Articles Posted in Legal and Contracting Issues

Posted

Agile is emerging as the prevailing methodology for software development. According to the 12th Annual State of Agile Report, a survey conducted by VersionOne and published earlier this year, 97% of respondent organizations practice Agile development methods, while 52% reported that more than half of the development teams in their organizations are following Agile practices.

Continue reading

Posted

Industry 4.0

The Fourth Industrial Revolution is the term coined by Klaus Schwab, the founder and executive chairman of the World Economic Forum, to describe the fourth major industrial era since the first industrial revolution which took place in Europe and America in the 18th and 19th centuries. Industry 4.0 comprises a collection of transformative technologies, what Schwab refers to as “emerging technology breakthroughs,” such as automation, artificial intelligence, the Internet of Things, digitalisation, use of composite materials, autonomous vehicles, quantum computing and nanotechnology with industrial/commercial applications.

Although not a new technology, many commentators would include additive manufacturing (AM) in the list of transformative technologies making up Industry 4.0. Until relatively recently, however, AM’s adoption was largely confined to development of prototypes with industrial uses rather than full scale manufacturing. This started to change with the expiration of certain key patents around a decade or so ago, to the point that today – although still in its infancy – AM has reached an inflection point as lower costs and technical advances have put it in reach of a greater number of businesses and consumers.

Posted

Financial Institutions may need to revise consumer contracts to remove class action waivers in preparation for a March 2018 federal rule.

On July 19, the U.S. Consumer Financial Protection Bureau, the federal regulator for a sweeping range of depository and non-depository consumer financial services companies (including the largest of U.S. banks), published a final rule that makes it illegal for many of the CFPB’s regulated entities to include consumer class action waivers in pre-dispute arbitration agreements. The Rule’s effective date is September 18, 2017, and applies to contracts entered into after March 19, 2018. (The Rule does not apply to pre-existing contracts.)

As a result, covered consumer contracts entered into after March 19, 2018, will need to: (a) remove language in pre-dispute arbitration provisions that bars consumers from participating in class actions; and (b) add language informing consumers of their rights to participate in class actions. The Rule will also require such companies to provide information on individual arbitration awards to the CFPB for publication in a public database (redacting consumers’ private financial information). Although the Rule does not outright prohibit pre-dispute arbitration agreements themselves (as many expected the CFPB might), companies will need to reconsider the economics behind offering consumers a full arbitration program in light of a future reality of increased class actions.

Posted

Recently our Global Sourcing and Technology Transactions team members published a report for SCL on Issues in Global Sourcing Transactions. Their report focuses on how in an increasingly globalized world, outsourcing contracts often have multi-jurisdictional scope. Before putting pen to paper, lawyers should consider with their clients the most appropriate contract structure for the deal and due consideration should be given to areas in which issues most commonly arise, for example, parent company guarantees, limitations of liability, service level regimes and TUPE.

Click here to read the full article on the SCL website.

Posted

According to Theresa May, the UK’s recently installed prime minister, Brexit means Brexit. But what this actually means in practice is still unknown. There is still a huge amount of debate over what Brexit will look like, what process should be followed and how long it will take. Some commentators, such as Michael Dougan, Professor of European Law at the University of Liverpool, have suggested that it could take up to 10 years to make all the necessary adjustments.

In the meantime, it’s business-as-usual in the field of commercial contracts, outsourcing and technology deals. That said, there are some key areas that should be considered when putting these deals together, given what we now know (and still don’t know) about Brexit, as well as provisions that should be kept under review as the Brexit story unfolds. This is going to be an evolving area, but, based on discussions with both buyers and sellers over the past couple of weeks, here are my top ten:

Continue reading

Posted

Of Silk and Services

As I listened to my wife, a custom wedding dress designer, talk a hysterical bride off the cliff this past weekend, I realized the conversation sounded eerily familiar. My wife was certain that the completed dress in front of them was exactly what had been ordered and she had emails, sketches and photos to prove it. The bride knew exactly what dress she had ordered, and this wasn’t it. She also had a set of texts, emails, and photos to support her expectation.

Sound familiar? This was nothing more than a failure to document a services solution. How can a “bride” to an outsourcing engagement avoid the same disaster?

