Robert J. Scott, who represents some of the world’s largest companies in enterprise transactions with Microsoft, will present a webinar on how the legal issues in enterprise agreements have shifted dramatically as Microsoft and other major vendors emphasize their cloud offerings.

The complimentary event will be Wednesday, August 23, 2017, at 11 a.m. CDT. CLE credit is pending in Texas.

Scott says The key issues in modern enterprise agreements are driven by privacy, security and regulatory compliance.

This webinar will discuss traditional and newly developed Microsoft licensing models, principal concerns about current licensing models, types of license agreements, and primary causes of exposure in enterprise-level Microsoft software audits. Scott will explain how he helps clients define their requirements up front, builds term sheets for negotiation, and how he approaches negotiating the key issues in Enterprise deals with Microsoft’s legal and business teams.

The webinar will cover:

Microsoft Licensing Models
*Perpetual vs. Subscription
*User vs. Device
*Microsoft’s SPE Offering

Agreement Types
*Microsoft Business & Services Agreement
*Online Subscription Agreement
*Enterprise Agreements and Enrollments
*Microsoft Products and Services Agreement (MPSA)

Key Legal Issues
* How to Define Requirements
* How to Build a Term Sheet
*Transitioning to Office 365
*Limitations of Liability
*True-Up Terms
*Price Protection
*Business Downturn
*Restacking Your CPS
*Audit Rights
*Regulatory Compliance – HIPAA, GLBA, GDPR
*Affiliate Definition
*Acquisitions and Divestitures

Register for the webinar.

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At its annual meeting in July, held at the Fairmont Le Chateau Frontenac in Québec City, Québec Canada, the International Association of Defense Counsel (IADC) elected Andrew Kopon, Jr. as its president for the 2017-2018 term.

In a release, the IADC said the organization is an invitation-only global legal organization for attorneys who represent corporate and insurance interests. The IADC’s approximately 2,500 peer-reviewed members hail from six continents, 51 countries and territories, and all 50 U.S. states. The core purposes of the IADC are to enhance the development of skills, promote professionalism and facilitate camaraderie among its members and their clients, as well as the broader civil justice community. Founded in 1920, the IADC is committed to respecting the rule of law and improving civil justice.

Kopon is a founding member of Kopon Airdo, LLC in Chicago. His trial practice focuses on complex civil litigation matters, including mass tort litigation, wrongful death and catastrophic injury cases, as well as pharmacy malpractice and coverage litigation matters. He currently serves as national counsel for a religious risk pooling Trust and a national retailer, overseeing its pharmacy malpractice litigation. He previously served as national litigation counsel for a commercial product manufacturer.

Kopon is Martindale-Hubbell® AV Preeminent™ rated and has been recognized by Illinois Super Lawyers and Leading Lawyers Network for multiple years. In addition to being heavily involved with the IADC and its Foundation, Kopon is an active member of Defense Research Institute and the Illinois Association of Defense Trial Counsel.

He received his B.A. from Providence College and his J.D. from The John Marshall Law School.

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Bloomberg Law reports that Microsoft hopes to shift 90 percent of its legal work into alternative fee arrangements within two years — in an effort to move away from the billable hour.

Microsoft has been re-evaluating how it works with law firms, according to David Howard, a corporate vice president and deputy general counsel at the company.

“It made several key decisions in the process, including to hire more law firms on a retainer basis and to work more closely with them on their diversity,” reporter Gabe Friedman writes. “[Howard] also said the company is rapidly moving away from the billable hour, and named a dozen law firms that have embraced alternative fee arrangements, such as fixed fees, that Microsoft views as its strategic partners.”

Read the Bloomberg article.

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Documents released Tuesday in a lawsuit against Monsanto raised new questions about the company’s efforts to influence the news media and scientific research and revealed internal debate over the safety of its highest-profile product, the weed killer Roundup, reports The New York Times.

Monsanto said it was outraged by the documents’ release by Baum, Hedlund, Aristei & Goldman, writes Danny Hakim.

“There is a standing confidentiality order that they violated,” said Scott Partridge, vice president of global strategy for Monsanto. He said that while “you can’t unring a bell,” Monsanto would seek penalties on the firm.

