Much of my SaaS law (Software as a Service) practice consists of negotiating SaaS agreements. Whether you count SaaS as a license, service or a hybrid of both, expect one thing in your negotiations, corporate counsel usually just don't get it. Most in-house counsel for large corporations spend their time on securities, employment or common vendor or customer issues. SaaS licensing is still a relatively new area of technology / information technology law and most in-house counsel want to throw it into a bucket of a purchase of goods or an installed software transaction. Common provisions that point to this lack of understanding are terms like acceptance testing, termination on convenience, reoccurring purchase order requirements, IP ownership, on-site insurance provisions and so on.
I once had a corporate counsel hold up a SaaS agreement over a maritime insurance clause. Not only was this a SaaS agreement where the client is merely turning on the switch to provide the customer Internet access to the SaaS solution, but my client was located in Indianapolis – the largest city in the US without a navigable water way.
The biggest problem caused by inexperienced counsel in these negotiations is that it causes delay in finalizing the transaction, which equates to increased expenses and risk of not landing the deal.
So what can you do?
During the proposal phase “ask, ask, ask”. Find out if the customer is experienced in SaaS transactions. Get the customer business representative to partner with you and to side with you when they present this to their counsel. Ask if their counsel can talk to your experienced SaaS counsel before negotiations begin. Inquire about the bureaucracy of the customer’s contract negotiation procedures.
Answers to these questions may not prevent all of the delays, but they should streamline resolutions to some of the issues that may otherwise come up during negotiations.
~~~~~~
Alerding Castor is an Indianapolis law firm focusing on business law, information technology law (including SaaS law and legal technology consulting), private equity consulting, probate and business litigation.
