Many times clients start outsourcing process before they are ready. Premature outsourcing decisions sometimes are driven by executive decision that the outsourcing function will need to be completed by certain deadlines. This can cause lots of problem. Effective negotiation of any outsourcing deals requires clients to perform proper due diligence and gather necessary internal data before the outsourcing process starts. Such data could include scope of services required, current mode of operation, desired future mode of operation, historical service level performance, extent of employees impacted, third party contracts and current cost base. 

Defining service requirements based on client’s own internal . . . [more]

Confidentiality obligations are a fundamental part of all outsourcing agreements. As part of an outsourcing transaction, the customer and the service provider each agree to make Confidential Information available to the other but subject, in each case, to the limitations on use, disclosure and retention that are agreed to in the contract. Unfortunately, customers and service providers don’t always get it right and the parties sometimes find, after signing the agreement, that information intended to be kept confidential need not be or that information intended to be freely available is subject to unwelcome restrictions that limit its usability. In this . . . [more]

This is the third and final contribution focusing on some differences between North American common law regimes and Quebec’s civil law system in the area of IT contracting. The first two contributions dealing with the same subject-matter can be found at: Seller Liability for Software Integrators? and Use Best Efforts Not To Rely On “Best Efforts”.

I thought I would use my last contribution on the specificities of Quebec’s legal regime to provide a quick snapshot of selected key issues which IT practitioners should be aware of when negotiating a contract governed by the laws of the Province of . . . [more]

I recently participated in a panel discussion called “Unbundled Work/Unbridled Success: Sourcing Canadian Legal Services Differently” at the Sixth Annual Canadian Bar Association Law Firm Leadership Conference. A significant portion of the conference covered legal process outsourcing (“LPO”). Professor Richard Susskind moderated the session on LPO. The conference was well attended by virtually all of the major law firms in Canada and the majority of the attendees were the managing partners of these firms. 

The conference was a personal highlight for me, for two reasons. Firstly, Richard Susskind was the moderator of the LPO session. Need I . . . [more]

The nomenclature of a contract can subtly alter the relationship between the parties. The choice of particular words can create tension when exercising the provisions containing them simply because of how they sound, and what impression those words make in the mind of the reader. The legal effect can be identical, but a subtle psychological bias can be introduced by selecting loaded words as definitions or terms. This bias can be reinforced by using the notice provisions of the agreement to influence whether a notice is communicated, and how it is communicated.

Consider a scenario where a first party is . . . [more]

There is an old adage that goes: “a good arrangement between parties is one where the contract can be put away at the end of the negotiation and never looked at again.” And who can complain with the apparent wisdom of this adage? It implies that the parties are so sufficiently well aligned and cooperative that a written contract is merely a formality, and that any circumstances can be accommodated through rational and cooperative behavior. I’ve never met a businessperson who did not subscribe to this adage. And I myself never questioned its apparent wisdom until the past 24 months . . . [more]

In his July 30, 2010 posting, Plus Ça Change, Dan Logan of Torys talked about the difficulty of addressing the implications of change as part of a long term outsourcing arrangement. Dan referred to the results of a recent Gartner Group survey that indicated:

• 55% of organizations have renegotiated their outsourcing agreement terms within the lifetime of the contract;
• 15% of the renegotiations occurred within the first year;
• 23% of the organizations did not expect to enter into the renegotiations; and
• nearly 8 in 10 outsourcings will go through renegotiations.

The Gartner Group survey identified one of the major . . . [more]

Many outsourcing contract negotiations start with customer’s paper. While this may not necessarily be objectionable, both parties must understand and remember what the objectives of the deal are. The problem in using a party’s standard template agreement is that those standard clauses may have little relevance to the outsourcing deal. While some customers may believe it is always “better” to get the supplier to agree to “more favourable” terms and conditions in the contract, the reality is that the customer is always the one who ends up paying for such additions.

For example, it is not unusual to see extensive . . . [more]

This is the second of three contributions focusing on certain peculiarities of Quebec’s civil law legal environment within North America (Part I can be found here).

While outsourcing and sophisticated professional IT services agreements typically deal with quality and performance issues through mechanisms such as service levels, penalties and credits, warranties and other related concepts, one will occasionally come across a client request to have the vendor commit to using “best efforts” to achieve a certain desired result. Vendors typically bark at this as they fear that such a commitment might be open-ended and require the deployment of resources . . . [more]

I recently read an interesting article called “For LPO clients, small is beautiful”. What makes it interesting is it highlights the valuable role of “smaller” LPOs. 

The survey supports the view that global companies outsourcing legal work seem to prefer doing business with smaller companies. The survey conducted across 6,547 clients globally shows that smaller vendors, including LPO vendors are satisfying more clients and to a greater degree compared to their larger counterparts. The survey was conducted by the Black Book of Outsourcing in 2010. 

UK-based Datamonitor’s Research Director, Eamonn Kennedy, said in a press statement, “Although feedback . . . [more]

Attention forum shoppers! Your governing law clause could buy you a lot more than you bargained for

There are many good reasons to “forum shop” when choosing the governing law of an outsourcing contract. Proximity to the place of performance and comfort with the commercial sophistication of the selected jurisdiction are two. In a ruling relating to a franchisee class action, the Ontario Court of Appeal has recently added another (maybe not so “good”) reason to the list: the possibility that the jurisdiction’s general body of statute law may apply to operations outside the jurisdiction even if you have not . . . [more]

Linking Service Descriptions to the Economic Model

It is trite to say that in any outsourcing transaction, the service description is critical to the deal. The services are, after all, the essence of the outsourcing regardless of the impetus for doing the outsourcing in the first place (such as cost reduction, technology improvement, business transformation, and so on). The service descriptions are used to establish the framework for the economic model and the base fees that will have to be paid by the business owner. These service descriptions are key for establishing what the service provider must do for the . . . [more]