A partner in the firm said Monsanto had failed to file a motion seeking continued protection of the documents, but the company said no such filing was necessary.

Read the NYT article.

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A new U.S. rule aimed at restoring consumers’ ability to band together to sue financial companies has survived its first challenge, as a top banking regulator said he would not petition for it to be suspended, Reuters reports

Lisa Lambert and Pete Schroeder write that the Consumer Financial Protection Bureau’s rule abolishing “mandatory arbitration clauses” was released on July 10, and was immediately threatened by Republicans in Congress and President Donald Trump’s administration.

Acting U.S. Comptroller of the Currency Keith Noreika publicly argued with CFPB Director Richard Cordray, appointed by former President Barack Obama, a Democrat, over whether the rule could endanger the banking system.

Read the Reuters report.

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Bloomberg Law reports that GE Healthcare is finding automation to be one of the biggest challenges as it builds its legal operations function, Vice President and General Counsel Laura O’Donnell said.

O’Donnell told Bloomberg BNA’s Yin Wilczek that the company’s in-house lawyers have been wrestling with how legal processes that are tailored for specific needs can be made “repeatable and automated without losing the good analysis that we are known for as a profession.”

Bloomberg includes a video of O’Donnell discussing GE Healthcare’s automation efforts.

Read the Bloomberg article.

OpenText Discovery (formerly Recommind) has published a report titled “Corporate Legal Ops Service Results 2017,” which is available for complimentary downloading.

Starting in 2015, OpenText Discovery has commissioned Ari Kaplan Advisors to interview premier corporate legal ops professionals to identify new trends and eDiscovery issues. This report details the latest 2017 findings, such as:

• AI and Analytics: Is cost still an issue to adopting discovery analytics?
• ECM & Discovery processes: Are legal ops professionals consolidating their approach?
• Cloud readiness: Has the cloud reached a tipping point?
• InfoSec: Have data security concerns increased?

Download the report.

NAVEX Global has produced a new ethics and compliance benchmark report that provides key statistics to measure and prove the value of educating employees on the right topics.

The report can be downloaded from the company’s website.

Most companies are using compliance training to teach employees about respect, ethical behavior and legal requirements. Yet companies continue to make headlines for bad employee behavior, NAVEX Global says on its website.

In the 2017 Ethics & Compliance Training Benchmark, NAVEX Global collaborated with an independent research firm to deliver data that answers questions like:

• What are the typical employment law training courses provided?
• What issues threaten training effectiveness?
• How are organizations aligning training with risk?
• How often, and on what topics, are boards training on?

The report also gives guidance on rigorous methods to use such as maximizing data from hotlines, measuring changes to behavior and more.

Download the report.

The case of Donald Zarda, a skydiver who claimed his employer, Altitude, violated Title VII when it fired him after finding out he was gay, illustrates how the U.S. Department of Justice and the Equal Opportunity Commission can sometimes operate at cross purposes in litigation.

According to a Reuters report, the EEOC, an independent federal agency, is representing Zarda’s estate against the former employer. At the same time, the DOJ has filed its own amicus brief, explicitly disavowing the EEOC’s stance.

Alison Frankel writes that the brief “argued primarily that the EEOC and the 7th Circuit, which adopted the agency’s reasoning in its en banc opinion last April in Hively v. Ivy Tech Community College, disregarded the actual language of the statute and misread Supreme Court precedent on interpreting that language. According to the Justice Department, it’s up to Congress, not the courts, to legislate protection for gay and lesbian employees, and Congress has steadfastly refused to do so.”

Read the Reuters article.

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The Bureau of Land Management has announced its recommendation that the hydraulic fracturing rule from 2015 entitled, “Oil and Gas; Hydraulic Fracturing on Federal and Indian Lands,” be rescinded, reports Fox Rothschild in its Energy Law Today blog.

Melissa J. Lyon explains that in 2015 the BLM had issued regulations that attempted to regulate oil and gas development on federal and tribal lands by focusing on wellbore construction, chemical disclosures and water management.

