IT Law for Non- IT Lawyers

Size: px

Start display at page:

Download "IT Law for Non- IT Lawyers"

Warren Mason
6 years ago
Views:

1 IT Law for Non- IT Lawyers for ACC Webinar on 8 September 2015 Nick Holland Brussels / Düsseldorf / Hamburg / London / Manchester / Munich / Palo Alto / Paris / Shanghai / =ield=isher.com

2 . Takeaways After Today s Presentation n overview of: Different types of technology- related agreements Common Commercial Structures Aspects of IT contracts that are typically highly nego@ated Brussels / Düsseldorf / Hamburg / London / Manchester / Munich / Palo Alto / Paris / Shanghai / =ield=isher.com 2

3 . Variety of IT- related contracts Simple Services (e.g. consultancy, sodware/hardware maintenance etc) Complex Services (e.g. outsourcing) Project Services (e.g. sodware development) Technology transfer/licensing, oden with a strong element IP licensing SaaS; PaaS Digital media- related contracts Brussels / Düsseldorf / Hamburg / London / Manchester / Munich / Palo Alto / Paris / Shanghai / =ield=isher.com 3

4 . Commercial Structures ime and Materials (T&M) - service provider invoices the client based on our delivery eam performing the services and a rate per hour or day. ixed Fee - fixed fee is a stated contractual price and the price is not subject to djustment other than where specifically so agreed under change control. ilestone- Based- Pricing pricing arrangement where the service provider will earn fees ased on achieving certain project milestones as defined in the agreement. ransac9on Based- Pricing - transac@on volumes for the system or business process eveloped, implemented, or operated determine the service provider s fee. alue- Based/Benefits- Based Pricing - con@ngent pricing arrangement where the value ealized by the client as a result of the services at least in por@on determines the service rovider fees. Brussels / Düsseldorf / Hamburg / London / Manchester / Munich / Palo Alto / Paris / Shanghai / =ield=isher.com 4

5 . Common themes Scope, Scope Creep and Change Control Clearly defined Acceptance Change control against non- delivery and carrots) Risk liability and Ownership and licensing of IPRs Exit Data Compliance with laws Governance Brussels / Düsseldorf / Hamburg / London / Manchester / Munich / Palo Alto / Paris / Shanghai / =ield=isher.com 5

6 . Scope, Scope Creep and Change Control that the contract clearly defines the scope of the Supplier s obliga@ons par@cularly in fixed price arrangements) hange Control - a formal process to ensure that all service or financial changes are pproved and signed off by the par@es before implemen@ng the change Abuse of change control by service provider? Client changes or delays will impact scope, schedule and delivery costs? Failure by par@es to follow change control process Consistent applica@on of change control process is key to enabling informed client project decisions and avoids unintended scope creep Brussels / Düsseldorf / Hamburg / London / Manchester / Munich / Palo Alto / Paris / Shanghai / =ield=isher.com 6

7 . Clearly de=ined responsibilities and obligations Applies to both Supplier and Customer Customers will oden press for their to be expressed as dependencies rather than : Customer failure to meet an = breach Customer failure to fulfil a dependency = Supplier is relieved of liability to the extent that Supplier breach is caused by the Customer s failure. Brussels / Düsseldorf / Hamburg / London / Manchester / Munich / Palo Alto / Paris / Shanghai / =ield=isher.com 7

8 . Performance Incentives (sticks and carrots) old Back Client retains and holds back a percentage of the total contract price un@l a re- determined period or event following final sign- off. iquidated Damages (LDs) or Service Credits contract provision sezng out a pre- etermined amount (or a pre- determined formula for calcula@ng the amount) payable in he event of a breach. xpecta9on of no future work ( break op@ons and ini@al terms ) EO amendance hreat of termina9on hreat of de- scoping tep- in rights Brussels / Düsseldorf / Hamburg / London / Manchester / Munich / Palo Alto / Paris / Shanghai / =ield=isher.com 8

