized industry standards and best practices. This includes frameworks like ISO 27001 or NIST
• Implement multi-layered security: Use a multi-layered approach to security, incorporating various defenses to protect data at different levels. This might include network security, application security, and endpoint security
• Document and monitor compliance: Maintain detailed records of security measures and monitor compliance. This helps in demonstrating adherence to data protection laws and in identifying areas for improvement
• Collaborate with IT and security teams: Work closely with your IT and security teams to ensure that technical and organizational measures are effectively implemented and maintained

#4 Address the use of sub-processors

Managing sub-processors is a critical aspect of a Data Processing Agreement (DPA). Ensuring that sub-processors adhere to the same data protection standards as your primary processor helps maintain data security and compliance. 

• Require prior approval: Make it mandatory for the primary processor to seek your approval before engaging any sub-processors. This allows you to vet each sub-processor to ensure they meet your data protection standards
• Conduct due diligence: Thoroughly evaluate the data protection practices of potential sub-processors. This includes reviewing their security measures, data handling procedures, and compliance with relevant regulations
• Include sub-processor terms in the DPA: Ensure that the DPA explicitly outlines the responsibilities of sub-processors. This includes their obligations to implement appropriate security measures, report breaches, and comply with data protection laws. For instance, “Sub-processors must adhere to the same security protocols and breach notification requirements as the primary processor”
• Establish liability clauses: Define clear liability terms for sub-processors in the event of a data breach or non-compliance. This ensures that sub-processors are held accountable for any damages or legal issues arising from their actions. \
• Regular monitoring and audits: Implement regular monitoring and auditing of sub-processors to ensure they continue to comply with data protection requirements. This includes periodic reviews of their security practices and data handling procedures
• Implement contractual safeguards: Ensure that contracts with sub-processors include stringent data protection clauses. These should cover aspects such as data security, breach notification, and data subject rights
• Provide transparency: Maintain transparency with your clients and stakeholders about the use of sub-processors. Inform them of any changes or new engagements, and provide assurance that all sub-processors meet the required data protection standards

#5 Protect data subject rights

Protecting data subject rights is a fundamental requirement under the GDPR. Your DPA must include clear procedures to handle requests for data access, correction, deletion, and portability. Here’s how to ensure compliance and protect these rights effectively:

• Implement access request procedures: Establish a process for individuals to request access to their personal data. This includes verifying the identity of the requester and providing the requested information promptly
• Ensure data correction: Allow data subjects to correct inaccurate or incomplete data. Implement a straightforward process for individuals to submit correction requests and ensure timely updates
• Facilitate data deletion: Also known as the right to be forgotten, data subjects can request the deletion of their personal data. Define clear criteria and procedures for evaluating and processing these requests
• Enable data portability: Data subjects have the right to receive their personal data in a commonly used and machine-readable format and to transfer it to another controller. Ensure your DPA includes provisions for data portability requests
• Regularly update procedures: Regularly review and update your procedures to handle data subject requests, ensuring they remain compliant with GDPR requirements
• Train staff: Ensure that all relevant employees are trained on the procedures for handling data subject requests. This includes recognizing requests, verifying identities, and processing requests within the required timeframes
• Document requests and responses: Maintain records of all data subject requests and your responses. This helps demonstrate compliance with GDPR and provides a clear audit trail
• Communicate clearly with data subjects: Ensure that your communications with data subjects regarding their requests are clear and transparent. Provide detailed information about the status of their request and any actions taken

#6 Implement technology solutions

Using technology to streamline the drafting and management of DPAs can greatly enhance efficiency and compliance. SpotDraft offers a robust CLM platform to automate the creation, tracking, and updating of DPAs, making the entire process seamless.

• Automate DPA creation: SpotDraft allows you to automate the drafting of DPAs. It ensures all necessary clauses are included, reducing the risk of omissions and ensuring comprehensive agreements. For instance, the platform can automatically integrate GDPR-compliant language and specific requirements based on your inputs
• Track and manage agreements: With SpotDraft, you can easily track the status of all your DPAs. The platform provides a centralized dashboard where you can monitor which agreements are active, pending approval, or require updates. This visibility helps you stay on top of compliance obligations and ensures no agreement is overlooked
• Update agreements effortlessly: Keeping your DPAs up-to-date with the latest legal requirements is crucial. SpotDraft simplifies this process by allowing you to make bulk updates across all your agreements. Whenever there are changes in data protection laws or internal policies, you can quickly implement these updates without manually revising each DPA
• Reduce manual effort: By automating the drafting and management processes, SpotDraft significantly reduces the manual effort involved in creating and maintaining DPAs. This not only saves time but also minimizes the risk of human error, ensuring your agreements are accurate and compliant
• User-friendly interface: SpotDraft’s user-friendly interface makes it easy for legal teams to navigate and use the platform. Even those with limited technical expertise can efficiently manage DPAs, thanks to its intuitive design and clear instructions
• Integrate with existing systems: SpotDraft can integrate with your existing systems, providing a seamless workflow. This integration allows you to pull data from other platforms and ensures that all your agreements and data are synchronized.

Also read: 6 Must-Have CLM Integrations with Business Tools

Start drafting DPAs with ease

Creating and maintaining a comprehensive Data Processing Agreement (DPA) is not just a legal obligation but a critical aspect of protecting personal data and building trust with your clients and stakeholders. By following best practices—using clear language, defining the scope of processing, including robust security measures, establishing breach notification protocols, addressing the use of sub-processors, and protecting data subject rights—you ensure that your organization remains compliant with data protection laws and mitigates the risk of data breaches.

Implementing technology solutions like SpotDraft can significantly streamline the process, reducing manual effort and ensuring that your DPAs are always up-to-date and compliant with the latest legal requirements.

Don’t leave your data protection to chance. 

Download our comprehensive DPA template now to get started on building a robust and effective Data Processing Agreement. This template will guide you through the essential components, helping you safeguard your organization and the personal data you handle.

Download the Free DPA Template