But litigation kept the final rule from going into effect. Then U.S. District Court Judge Skavdahl ruled that the BLM does not have the authority to enforce the 2015 hydraulic fracturing rule.

Read the article.

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The use of artificial intelligence technology, though still in its infancy, is gaining traction with law firms, helping to provide better outcomes for clients, faster, writes Russell Kostelak in Proskauer Rose’s Minding Your Business blog.

His article discusses the use of AI in the many phases of contract review: contract creation, contract analysis, and contract due diligence.

“While many law firms rely on templates for initial drafts of a contract, there is no one-size-fits-all template for the intricacies of each situation. AI systems can scan a law firm’s contract library and generate spreadsheet reports sorting and categorizing the underlying data within the contract library,” writes Kostelak.

Read the article.

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A non-competition agreement raises state-law public policy concerns. As a result, states often restrict the scope of non-competition agreements before they will enforce them, warns Mark Koogler in Porter Wright Morris & Arthur’s Federal Securities Law Source.

“Most jurisdictions disfavor non-competition agreements as a matter of public policy because they view such agreements as a restraint of trade,” writes Koogler. “Broader language places a heavier burden on the employer to justify the restrictions whereas narrowly tailoring the language of a non-competition agreement reduces the risk that a court will construe the agreement to unnecessarily restrain trade.”

Koogler writes about the importance of balancing the interests of the employer and employee.

Read the article.

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Executives and other high-level employees often negotiate a contractual provision requiring the payment of severance if terminated without “Cause” prior to the expiration of a term agreement, points out Bill Wortel in Bryan Cave’s At Work blog.

“Too often, employers limit the definition of Cause to intentional misconduct that harms the company, criminal behavior, or the executive’s death. Such a narrow definition ties the employer’s hands when an executive is not making a good-faith effort to perform well or is performing very poorly despite reasonable efforts,” Wortel writes.

He advises that the agreement should include a definition of cause that provides the company with flexibility to terminate an executive for legitimate, non-discriminatory business reasons.

Read the article.

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Jared Butcher, writing in the Steptoe Blockchain Blog, suggest three tools to address smart contract risks: (1) cybersecurity insurance policies, (2) indemnification agreements with outside vendors, and (3) “make whole” agreements among the smart contract parties themselves.

He writes that insurers, vendors, and other contract parties can provide the best source of indemnification, assuming that the proper contractual arrangements are put in place.

Under the heading of cybersecurity insurance policies, he writes:

“One issue worthy of particular attention is the employee exclusion. These exclusions in the policy language should be scrutinized to determine the level of coverage for losses caused by employee errors, which are likely to be a significant source of risk in a smart contract system.”

Read the article.

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A Bressler, Amery & Ross lawyer representing Wells Fargo, responding to a third party subpoena in a case between two financial advisors, produced documents without redaction or confidentiality designations that revealed “billions of dollars of client account information, from residents of numerous states and possibly Europe.”

Above the Law describes how the mistake got worse: “To compound the issue, [the lawyer] alleges that plaintiffs showed the documents — which, remember, weren’t protected by a confidentiality agreement — to the New York Times, which then wrote about the consumer information that was produced. All in all, an incredibly messy affair.”

Kathryn Rubino writes that a broadly worded confidentiality agreement could have mitigated the damage.

Read the Above the Law article.

A former Fiat Chrysler executive has been charged with looting a training center for blue-collar workers by giving $1.2 million through a variety of ways to a UAW leader, his wife and other senior union officials, according to an Associated Press report.

The ex-exective is Al Iacobelli, who was indicted in an alleged conspiracy involving the late United Auto Workers vice president General Holiefield and Holiefield’s widow, Monica Morgan.

“The indictment describes a multiyear scheme to reward Holiefield and Morgan with first-class travel, designer clothing and jewelry. A $262,000 mortgage on their home in suburban Detroit was paid off, according to the grand jury,” write Ed White and Tom Krisher. “Iacobelli treated himself to more than $350,000 for a Ferrari, the government alleged.”

Read the AP article.

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A defense lawyer says former pharmaceutical CEO Martin Shkreli would lose a $65 million stake in a drug company he founded if he’s convicted at his securities fraud trial, reports the Associated Press through ABC News.

