Technology contracts are important for both big businesses and startups. Even more so in the COVID-19 lockdown and social distancing phase. We’ll get to that part in a moment.
Today, the top 5 most valuable companies in the world happen to be technology companies with sizable legal teams indulging in massive contract management and documentation. Within the next 3-5 years, 70% of the business transactions will become digital in nature and almost every transaction will have a technology component to it.
Young individuals, often millennials are also starting innovative technology ventures rapidly. They need help in negotiating and finalizing contracts with different kinds of parties - whether they are vendors, partners, and customers. One mistake in a contract with a vendor can interrupt a critical service for their app or website. If such mistakes are not identified and the right terms are not in place, the loss arising out of such mistakes have to be borne by them. The vendor will not be responsible. If they offer a customer-facing product, they also need to create customized policies.
One missing term in policy can lead a B2C business (a business that offers services to individual customers) to face litigation in a totally different jurisdiction from where it operates. It can lead to unwanted criticism from angry customers.
If there is a breach of customer data that is not appropriately handled, liability for the organization responsible for mishandling the breach can run into millions. Here is a list of GDPR fines that were imposed, the highest being a 50 million euros fine on Google. A total of 237 fines amounting to 150 million euros have been imposed as of early 2020.
How does this impact technology contracts?
Businesses in India build ‘apps’ for various kinds of functions, which collect and process customer data from other businesses. These businesses have domestic and international clients. The client itself is in a customer-facing business, like running a restaurant, or a departmental store, or an apparel chain. Such clients tend to impose unlimited indemnity for data breaches on the technology services provider.
Now, if an Indian company does not negotiate such a clause, it can land itself in huge trouble. Further, if it does not prepare itself to handle these situations beforehand, it will find itself unable to do business in such jurisdictions. Losses and lost opportunity costs will be in millions.
Sounds serious, right?
Do you think a client will be willing to pay you for helping them review, negotiate and draft such contracts?
Will they pay you for advice in implementing internal systems which ensure that such contracts are not violated?
There are people who believed that they do not have to worry about engaging trained professionals for contract drafting - they would pick up an international template and execute it.
This was until they saw the problems materialize. Unlike earlier, a ‘cut, copy and paste’ job will not work anymore owing to the high degree of risk involved.
It does not take long for gaps to be identified - 6 months to 2 years is enough. Software development contracts fail regularly resulting in losses, and the primary reason is that the risks, loose ends and the phases are not mapped out.
Many customized software as a service (SAAS) or technology services procurement deals result in losses too, because the relevant service levels, metrics and KPIs are not mapped out appropriately to the nature of the service.
These challenges are becoming a day-to-day feature of everyday business operations.
I am not blowing the importance of technology contracts in today’s times out of proportion at all. The Harvard Business Review estimates that inefficient contracting causes firms to lose between 5% to 40% of the value on a given deal. This calculation pertains to ordinary contracts. For technology contracts, add the huge amount of regulatory fines for data breaches, indemnity claims and the increased costs of cross-border legal proceedings. Can you imagine how much is at stake here, and how important it is to have expertise in this area?
Given this situation, there is a huge demand for professionals who can assist businesses in drafting and negotiating technology contracts, contract management, and technology procurement.
Lawyers, Chartered Accountants (CAs), Company Secretaries and contract managers who do not have a law degree can reap tremendous career benefits if they can help clients solve these challenges. They may also be able to develop new clients on the way.
Traditional lawyers who have a litigation practice, or commercial lawyers who perform contract drafting work are struggling to effectively tap into this market because of the specialized nature of the work and its connection with other branches of law, such as data protection and privacy.
This is where you can enter. Take up these headaches for such businesses that they don’t even know exist and you’re the messiah. It is possible for younger professionals to enter the market by acquiring these ‘bridge’ skills.
In fact, younger professionals who work in this domain will enjoy an advantage in comparison to other areas of legal work as they will be able to break across numerous stereotypes. You do not need a specific level of seniority, or a minimum amount of experience, which is otherwise considered necessary to win the trust of a client for working on property litigation or a high-stake corporate deal.
