I decided mid-meeting the other day to start a new society: the Campaign for Realistic Negotiations. I’ve finally had enough of lawyers and their clients looking reality in the face and then denying it.
What pushed me over the edge was a heated — and completely unnecessary — negotiation on an IT services contract. The cause of all the tension was the old chestnut of whether the customer should have the right to step in and take over from the service provider if something went wrong.
Arguments about step-in rights have been around for ages, and many lawyers and clients see them as part of the protective armoury in a case of service failure.
No-one would really argue against the proposition that a customer’s main goal is to ensure its service is kept up and running. The question is how should that happen?
In some circumstances, it’s fair enough to have a step-in right whereby the customer takes over the service temporarily while it’s being stabilised. But it’s increasingly rare to find the circumstances where that’s appropriate. Taking over service provision involves control over datacentres and people, not just software and hardware.
How feasible is it for a customer to tell someone else’s employees how to run a service when it has no knowledge of its working processes?
Many years ago, step-in was a more plausible remedy because more solutions were developed for one particular customer but nowadays very few IT solutions are dedicated or bespoke.
There’s also more complexity in solutions and services and probably a lower incidence of in-house skill and experience that would enable customers to run a step-in service effectively.
The problem is that many of my legal colleagues haven’t moved on in terms of how they try to negotiate remedies supposedly for their client’s protection.
I’d go so far as to say that across-the-board step-in is almost never appropriate, but you’d never know it from many contract negotiation processes.
Step-in of some targeted form may still have a place in IT contracts, but there needs to be a focus on the sensible and workable alternatives.
The modern version of step-in probably means the customer either steering the services temporarily away from the vendor (and thus overriding any exclusivity clauses) or merely imposing a much greater level of hands-on management or control over the vendor’s service delivery.
Alistair Maughan is a partner at Morrison & Foerster, an international law firm