The lawyer told jurors that a drug company official who testified against Shkreli was biased because the company would benefit financially if Shkreli is convicted of a felony.

“Shkreli is best known for raising the price of a life-saving drug by 5,000 percent and trolling his critics,” the AP reports.

Read the article.

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By Stephen F. Pinson
Scott & Scott

More and more businesses are considering accessing hosted software rather than purchasing on-premise software. They are also placing data in third-party public or private clouds instead of selecting on-premise software. This article will explain the key considerations and contractual provisions when deciding to utilize a hosted software cloud solution versus On-premise software solutions.

KEY CONSIDERATIONS

1. Strategic Considerations
Using hosted software in the cloud allows for greater flexibility such as: allowing a business to access its information from any location, and not having the initial outlay of capital to purchase servers and other infrastructure when implementing the software’s use. This is a significant departure from on-premise software, which often requires substantial infrastructure investment, and can only be accessed from the device the software installed.

2. Financial Considerations
Cost Savings
Most businesses switch to the cloud because of the belief in inherent cost savings. However, in the long run, switching to the cloud will not always result in savings. Cloud infrastructure costs money, and the business will be the one that bears the costs, usually in a monthly subscription, instead of a yearly license fee.

Return on Investment – Moving from CapEx to OpEx
On-premise software products and hardware infrastructure are generally considered capital expenditures, while subscriptions to cloud software are typically classified as operating expenses. It is important to consult with tax professionals to ensure there are no unintended consequences from making the switch from on-premise to hosed software products.

Infrastructure investments / upgrades
Generally, on-premise software requires purchase of hardware or use of infrastructure that is already in place. On the other hand, moving to the cloud may require an investment in upgraded devices or equipment to maximize the value of the hosted solutions.

Cost to implement or migrate. When moving from on-premise to the cloud, there can be significant implementation or migration costs. Companies may not adequately consider the costs related to migrating data to the hosting or storage providers. The number of man hours required to successfully migrate can be significant and costly. Accordingly, the scope and complexity of the migration is an important consideration when negotiating a contract.

3. Operational Considerations
Outsourcing activities
Using the cloud can pave the way to outsourcing non-core operations. On the other hand, on-premise software may require more sophisticated security credentials currently in place, whereas the cloud application may reduce that need.

Support
On-premise software generally requires maintenance and support along with support levels and support times. These generally are limited to business hours, and come with increased costs for after-hours support. When using the cloud, maintenance and support are included as part of the package, and are generally included as a 24/7/365 service.

4. Technical Considerations
Infrastructure
To use on-premise software, companies must procure appropriate hardware. For cloud solutions, the cloud vendor provides the hardware, infrastructure and applications for the software to work, but that does not mean that there is no investment by the end user to the software. The end users may need to upgrade devices and security plug-ins. They also may need to expand firewalls to cope with the additional internet traffic. Internet providers may need to provide more bandwidth.

Location and Ownership of the data
There is little question as to where data will be stored and who will own the data when using on-premise software – the customer owns the data. However, when using cloud solutions, the location and ownership of the data may become unclear. A business wants to own its data and not let it be used for research or statistical purposes, particularly by its competitors. Additionally, many businesses want or need the data to be stored in the nation where they are located or where they are doing business, and not some remote or foreign locations.

5. Security, Backup, & Privacy Considerations
Security
When using cloud or on-premise software security is important. On-premise software provides a level of security that is implemented through patches and updates to the software. Cloud providers can hand off their hosting and security to a third party provider, which can compound security risks. It is critical to understand and document who bears the risks of a security incident in the event of a security incident.

Backup
For on-premise software, the backup is left to the business user. For cloud, the cloud provider generally provides the backup for certain intervals of time, which is generally contracted for by agreement. It’s important to have a backup schedule with redundant backups when contracting with a cloud provider, as well as a general understanding of what information is purged from the system.

Privacy
For on-premise software, privacy is generally not a concern, because the software is part of the business infrastructure. However, in a cloud implementation, privacy issues become a major concern because business information is sent over the internet which can be intercepted by hackers. Understanding how the cloud provider protects your privacy is always important.Accordingly, below is a list of key contractual provisions that are critical when deciding to utilize hosted software in the cloud vs. on-premise software.