9 . Limitation of Liability imita9on of Liability (LOL) contract provisions placing a limita@on (i.e., cap) on each arty s liability exposure associated with performance or receipt of services under the ontract. Client ShiD delivery risk and liability as its service provider Seek unlimited liability or very high limit of liability Create significant leverage Service Provider Reasonable correla@on between risk and reward Limit responsibility for those damages directly caused by service provider s failed services Object to taking on consequen@al damages Brussels / Düsseldorf / Hamburg / London / Manchester / Munich / Palo Alto / Paris / Shanghai / =ield=isher.com 9

10 . Limitation of Liability ommon Final Posi9ons 12 months of trailing charges (outsourced services) An amount equal to the total fees (IT project) Recoverable losses capped per calendar year Cap per claim/occurrence Separate caps for different types of loss/damage Brussels / Düsseldorf / Hamburg / London / Manchester / Munich / Palo Alto / Paris / Shanghai / =ield=isher.com 10

11 . Indemni=ication ndemnifica9on - a voluntary promise in a contract to compensate another party against osses suffered as a result of a third party claim. Client Obligate service provider to compensate client for losses from an@cipated situa@ons, including breach of contract or third party damages Service Provider Provide indemnity against liabili@es from third party claims to the extent service provider can control the risk and liability May equate indemnity to insurance Avoid indemnity for general situa@ons (e.g., breach of contract or any third party damages) Seek alterna@ve recovery right in addi@on to breach of contract Avoid responsibility of an insurance underwriter Brussels / Düsseldorf / Hamburg / London / Manchester / Munich / Palo Alto / Paris / Shanghai / =ield=isher.com 11

12 0. Indemni=ication ndemnifica9on: Common Final Posi9ons Unlimited for personal injury, death and tangible property caused by negligence, taxes, employment claims and IP Infringement Scope of IP indemnity oden IP Indemnity if IP is assigned to the Customer apply a separate higher cap to specific indemnity claims. Brussels / Düsseldorf / Hamburg / London / Manchester / Munich / Palo Alto / Paris / Shanghai / =ield=isher.com 12

13 1. Acceptance cceptance - process where client will review, inspect or test the deliverables Accenture evelops and, as a result, accept or reject such deliverables. Client Longer acceptance period to review and test deliverables No deemed acceptance Concerned about missing a problem during review and/or tes@ng process Service Provider Shorter acceptance periods to keep project Acceptance by client provides certainty Avoid project delays Brussels / Düsseldorf / Hamburg / London / Manchester / Munich / Palo Alto / Paris / Shanghai / =ield=isher.com 13

14 2. Acceptance: Common Final Positions cceptance: Common Final Posi9ons For interim deliverables, generally shorter acceptance periods considering the For final longer acceptance period enabling of final review and user acceptance Typically, is deemed accepted if client decides to deploy the into prior to acceptance and defects are corrected in warranty period Brussels / Düsseldorf / Hamburg / London / Manchester / Munich / Palo Alto / Paris / Shanghai / =ield=isher.com 14

15 3. IP Ownership P Ownership describe who owns the rights to the work products or deliverables eveloped on a given project or engagement. Client Safest to own all IP rights Service Provider Provide to client broad enterprise- wide rights to use in its business Should own the deliverables because it paid for them Exclusive ownership by one client is poten@al restric@on on its business or prac@ce Tools and pre- exis@ng IP must be unrestricted Brussels / Düsseldorf / Hamburg / London / Manchester / Munich / Palo Alto / Paris / Shanghai / =ield=isher.com 15

16 4. IP Ownership: Common Final Positions Each party retains ownership to its pre- IP and any enhancements or to it In projects or outsourcing, client owns the net new deliverables In new technology advancements (e.g., digital offerings), service provider is retaining ownership to the IP Customer ownership of newly created IP may come at a premium. Brussels / Düsseldorf / Hamburg / London / Manchester / Munich / Palo Alto / Paris / Shanghai / =ield=isher.com 16

