Software Vendor Negotiations: When To Get a Lawyer Involved?

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Software Vendor Negotiations: When To Get a Lawyer Involved?

This article has been contributed by Scott D. Rosenberg of Miro Consulting.

As consultants who help companies during software negotiations and audits, we often get involved with their internal legal counsel, and occasionally their external counsel.  Senior executives usually believe that they know when to get lawyers involved in the negotiation process.  One of them told us this issue is as black and white as the contract itself.

If you know anything about software vendor contract negotiations, you know that nothing is black and white!  Every company has different software requirements and situations.  Good lawyers are absolutely essential to software vendor contracts, but not quite as essential as many of them think!

So when do you get legal counsel involved?  Simple: Lawyers should be involved during the review of the final draft contract only from a legal standpoint. That’s it.  Lawyers should do little or nothing else beyond this, even if they clamor to “know the contract.”  Yes, you need lawyers to interpret the legal terms and conditions.  This is what they are uniquely qualified to do for you.  What they are not qualified to do – but all too often try to do – is optimize software licenses to fit the organization’s needs now and in the future.  They are attorneys.  They know the law.  They are not CIOs, IT experts, IT asset managers or even business executives who must look at their software assets and align them with business objectives.

Why and when lawyers should not help during software audits:

1. Vendor negotiations: While it may seem intuitive to get the lawyer involved in software negotiations, it’s actually almost always a bad idea. The reason: lawyers will only look at the legal aspect of the contract, including how many licenses are needed (e.g. How many licenses are needed for multicore?).  What they don’t do is look at it from the needs of the organization, now and in the future.  What is the best decision from the IT or operational standpoint?  Will it optimize my licenses and allow me the flexibility I need later on?  These are critical issues during software contract negotiations, and your lawyer can’t help you.
2. Contract re-up: For the same reason, keep the lawyers away during initial contract re-up negotiations.  Attorneys may understand that the existing terms and conditions negotiated a while back are a sweet deal, and you may be tempted to direct them to renegotiate the same T&Cs.  However, attorneys are not likely to understand the nuances in licensing changes, how they affect the IT organization, or how they affect your re-up.  For example, multicore changes – while simple to understand – can lead to extreme pricing changes in licensing. While you can usually grandfather in certain older multicore values, the question to ask is: should we?  The multicore may be obsolete in a few months, or perhaps there is a plan to change the servers and the types of cores within the year.  This would make the contract re-up and the T&Cs obsolete.

A good lawyer is essential to the software contract negotiation process, but only that part of the process they are trained to execute.  Don’t ask them (or let them) help with the larger optimization process that they are not trained to understand.

This article has been contributed by Scott D. Rosenberg of Miro Consulting.

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