Lessons from Litigating Technology Service Agreements

Complex technology-based service relationships are especially vulnerable to disappointment, if not outright dispute, even as they have become an essential part of the operating fabric of the modern corporation. For most companies, third-party consultants, outsourcers, technology providers, and other service providers play a substantial role in the company’s daily operations. In the context of technology implementation agreements in particular, we tell our clients to set their expectations using the rule of threes – the project will cost three times as much, and take three times as long, as the contract provides. But very often clients are in the greatest hurry to implement these projects.

Although the reality of practicing business law is not likely to change, there are things we can do to reduce the odds that our contracts will work against us if there is a dispute. Based on our experience in negotiating, implementing, disputing, and litigating these kinds of agreements, this article suggests some areas of a typical service contract that should not be overlooked during the contracting process.

Our suggestions fall into three categories:

1. Substantive deal terms—the deal terms that naturally draw attention because they relate directly to the services provided.
2. Dispute-related terms—which for the purposes of this article means the “standard” contract terms that do not rise to the level of substantive deal terms, and typically receive less attention in drafting and negotiation.
3. Parties’ behavior—clients do not always appreciate that the way they conduct themselves during the course of a dispute can have profound effects on the outcome.

Download: Lessons from Litigating Technology Service Agreements