KEY CONTRACTUAL PROVISIONS

1. Strategic Considerations
It is critical to clearly identify the requirements for companies that will host software applications or store the business’ data. For flexibility, it is also important to evaluate whether traditional on-premise license metrics will be appropriate for any hosted software solutions. Generally, it is its best practice to negotiate the number of users rather than the number of devices when negotiating a cloud deal for maximum use. A user can use several devices at once, and being charged for each device would be costly to the business.

2. Financial Considerations
To be sure fees are controlled when deciding on utilizing an on-premise solution versus a hosted software solution, the business should calculate the cost of both on-premise licenses along with maintenance and support and compare the costs to the total amount required to subscribe to the hosted version of the software solution. If the costs are relatively the same, then capping the monthly cloud subscription every year would be wise to keep costs in line. Additionally, it’s important to negotiate infrastructure upgrades and implementation and migration costs to the cloud or to any subsequent provider.

3. Operational Considerations
It is important to negotiate who will have access to the cloud and what administrative rights will be assessed to each user. Additionally, its best practice to negotiate the support levels when using cloud, and any service credits for failure to implement the service.

4. Technical Considerations
When negotiating a cloud deal, companies should understand and document ownership of the data, allowable uses of the data (even in aggregated form) by the cloud provider, and locations where the data may be stored.

5. Security, Backup, & Privacy Considerations

For security, it is a best practice to include security protocols in the contract and to successfully negotiate a reasonable limitation of liability for security incidents, back-up failures, or privacy incidents. In these scenarios, the limitation of liability may include a carve-out, or a super-cap to handle the increased risks involved. For backups, it is always important to contract with the cloud provider the specific backup procedures, protocols, and backup intervals required by the business. Additionally, it is important to include in the contract security reports or audits for the business to ensure that the cloud provider is following those contractual obligations. Lastly, for privacy, it is always important for the business to include privacy language and protocols for incident response. Specifically, when an incident occurs, the business should require the vendor to notify the business immediately of any privacy or security incidents. Lastly, it’s always best to negotiate the appropriate levels of insurance for provisions dealing with these topics.

When switching from on-premise software to a hosted software cloud solution, there are numerous business issues to consider. Having a plan when switching to a hosted software cloud provider is crucial to a business’ success. Given the risks, it is increasingly important to seek advice from experienced counsel when negotiating contracts like these to make sure the risks are adequately assessed and each party’s interests are protected.

It was a mistake and a bad one. In responding to a subpoena for information, a lawyer for Wells Fargo inadvertently sent the opposing attorney in a lawsuit a disc filled with confidential information, including Social Security numbers, for 50,000 of the bank’s wealthiest clients, according to a post on the website of Androvett Legal Media & Marketing. This embarrassing and damaging error came to light in a New York Times article.

Telling the media is not the appropriate way to handle such a transgression, says Houston trial lawyer John Zavitsanos of Ahmad, Zavitsanos, Anaipakos, Alavi & Mensing P.C. or AZA, who has tried more than 75 cases to verdict. Normally, the recipient of the material would return it to the sender, understanding that mistakes like this happen sometimes, he said.

“Instead, this may boomerang on the people who publicized the breach, and they may get in trouble for it. Most judges are human beings and understand mistakes – and they don’t like gotchas.

“Also, many states have snapback procedures whereby if you inadvertently turn over privileged information, you can retrieve it and say it was inadvertently produced. Until that privilege is determined, the receiving party can’t hold onto it. There are a slew of states that have provisions like that. And even if this involved a state without a snapback rule, the other side can file a motion to protect their confidential information.

“Of course, if Wells Fargo is unsuccessful in retrieving the information, its law firm may be subject to claims and penalties. Usually you come up with a set of protocols to prevent this from happening. However, every lawyer with an active litigation practice has produced something in error at some point. You call the other side and ask them to return it. We’ve all been there.”

