The Prinz Law Office

Silicon Valley SaaS Attorney Kristie Prinz will present a webinar on “Negotiating SaaS Agreements: Drafting Key Contract Provisions, Protecting Customer and Vendor Interests” on October 26, 2018 at 10:00 a.m. The program will be sponsored by Virginia-based Clear Law Institute.  To register for the event, sign up at  https://clearlawinstitute.com/shop/webinars/negotiating-saas-agreements-drafting-key-contract-provisions-protecting-customer-and-vendor-interests-102618/.   Clear Law Institute has made available a discount code for the course: you can receive a 35% discount with the promo code: KPrinz119433.

If your SaaS company is like most, you postpone the procurement of insurance policies until you absolutely have to obtain them, expecting to be able to obtain whatever you need on demand.

However, if your SaaS company anticipates a significant deal is on the horizon,  you should be anticipating your needs in advance of actually starting those negotiations, or you may find yourself in a situation where you have to commit to maintaining insurance during the relationship that you may not actually be able to buy on the open market.  Why is this a problem?  Well, this puts you in the position of potentially breaching the terms of the “significant” deal before you ever start performing those terms, which can obviously have serious consequences for your company’s business if your breach is ever discovered.  Since the usual insurance terms in these types of deals require the submission of certificates of insurance as proof of coverage, any failure to procure the insurance required is not likely to stay undiscovered for an extended period.

Notwithstanding the foregoing, even if you do not breach the terms of the negotiated deal, it is far better to negotiate the scope of indemnification risks you will be incurring with advance knowledge of the terms of the insurance policies you already have in place, as you can then negotiate limits of liability within the coverage of the insurance coverage previously obtained.

So, what types of insurance requirements should a SaaS company anticipate when it goes to negotiate a significant deal?

First and foremost, SaaS companies should anticipate the requirement of a general commercial liability policy.  This is a standard commercial insurance policy that every business, regardless of whether or not in the software industry, should keep.

Second of all, SaaS companies should anticipate the requirement of a commercial auto insurance policy to cover the risk that employees or contractors may have an accident while traveling back and forth to a customer or business partner’s work site.

Third of all, SaaS companies should anticipate the requirement of an errors & omissions policy to cover the risk that company workers will intentionally or negligently act in a way that harms the customer or business partner.

Fourth, SaaS companies should anticipate the requirement of a cyberinsurance policy to cover the risks of hack attacks, data breaches, and third party cybercrimes, as well as notification costs and other costs to remedy a breach after it occurs.

Fifth,  SaaS companies should anticipate the requirement of an umbrella policy to cover losses in excess of the insurance limits available.

What types of limits of coverage should a SaaS company anticipate?  In my experience, larger deals will come with larger expectations, so the more significant the deal, the more insurance your company should be lining up in advance.

The bottom line is that doing some advance planning with respect to insurance before your software company commences negotiations on a significant deal will save your company the worry down the road of being discovered to be in breach of the deal you just closed if you find that meeting the insurance requirements you agreed to is not quite as easy as you anticipated.  Furthermore, it will enable you to go into negotiations better prepared to be able to negotiate terms that actually protect your company.

If you have questions about your SaaS company’s insurance planning, please schedule a consultation today at https://calendly.com/prinzlawoffice.

If your company has just landed a big tech or software development project for a third party, do not underestimate the importance of the agreement in protecting the revenue stream you are being offered in exchange for your development services.

The typical tech or software development agreement requires lump sum payments in installments throughout the term of the relationship.  Also, the typical development agreement will have at most a statement of work connected with the project and will rarely be accompanied by technical specifications or milestones, with respect to which approval can be sought at the various phases of the development.

Why can this be a problem?  Well, if your company agrees to take on a large tech or software development project and has not defined contractually in detail the technical specifications and standards required to be performed, or developed detailed milestones that can be tied to satisfaction of particular phases of the project, how exactly can you prove that you earned the money paid in installments if the customer pulls the plug on the project at any stage?  How exactly do you prove that you fulfilled your responsibilities with respect to the development project if you never actually reached agreement as to the technical terms of the development project?

The reality is that it can be very hard to enforce an agreement when the key terms of the relationship were never actually memorialized in writing.  While the risk of not being able to enforce your agreement may be low in low dollar value development projects, that risk escalates dramatically as the dollar value of the project also increases into the hundreds of thousands of dollars or even millions.

In general, when I see disputes involving tech or software development projects, the dispute can almost always be attributed to a poorly drafted agreement between the parties.

So, what can you do to minimize your risks of taking on a tech or software development project?

First and foremost, obtain help from experienced technology transactions counsel when your company is first approached with a potential development project.  An experienced attorney in this space can guide you through the negotiation process at the early stages, so that you don’t have to renegotiate terms that have already been agreed to by the potential development partner.  It can be very hard to get partner buy-in on developing and memorializing good technical terms when the parties are already weeks or months into the negotiation the deal.

Second of all, ensure that the technical specifications and requirements for the project have been defined in detail, and develop milestones throughout the development process, which can be approved.  Also, develop a process that is very well-defined within the contract to  obtain that approval.  If a specific timeline is required at any part of the process, develop terms that reflect the agreed upon timeline as well.

Third, instead of merely requiring payment by installments through the development work, develop payments that are tied to the accomplishment of specific well-defined milestones, in order to ensure that your company is can prove that any payment received was earned a s a result of the successful accomplishment of the applicable milestone(s).

The bottom line is that a big tech or software development project should be accompanied by a very detailed, technically-specific development agreement if a company prefers to avoid big legal headaches down the road.   It is in your company’s best interest to ensure that any development agreement that the parties execute is drafted to protect the anticipated revenue stream from the development project.

If your company is contemplating a tech or software development project and is concerned about avoiding future legal headaches, schedule a consultation today at https://calendly.com/prinzlawoffice.

Prinz Law Announcement 10.3.18

Webinar Mailer 10.26.18

Press Release 10.3.18

The Prinz Law Office is pleased to announce the launch of a new alternative legal billing solution for our clients in the software/SaaS, tech and health tech/digital health, and IT/healthIT industries: the subscription billing model.  We have been following the recent popularity of this model with California companies, and have decided to adopt our own version.  We believe that it may be a good fit for clients with ongoing firm needs, particularly in the transactional space.  Our new plans will be based on daily and half-daily billing, eliminating traditional hourly timekeeping for clients who choose this option. For more information on how a subscription solution would work, please contact Kristie Prinz at kp****@pr************.com or 408.884.854.