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What "indemnify and hold harmless" actually means

To indemnify is to agree to pay the other side’s losses, and a broad clause can cost far more than the fee. This guide reads one from a real agreement filed with the SEC.

What it costs

In this example, one third party claim costs the consultant $400,000, more than three years of fees.

Assumes $150,000 of defense costs and a $250,000 settlement, against the $10,000 a month fee in Exhibit B. An illustration, built on the assumptions stated here.

The clause, from a real filing

8. Indemnification

Consultant shall indemnify, defend, and hold harmless the Company from and against any and all claims, liabilities, damages, and expenses (including reasonable attorneys' fees) arising out of or in connection with Consultant's performance of the Services under this Agreement.
Consulting Agreement, Exhibit 10.2, CIK 1662991, Form 8-K, filed with the SEC on November 5, 2025. Read the original on SEC.gov
  • High risk

    An open ended promise to pay

    The consultant pays for any claim tied to its work. The clause does not say the claim must be the consultant’s fault. Nothing else in this agreement caps it, and the company makes no promise back.

The change to ask for

Before: Consultant shall indemnify, defend, and hold harmless the Company from and against any and all claims, liabilities, damages, and expenses (including reasonable attorneys' fees) arising out of or in connection with Consultant's performance of the Services under this Agreement.

After: Each party shall indemnify, defend, and hold harmless the other party from and against third party claims, liabilities, damages, and expenses (including reasonable attorneys' fees) arising out of or in connection with its own negligence or breach of this Agreement, up to the fees paid in the twelve (12) months before the claim.

Suggested language to discuss, not legal advice. Third party claims, own negligence or breach, and a cap of twelve months of fees are examples.

Before you sign: indemnification

  1. Find it. It may sit under Indemnification, Indemnity, or Hold Harmless.
  2. Check what triggers it: any claim tied to your work, or only claims your own fault or breach caused.
  3. Check whether it runs both ways, or only toward the other side.
  4. Check whether you must defend the other side, pay its legal fees, and who controls the defense and a settlement.
  5. Check whether the liability cap covers it. Many contracts leave indemnity outside the cap.
  6. Ask for a clause that runs both ways, covers only your own fault, and sits under a cap.
Open the one-page checklist to print
Transcript
  1. 0:00This clause makes you pay the other side’s losses.
  2. 0:03It comes from a consulting agreement filed with the SEC.
  3. 0:07To indemnify is to pay their losses. To defend is to pay their lawyers, too.
  4. 0:13The consultant pays on any claim tied to its work. Nothing runs back.
  5. 0:18Say someone sues over the work. Defense costs $150,000. A settlement costs $250,000.
  6. 0:27The consultant owes $400,000, against $120,000 a year in fees.
  7. 0:33Check three things. What triggers it? Does it run both ways? Does the liability cap cover it?
  8. 0:39Ask for a mutual clause, limited to your own fault, with a cap.
  9. 0:44A BeforeJD read marks a clause like this, explains it in plain English, and writes the change to ask for.
  10. 0:51It also drafts the email that asks for it.
  11. 0:54Check your contract for this clause.
  12. 0:57Your first read is free.

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Check your contract for this clause.

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BeforeJD is not a law firm. This is informational only, not legal advice.