‘Tis the season! For the holidays, et cetera, but more particularly for CLEs which meet the Law Society for Upper Canada’s new requirements for professionalism and ethics. Every lawyer called to the bar in Ontario must complete three hours of continuing legal education approved by LSUC that is directed to instructing on professionalism and ethics. In the mad rush to meet the year-end deadline, CLEs are popping up all over the place directed to this topic.
IT Professionalism and Ethics CLEs: An Introduction
For outsourcing and information technology lawyers, it was a challenge earlier this year to find relevant seminars. There were many generic seminars on practice management and the like that could appeal to an information technology lawyer in a general sense, but very few seminars that addressed issues specific to the practice of information technology or outsourcing law.
I suspect that there are several good reasons for this. IT lawyers are rarely in court, so the ubiquitous litigation-related professionalism courses are only tangentially relevant. (IT companies rarely air their dirty laundry, preferring in the worst cases confidential arbitration instead.) IT lawyers spend most of their time either drafting contracts or negotiating them between reasonably well-funded and well-represented parties, which can make for boring ethical fodder.
Recently, however, there have been a number of seminars that were of particular relevance to IT lawyers in Ontario. The Ontario Bar Association and LSUC put on a couple of seminars in the fall, for example. Our colleagues across the country may find these seminars of interest even if they do not have these particular CLE requirements to contend with. A number of these seminars addressed ethical and professionalism issues arising in contract negotiation.
This topic is near and dear to my heart. I spoke on it at a recent session to the Licensing Executive Society. With that engaged audience, we ran over time by almost half an hour, and had to cut the session short, because there was such excellent discussion to be had. So much for it being boring ethical fodder, I discovered.
In this column, and in at least one more upcoming column, I will present one or a number of scenarios in which ethical or professionalism concerns arise in the context of IT transactions. Some of these scenarios could be generalized to any commercial transaction, and others have a particular IT twist.
Errors in IT Negotiations
The first scenario I would like to discuss is whether it is ethical or professional to take advantage of errors of opposing counsel or their client in the context of an otherwise balanced IT negotiation.
Most if not all professionalism codes will expressly forbid “sharp practice”, which, in the little case-law in Canada that describes it, includes taking advantage of a “clear oversight” by an opponent in a proceeding. (Construction Workers Local 53 v. Fahringer Mechanical Contractors Limited (2001), CanLII 3504 (ON L.R.B.)). LSUC’s Rules of Professional Conduct instruct a lawyer to “avoid” sharp practice, and particular forbid lawyers from taking advantage of mistakes of other legal practitioners where such errors do not go to the “merits”. In a negotiation, this is a thin line. There are few procedural errors a lawyer could make in a negotiation, and most errors would go to the merits or otherwise affect their client’s rights.
There are several general categories of obvious errors that occur in an IT negotiation.
One of the most common obvious errors is a failure to cleanse a document of metadata. Metadata, such as the author of a document, when it was created and edited, and, in a document with tracked changes, who made which changes at what times, can provide a wealth of negotiating information to an opposing party. For example, it can help an opposing party identify who the decision-makers are and call out internal disagreements within an opposing party. For this reason, it is common practice to scrub documents intended for the other party of all metadata.
Once in receipt of a document containing metadata from the other party, is it unethical or unprofessional to take advantage of the error and review the metadata? I think so, but there were mixed opinions at some of the seminars I attended which addressed the topic. I believe that it falls within the LSUC prohibition, since metadata cannot be said to go to the “merits” of a point under negotiation. As a practical matter, I know it is possible to manipulate metadata, so would not be inclined to rely upon it anyway.
Another common but obvious error is the inadvertent inclusion of internal emails in an email reply. In the heat of a busy negotiation, the parties will be exchanging many emails. These emails are often forwarded internally within each party, and may be commented on. Strategies and potential responses may be discussed before a response is formulated and returned. It is at best embarrassing and potentially quite damaging when this internal discussion is forwarded to the other party in a negotiation.
Once having received a document that contains such information, I feel that I am ethically obliged to limit its distribution. I may or may not have contractual obligations to keep the negotiations confidential. But, in any event, the error cannot be exploited, so limiting its dissemination will reduce the temptation to do so by my client.
Practical considerations may prevail anyway. It can be counterproductive to raise the error, or to use the information provided by it, in negotiation. Although it is nearly impossible to stuff the genie back in the bottle, if the party that made this error is reminded of it subsequently at the negotiation table, it is likely to embarrass or upset them further, and put distance between the parties. Conversely, an error professionally handled can engender respect between the parties, and, ultimately, a measure of trust that will be essential to close the transaction.
A third kind of error is what I call a “technological error”. It is an error in the specification of the technology being contracted for under the agreement. This kind of error is often only obvious to one of the two parties. The party with the greater technological expertise may spot that the other party has made incorrect assumptions or selected technology that would not work as intended. If this error is made by the customer, the service provider has a strong business interest to stay silent. Once the error is discovered, often after the contract is signed, the service provider is in a much stronger negotiating position, and can use the error to force other changes in the agreement, including increased fees.
If I was acting for the service provider, and my client informed me that the customer had made such errors in their specifications, I could be in a difficult position. This is not an error of opposing counsel, but instead is an error of their client, so the professionalism rules do not apply. If there were a great inequality in bargaining power, case law relating to such negotiations in non-technical fields (such as employment or franchise law – see Shelanu Inc. v. Print Three Franchising Corp. 2003 CanLII 52151 (ON CA), (2003), 64 O.R. (3d) 533, and the cases cited therein) have imposed a duty to negotiate in good faith, which, if it applied in an IT transaction, could oblige a party to point out an error like this. However, in a negotiation involving sophisticated and well represented parties, I would not have trouble staying silent with respect to this error, since the parties are well equipped to spot their own errors.
Rule of Thumb
There are, of course, many other types of errors that can arise in an IT negotiation. To evaluate each, counsel should consider whether the professionalism rules of their jurisdiction apply, whether a duty to negotiate in good faith applies, and whether, as a practical matter, the damage to the relationship between the parties is worth the gain to be had by exploiting the error.
The IT bar in Canada is an intimate one, and word gets around. To keep your clients and preserve your reputation, ultimately, the soundest course is to follow the golden rule, and treat others as you hope to be treated (and make sure your insurance is up to date).