Firstly, be sure to draft the agreement from first principles rather than reworking another agreement, especially not an agreement provided by the counterparty.

Firstly, be sure to draft the agreement from first principles rather than reworking another agreement, especially not an agreement provided by the counterparty. This may go some way to save you from toxic clauses creeping in. Also, offer to do the work of drafting the agreement yourself, or pay for and manage the lawyer yourself. Secondly, positively reiterate again the obligations around data security and confidentiality that you are already willing to provide, and which are industry standard, and leave it at that. You do not need to convince them that their request is unreasonable. You are right, you definitely should not be responsible for compensating them for "irreparable harm". By definition, "irreparable harm" cannot be corrected through monetary compensation in any event. The agreement should protect both parties equally as far as confidential information goes. The agreement should enforce limited liability for the safety of both parties.