Posted

In the first installment of this post, I posited that one factor contributing to disappointing results following a merger or acquisition is the flawed perception that transition services are not that important. I noted that this mindset may dilute the effectiveness of the post-deal enterprise(s) and result in unanticipated and unmitigated risks, lost or reduced revenues and/or interruptions of key business operations.

Let’s assume that you are sold on the importance of transition services. Even when transition is given appropriate attention, companies often suffer the perils of misguided implementation of the transition service regime, which may include:

  • Insufficient planning;
  • An undisciplined process;
  • Inadequate diligence (not asking the right questions); and/or
  • Incomplete or improper terms.

This installment focuses on how best to avoid these issues by adhering to a practical set of informed best practices.

Transition Services “Value Imperative”

Although there is no single “right way” to devise and execute a transition services strategy, there is one guiding principle that should drive any transition service regime. For the sake of discussion, I’ll call it the “value imperative,” which should advance three primary objectives:

  1. Help position the post-closing enterprise(s) to be at least as (if not more) competitive in the market(s) in which they operate;
  2. At a minimum, preserve (and potentially enhance) the valuation; and
  3. Enable the enterprise(s) to fully exploit the targeted synergies of the deal.

Put another way, the transition services should, at a minimum, “do no harm” to the value proposition being pursued, recognizing that the mechanisms for achieving this goal may differ depending on whether you are the seller or buyer (the recipient or provider of the transition services).

Implementing an effective transition services regime is as much about process as it is about substance. In this installment I explore the key attributes of an effective transition services process from the perspectives of both the provider and the recipient of these services.

Continue reading

Posted

Commercial lawyers ink thousands of contracts every day. Faced with an ever-shortening business cycle, they often do not have the luxury of seeking perfection in the contracting process. Fortunately, very few contracts ultimately end up in a formal legal dispute, but when they do, the fine points of the terms and conditions can become pivotal to litigation success or failure. There are things we can do to increase the odds that our contracts will work for us, rather than against us, if there is a dispute. Based on our experience in negotiating, implementing, disputing and litigating these kinds of agreements, this article suggests some areas of a typical service agreements that should not be overlooked during the contracting process.

To read the full article as published in Business Law News click here.

Posted

Nearly every website, app or online service posts a set of Terms of Use outlining company policies for users (sometimes called Terms of Service) (“Terms”), but many companies do not know if their Terms are enforceable in court. Do you? Online platform use has increased quickly, and companies have tried a variety of methods to present these Terms to users. Not every method works—some companies have been dragged into unfavorable litigation when courts hold their Terms unenforceable, a situation which can result in a tremendous drain on time and resources. Today, appropriate website design and Terms content are crucial for addressing the enforceability of your company’s policies, reducing uncertainty, and minimizing future costs.

I. Importance of Terms of Service

Clearly communicating Terms of Use to users is critical to reducing liability and demonstrating transparency to customers. Terms of Use outline a company’s expectations and the types of penalties that can be imposed for violations. If a third party brings a claim against your company based on their or another’s use of your service, Terms can serve to protect your interests and reduce litigation costs by designating on the front end which state’s laws will apply or possibly requiring arbitration. When properly coordinated with a Privacy Policy, your company can also minimize liability involving use by children, copyright or intellectual property infringement, and the performance or security of your service.

Posted

By Richard E. Nielsen and Michael J. Cataldo


On May 15, 2015, the New York Department of Taxation and Finance determined in Advisory Opinion TSB-A-15(2)S that the sale of certain cloud computing services were not subject to New York State sales and use tax.  The Advisory Opinion is noteworthy because of the Department’s position on the taxability of licensing prewritten software. 

  1. The Opinion was based on the unique facts of the taxpayer. The taxpayer (“Supplier”) offered Software as a Service (“SaaS”).  No specific servers of the Supplier were dedicated to any particular customer, the customers had no physical access to the servers, and the Supplier decided which of its servers would be used for each customer.  Customers were not charged by the Supplier for operating system software, and all charges were based on hourly rates and the amount of computing power consumed.  Customers were not charged any fixed fees for the service.