Monthly Archives: October 2007

Negotiation skill

Yesterday was the Business of Software 2007 Software Idol competition in San Jose. The topic of my 11 minute talk was the Five Fundamental Skills for Effective Negotiation – a result of research done last year. I didn’t win the prize (a Nintendo Wii), but I did end up having some great conversations with many of the world’s leading thinkers with respects to technology. Bill Buxton, head of Microsoft Research, asked me two very simple, yet often ignored questions about negotiation and negotiators.

First, he wanted to know whether a skilled negotiator (or sales person) could identify someone not so skilled simply on the basis of an initial conversation. The easy answer is “yes, they can.” If you are party to a negotiation and are not a skilled negotiator when the other side is, they will know it.

The logical followup second question then is whether two skilled negotiators create better deals. The answer, generally speaking, is also yes. I know that if I’m talking with another trained negotiator, we’re going to complete the deal much faster and more efficiently. Part of it is the negotiation skills and part of it is the contract/license experience to know where there are real issues versus red herrings.

For example, governing law is not a real issue. The parties either agree on their respective home states or New York. Once in awhile it’s Delaware. It’s a non-issue and can derail an unskilled negotiator/contract professional who is unable to move to the more important contract components.

So… the moral of the story is that if you’re a less-experienced negotiator, please go educate yourself. Books, training classes (and of course, real experience) will all help you to become better. Then add in the licensing component to understand what is really important as opposed to what only appears important.

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Term and Termination

I told you the other day that I was implementing a contract management system. Part of this task is the Herculean effort required to go through all of the existing contract files and cull them down to the contracts and their related paperwork. This wouldn’t be so bad if we didn’t have active agreements dating back to the 70s – or if thirty people didn’t mark the same document “to be filed” and the filer never look to see if another copy was already filed.

The second task, however, and one that is more important, is entering the metadata about the contract into the system. One obvious piece of information is the date of termination… and while you wouldn’t possibly believe this, almost 50% of the agreements I’ve seen so far have no termination date.

I don’t mean that they were intended to be perpetual – I mean that they’re usually a services agreement and they have an effective date, but no contemplation of an end. Sure, I suppose it’s possible that after they spent time negotiating the contract, they didn’t want to have to revisit the agreement… but “forever” is a long time. Besides, I’m sure your organization has change at least one contractual phrase in the intervening years that you’d like to integrate into your old agreements.

So, short and sweet today, let’s just all remember to put termination dates on our agreements. Even if you set it up so that there is some sort of a renewal term, make sure you have a way to get OUT of the agreement that lists what happens in the event of termination (and not just for breach). I might thank you for it some day.

[As a complete side note, don’t forget that the Caucus IT Procurement Summit is next week! If you’re in Orlando, or have time to burn, we’d love to see you. And if you’re going to be there, come find me and say hello!]

Audit

Provider’s typically require the ability to come to a customer’s facilities at any time and with almost no notice for the purpose of conducting an onsite audit of the use of provider’s product. While an audit, in and of itself, might not be a problem for a customer (in some cases, third-party associations argue that they have this right to audit as well), the convenience of any audit is of concern. For example, if a party had a sales cycle that was quarterly in nature, an audit at the end of the quarter could significantly disrupt the cycle and that quarter’s earnings.

The customer might also like the ability to audit the provider to review their accounting and bookkeeping practices. As such, audits are not a contractual problem so long as they are done upon several days’ prior written notice and at a mutually convenient time, usually during business hours.

Most audit provisions also detail that the expense of the audit is to be borne by the party conducting the audit unless, as a result of the audit, it is discovered that the audited party is somehow breaching the terms of the agreement. Watch out for situations where the audited party has to pay the costs of audit regardless, as this could merely encourage random and inconvenient audits designed more to harass rather than to find true issues. This also means that audits should only be performed a “reasonable” number of times. In other words, audits should be done on a consistent (i.e.: annual) basis and with some form of reason behind the audit.

With the advent of remote monitoring systems, many providers are now attempting to include the ability to audit remotely. This usually involves connecting through a secure system to enable the provider to gain access to the customer’s internal network and to view certain log files or other data that indicates software usage. From an ethical perspective, a customer should never have a problem with allowing their providers to review their usage. From an IT security perspective, however, the concept of remote monitoring may raise some concerns. Before agreeing to such a provision, a customer should make sure to check with their IT security group and include language regarding IT security into the license.

What audit language have you agreed to? Are you happy with it? Have you been burned?

Caucus Annual IT Procurement Summit 2007

I can’t believe it’s already October! But one of my favorite events of the whole year happens at the end of this month, the Caucus IT Procurement Summit. Held this year at Walt Disney World (yes, I’m a Disney fan, too), this annual conference provides one of the best opportunities for IT procurement professionals to gather and discuss contract, negotiation, legal and other related issues that face our industry.

I have the honor of serving on the planning committee this year, so of course, some of the best speakers are going to present the best sessions! (No, I’m not speaking this year, so I’m not being arrogant.) In all honesty, though, the presenters really are hand selected and represent the highest quality practitioners in the field.

If you would like to join us (or perhaps you are just looking for a reason to come to Disney in the fall with the nicest weather all year) – don’t fret, there’s still time to register!

See you in Orlando!

TechnoLawyer BlawgWorld

Software licensing is just one of a host of legal issues now covered online by a variety of bloggers. Some of the folks I mention in my blogroll to the right discuss many other important topics on a daily basis.

BlawgWorld 2007 is an eBook published by TechnoLawyer, an aggregator for legal blogs. The 2007 Problem/Solution Guide enables you to find solutions to 185 common problems – by providing you the “best of the best” posts from a lot of these blogs throughout the year. These solutions are organized by topic, including case management, depositions, discovery, document management, legal research, time-billing, etc.

No registration is required to download the book – it’s a free PDF. If you’re one of my lawyer-readers… or just enjoy legal topics, you’ll enjoy the book – and probably find a few new blogs to add to your feedreaders – just like I did! My only disappointment was that I didn’t find out about them soon enough to get one of my posts listed in the 2007 guide, but look for me in 2008!

Enjoy the free eBook!