17 4. Compliance with Laws ompliance with Laws describe each party s responsibility with respect to any pplicable laws, regula@ons and rules, and the process for making changes to the contrac f there is a change in law that impacts the project or engagement. Client Service provider should be compliant with all laws when performing the service Service provider will change its service if change in law impacts that service Service Provider It will be compliant with laws applicable to its business but client is responsible for laws applicable to its business It will change its services to accommodate changes in laws to its IT services but par@es will agree on change control for changes in client laws Client will give direc@on to it on how client complies with laws applicable to client s business Brussels / Düsseldorf / Hamburg / London / Manchester / Munich / Palo Alto / Paris / Shanghai / =ield=isher.com 17

18 5. Compliance with Laws: Common Final Positions For IT projects, each party is responsible for the laws that are applicable to its business Service provider will follow or guidance from client on laws applicable to client s lines of business Appor@onment of costs arising as a result of changes in law is oden conten@ous. Brussels / Düsseldorf / Hamburg / London / Manchester / Munich / Palo Alto / Paris / Shanghai / =ield=isher.com 18

19 6. Data Protection ata Protec9on describe each party s responsibili@es with respect to protec@on of the ther party s personal data. Client Service providers using personal data should be responsible for breaches or unauthorized access incidents Service provider may have beaer processes and protec@ons than the client itself Service Provider Par@es should agree on protec@ve standards and client should provide direc@on for applicable data privacy laws Liability for confiden@ality of business informa@on is different than liability for personal data Brussels / Düsseldorf / Hamburg / London / Manchester / Munich / Palo Alto / Paris / Shanghai / =ield=isher.com 19

20 7. Data Protection: Common Final Positions Final vary greatly Many US service providers demand caps on liability Clients and service providers agree that certain damages are considered direct damages Europe: EU wide privacy framework Reach of EU privacy law depends on the "data controller's" place of establishment or of processing equipment EU - country of origin principle Control of transfers of personal data to outside of the EU Brussels / Düsseldorf / Hamburg / London / Manchester / Munich / Palo Alto / Paris / Shanghai / =ield=isher.com 20

21 8. Exit Planning ssues to Consider: obust exit plan and on the incumbent and treatment of assets Handover of on service management Knowledge transfer Assistance during the period provision of the current service Costs TUPE ue diligence by incoming vendor Brussels / Düsseldorf / Hamburg / London / Manchester / Munich / Palo Alto / Paris / Shanghai / =ield=isher.com 21

22 9. Commercial Guidance overnance overnance - a formal process and successful iden@fica@on and resolu@on of pera@onal and commercial risks and issues. Deal with issues efficiently, amicably and fairly Effec@ve governance structure Brussels / Düsseldorf / Hamburg / London / Manchester / Munich / Palo Alto / Paris / Shanghai / =ield=isher.com 22

23 0. Conclusions Whilst there are IT terms and sector knowledge is important, many IT contracts are simple commercial agreements SLA s, Scope creep, service credits and data privacy are key areas in any IT contract Brussels / Düsseldorf / Hamburg / London / Manchester / Munich / Palo Alto / Paris / Shanghai / =ield=isher.com 23

com T: +44 (0)20 7861 4977 M: +44 (0)7774 975559 Brussels /

24 ontact Nick Holland Partner - London Fieldfisher E: nick.holland@fieldfisher.com T: +44 (0) M: +44 (0) Brussels / Düsseldorf / Hamburg / London / Manchester / Munich / Palo Alto / Paris / Shanghai / =ield=isher.com 24

Developing and Implementing Large Scale IT Projects

Developing and Implementing Large Scale IT Projects for ACC EMEA call on 8 January 2015 Nick Holland Brussels / Düsseldorf / Hamburg / London / Manchester / Munich / Palo Alto / Paris / Shanghai / =ield=isher.com