In this day and age, every business needs a commercial litigation lawyer. And it’s more critical than ever, especially for industries like tech and SAAS.
Millions of Australians may have felt a moment of alarm on Monday September 28th 2020 when they found themselves unable to sign into some of the most widely used apps in the world, including Microsoft Office, Teams and the Outlook email service. Arguably, this isn’t the first time and won’t be the last. Some will have briefly feared they were a victim of hacking or a cybercrime incident of the kind that hurt many Australian businesses in early 2020, though the truth turned out to be that Microsoft was experiencing a massive service outage affecting the West Coast of America and Australia, especially Melbourne, Brisbane and Sydney.
Reports soon emerged that the problem was in fact the result of a mistake by Microsoft, the second embarrassing slip up of the year, but in the meantime enormous disruption was experienced by individual workers and businesses alike. This was an even more glaring problem than usual at a time when so many people are working from home and reliant on these apps to connect to colleagues. Most users concluded there was little they could do about it other than take to social media to register their disappointment and disgust. After all, legal action can seem futile when facing the second biggest business in the world, with its armies of corporate lawyers.
However, service outages have led to serious legal consequences in the recent past. In April of this year the major US bank Truist Financial Corp filed a lawsuit against Hitachi Vantara, its software provider. While Hitachi sought to block the action, arguing that the bank had run into problems because it failed to follow instructions exactly, the courts have allowed the action to proceed. And, legally speaking, where the US goes, Australia will often follow.
A commercial litigation lawyer is crucial not only for large enterprises, but also the SMEs.
If you are a small or medium sized software or IT services provider, without the legal firepower the likes of Microsoft and Hitachi can command, you may be even more vulnerable to the threat of a commercial litigation when and if your services fail for whatever reason. The more people or businesses rely on your services, the more likely this can become a bigger problem. That’s why you need a highly competent commercial litigation lawyer on your team or advising you – not just to help you with a potential future dispute, but to help you prevent it.
Robust Master Service Agreements, expertly crafted by lawyers, are essential for all providers of services, with additional Service Level Agreements also highly advisable for software providers. These agreements establish the relationship between you and your clients, what products and services you have agreed to provide, and what deliverables are expected. They can make requirements for both parties clear, which was obiviousy a problem in the above Hitachi dispute.
Well crafted, they also – as one Silicon Valley solicitor writes – ensure both parties “understand what particular expectations are reasonable for the particular service being procured”. These expectations are crucial in an industry where there are sometimes several additional parties involved in the provision of services, whether mobile data operators or third-party software contractors.
Are your customer agreements and contracts giving you full protection?
You should of course be having detailed discussions with your clients about these expectations long before contracts are drafted or signed. It is in both parties’ interests that you have honest conversations about the problems that can occur in any type of service, but particularly ones that are reliant on technology. Software and hardware can experience glitches, even if you are tirelessly diligent and have the best engineers and developers working for you.
Communicating with your clients and customers will create more understanding and eliminate any unnecessary damage or breakdown to your relationships with them especially if major technical problems occur. But this ‘understanding’ also needs to be codified into legally binding agreements – without them, the consequences can be more serious than even a lost client. Instead you could end up in court, with all the potential costs that entails, including to your reputation and your bottom line.
Prevention is the best cure when it comes commercial litigations.
Of course, if that does happen, you will again need a strong commercial litigation lawyer on your side – but this is another one of those situations in life where prevention is much better than cure. Many of the most damaging commercial court cases come about as a result of poorly drafted contracts and service agreements. Getting the right legal advice can help ensure that you are not the losing party if those court cases happen but, even better, can prevent the situation ever occurring. That means that if the day comes when you do run into a service delivery problem, you can focus on fixing it, rather than wasting energy worrying about the legal repercussions that could be coming your way.
Mark Lazarus
Mark Lazarus, the visionary behind the business and the fresh blood of the Lazarus Legal team, Mark (or Laz as he is often known) owes much of his success to his past experiences. And he’s made it his personal goal to bring that wisdom and formula to the firm.