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Privacy impacts the daily lives of people like never before, including how their information is treated and protected by the companies in which they place trust for business. In recognition of the growing importance of privacy and data protection law and compliance, the International Association of Defense Counsel (IADC) has dedicated the summer 2017 edition of its Defense Counsel Journal (DCJ) to the exploration of privacy issues.

The summer issue is the first half of the IADC’s “Privacy Project V” publication. The second half will be published as the fall 2017 issue of the DCJ. The current issue is available for free and without a subscription via the IADC’s website.

In the current issue, IADC members write about a variety of privacy topics from a global perspective. Frequently and favorably cited by courts and other legal scholarship, the DCJ is a quarterly forum for topical and scholarly writings on the law, including its development and reform, as well as on the practice of law in general. The IADC is a 2,500-member, invitation-only, worldwide organization that serves its members and their clients, as well as the civil justice system and the legal profession.

“We are reminded in our daily lives of the importance of privacy – particularly in matters or with business impacted by social media, e-discovery, text messaging and instant messaging,” said Eve B. Masinter, co-chair of the IADC’s Privacy Project V Editorial Board and a partner with Breazeale, Sachse & Wilson, L.L.P., in New Orleans. “Privacy must be protected worldwide by our constitutions and laws.”

According to the Pew Research Center, 91 percent of adults agree or strongly agree that consumers have lost control of how personal information is collected and used by companies, and technology experts believe most individuals will not have the energy or resources to protect themselves from “dataveillance” in the coming years.

S. Gordon McKee, also co-chair of the IADC’s Privacy Project V Editorial Board and a partner with Blake, Cassels & Graydon, LLP, in Toronto, added, “It is critical that attorneys, who are increasingly giving advice on the balance between privacy and other rights and interests, remain engaged and informed on the latest developments and insights that impact this developing area of the law.”

The IADC’s Privacy Project is dedicated to the memory of Joan Fullam Irick, the IADC’s first female president, who made the issue of corporate and personal privacy a key theme for her administration.

The first half of the “Privacy Project V” issue of the DCJ includes the following articles:

– “The Era of the Internet of Things: Can Product Liability Laws Keep Up?” – Explores the need to reexamine traditional product liability theories amid the proliferation of wireless connected devices.

– “Follow the Audit Trail: The Impact of Metadata in Litigation” – Discusses the importance of practitioners making a conscious effort early in every case to determine whether discoverable electronic data and, particularly, metadata exist, assess whether it is relevant to the pertinent issues, and ensure its preservation.

– “Standing in the Midst of a Data Breach Class Action” – Focuses on class-action litigation following a cyber attack, and what is often corporate counsel’s first best chance to dispose of these cases by challenging plaintiffs’ standing.

– “Connected Cars and Automated Driving: Privacy Challenges on Wheels” – Explores privacy and data protection in the realm of connected cars.

– “The French Blocking Statute and Cross-Border Discovery” – Reviews the so-called “French blocking statute” and attempts to reform it, and how it – along with data protection and privacy laws – constitutes another hurdle for the transfer of certain information from the French jurisdiction to the United States.

– “Did You Really Send It? Email Evidence in Litigation and Arbitration in Argentina” – Analyzes the state of electronic evidence in Argentina and the need for additional measures.

– “Zones of Privacy: How Private?” – Discusses the constitutional and legal implications engendered by the collision between the right to individual privacy and the exercise of the state’s police power pursuant to the demands of public interest and state security under Philippine law.

– “Busting the Black Box: Big Data Employment and Privacy” – Provides examples of the impact that big data can have in the workplace and the related compliance concerns.

– “EU Data Protection and the Conflict of Laws: The Usual “Bag of Tricks” or a Fight Against the Evasion of the Law?” – Examines to what extent the principles developed by the case law of the Court of Justice of the European Union still apply under the General Data Protection Regulation and, if so, to what extent they can still be used as a source of inspiration in resolving data protection questions.

– “Shots Fired – A Rational Assessment of Mass Shootings, The Alleged Participation of the Mentally Ill, and an Impaired Right of Privacy” – Advocates for removal of the barriers preventing data collection and analysis, particularly with states abandoning conceal-carry permit requirements and as terrorists migrate to using cars and alternative means to carry out their plans.

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