Today, clients are willing to trust young lawyers with only a few years of experience and even freshers provided that they possess the necessary skill-sets to help them.
As these technologies and regulations are themselves new (less than a decade old), clients do not require lawyers to have 10-20 years of experience.
Since many of these businesses have innovated and grown rapidly, they are also willing to trust younger lawyers who can demonstrate that they have the skills and that they can deliver. If necessary, one can always show them a demo of their work.
Those who start early will be able to build their online profile and be in a position to get the clients faster.
The clients will not even insist on having physical meetings before they can give you work - in other words, you can get legal work even during a period of lockdown and social distancing.
Now, let me come to the COVID-19 lockdown and the social distancing phase, and how building expertise in technology contracts may be relevant for you.
How the COVID-19 lockdowns affect legal work around the technology contracts?
The COVID-19 lockdowns have placed businesses in a difficult situation. The likelihood of delay and default arising from different contracts has increased.
Parties are resorting to numerous legal actions under the contract law, such as the invocation of force majeure, frustration, novations, extensions and terminations under ordinary contracts.
These risks are applicable to technology contracts as well. These risks add another layer of complexity with respect to the technology contracts, especially if they are cross-border.
Now, the practical commercial implications of these concepts such as force majeure, frustration, etc., are not sufficiently chalked out with respect to technology contracts, especially in a scenario such as the current one.
When lockdowns are withdrawn, we may see a huge amount of litigation based on these communications.
Therefore, the responsibility of planning and issuing these communications is now. If any deal is to be restructured, it must be done now.
A good lawyer can save a client lakhs or even crores, with smart contract drafting.
At a time when courts are shut, hiring is slower and litigators are looking for money, the need for professionals who can do this work is urgent. This work can be performed online. You can build your profile, network, get this work and perform it remotely and legally.
But how will you perform the work?
Will you even be able to identify the pain points of a client to generate the work effectively and perform it?
Most professionals fail to generate clients because they do not know how to do the work. They bank on getting the work first and then performing it later. They ‘hope’ to learn how to do the work on the way.
That does not happen nowadays, as clients are highly informed, and they give you work based on your pre-existing level of knowledge, understanding of their business model and their pain points. Especially in this domain, clients are often technologically sound.
This pattern of client behavior is not specific to COVID-19 lockdown alone, but definitely, clients will search more and analyze your skills more deeply before giving you work, in the COVID-19 period.
What if you developed the capability to deliver services to these businesses as per their requirements?
What if you could help them re-negotiate and draft various kinds of ‘cloud computing’ agreements, or advise them on how to draft clauses on the use of ‘open-source software’ for a project?
What if you could have them restructure deals, claim ‘indemnities’, ‘invoke force majeure’ and save millions?
Won’t the client be willing to pay you for such work?
Remember, a client pays for the value which you have provided, not for the number of hours that you have spent on the work. If you are highly skilled, you can generate high value for the client and if you work in a company, the management appreciates you even more.
When the lockdown is withdrawn, would they give you more responsibility and recognition?
If you are looking for a job, would you be in a better position to be hired, if you have already performed such work?
Will clients be able to trust you more with new contracts?
Keeping all this in mind, we have curated an intensive 1-month certificate course, with live face-to-face interactions online, to introduce you all to the various kinds of prevalent technology contracts. This course deals with this specialized category of contracts related to software development, services, licensing, cloud computing, terms of use, privacy policies and other specific contracts relating to e-commerce, etc., which do require a sound understanding of the sector, and we intend on making this process of learning extremely satisfying.
Unlike our other courses, you will have two classrooms per week, and draft 4 contracts every week.
You can work harder, and grow faster. Prepare yourself simultaneously to handle work during the COVID-19 lockdown and post lockdown.
Our goal is not only to familiarize you with the terms and jargon but to enable you to draft these agreements effectively and become industry ready within a month.
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