Edward F. Donohue III of Hinshaw & Culbertson LLP has published the third installment in his series on client arbitration agreements for lawyers.

“Many attorneys have been using the same engagement agreements for decades designating standard commercial providers such as the American Arbitration Association to resolve client disputes,” he writes. “In recent years some have learned the hard way that their agreements do not comply with consumer protection rules that have developed in recent years. The failure to incorporate new standards into fee agreements means not only that non-conforming provisions will be deemed unenforceable.  In some cases attorneys will find that their arbitration agreements are wholly unenforceable.”

This installment has subheadings titled “Guess What? Your Fee Agreement is Non-Compliant,” “If Your Wealthiest Client is a “Consumer” Should You Abandon Arbitration Clauses?,” and “If You Still Want to Arbitrate Catch Up With the Rules.”

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With the recent passage of the Defense of Trade Secrets Act (DTSA), businesses are welcoming the many benefits the statute brings, including federal jurisdiction, robust equitable relief, and the ability to recover compensatory damages, punitive damages, and attorneys’ fees, writes Michael Greco in Fisher Phillips’ Non-Compete and Trade Secrets blog. However, in the midst of celebrating this new federal cause of action, many employers are overlooking a requirement embedded deep within the statute.

“Namely, employers are required to provide employees with notice that they are entitled to immunity if they disclose a trade secret for the purpose of reporting suspected illegal conduct,” he writes. “If employers fail to give notice in the manner required by the DTSA, they will not be able to recover punitive damages or attorneys’ fees. Consequently, employers must pay careful attention to the DTSA notification requirements, which are not as straightforward as many believe.”

He explains that “the immunity notification requirements of the DTSA are less than straightforward. If employers intend to avail themselves of the new federal cause of action, they should carefully analyze their agreements and policies to ensure compliance.”

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Considerable litigation has arisen as to whether a  waiver of subrogation provision in a construction contract applies to bar an insurer’s subrogation claim against a contractor to the extent the insurer covered damage to the owner’s “non-work” property under the owner’s existing property policy, writes Robert Barrack in Robinson Cole’s Construction Law Zone blog.

He explains that a majority of jurisdictions have held that the waiver of subrogation provision in the construction contract applies to bar subrogation claims where the owner’s property policy covers the damage to “non-work” property.

In his article, he explains waiver of subrogation provisions and discusses some cases that address the subject.

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Form contracts are generic contracts created to cover subject areas rather than specific circumstances, explains Seattle lawyer Jordan Couch for ContractRoom.

“Fill in the blanks service contracts; downloadable buy/sell agreements; and state-provided leases are all form contracts commonly used by small to medium sized businesses, but this isn’t just a problem for small companies,” he writes. “Does your national property rental agency use the same contract in every state? Does your international distributor use the same contracts for different types of goods and dealers? If the answer is yes, you will run into problems.”

He offers reasons why form contracts shouldn’t be used and offers a solution.

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A contract is a form of communication that a diverse audience will read and use, writes Julie Brook in the CEB Blog of the Continuing Education of the Bar – California.

She cautions that lawyers who focus strictly on the legal terms and not on their word usage may find that style got in the way of substance.

She discusses and offers advice on five writing tips that can apply to any type of contract: don’t use legalese, avoid ambiguity, don’t use sexist language, use consistent terminolog, and avoid redundancy.

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Every word matters in a contract and this is as true in Chinese as it is in any language, writes Dan Harris on Harris & Moure‘s China Law Blog.

“Words have very particularized meanings in contracts and those meanings are sometimes different in a contract than in real life. Contracts also have terms that have become recognized and defined over time,” he writes in the article. “The only people who can truly know how to use these specialized and particular words and terms are lawyers who know both China’s contract laws and who are completely fluent in written and spoken Chinese. On top of this, it is critical that the Chinese version explicitly reflect our client’s goals. To put it another way, we pretty much never see a ‘translated’ contract that works as intended.”

He explains the importance of having a judge or arbitrator being able to understand the Chinese language contract in the context of Chinese law.

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A New Hampshire court has issued a decision on the duty to defend arising from an indemnity obligation in a design contract, distinguishing between the duty to defend often invoked for insurance coverage, from a duty to defend expressed in a contractual indemnity, writes Stan Martin of Commonsense Construction Law LLC.

The court found that an engineering firm owed a duty to defend the New Hampshire town that had hired the firm to design a wastewater treatment plant, from claims arising from the design against the town made by the contractor.

Martin describes the case and the arguments made by the parties. He concludes: “An explicit contractual duty to defend against allegations of negligence or breach by the indemnitor may well be construed to require such a defense from the outset, even when parties are still arguing over ultimate liability. And an indemnitor who has not been in breach of its contract up to that point may yet breach its contract by refusing to defend when required.:

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Kevin Perry and Joanne Elieli of of Cooley offer some insight for American general counsel on the drafting of international arbitration clauses, covering preliminary considerations and specific drafting issues.

The article is posted in the Cooley blog Cooley M&A.

The topics they discuss in the article include: consider likely nature of the dispute, should the clause cover all disputes that could arise?, should you include a dispute escalation clause? could any dispute include more than two parties? will there be any enforcement issues? choice of law issues (the contract and the arbitration), institutional or ad hoc arbitration, confidentiality, the rules to be used, the number of arbitrators, the seat/place of arbitration, and the language of the arbitration.

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Practical Law and Honigman Miller Schwartz & Cohn LLP partners Ron Whitney, Todd Sable, and Lawrence Murphy will present a free 75-minute webinar on managing risk in supply agreements.

The event will be Thursday, June 23, beginning at 1 p.m. EDT.

During this session, the presenters will discuss: risks associated with supply agreements; tools counsel can use to assist clients in managing such risks; and tips for addressing, limiting, and resolving disputes. The discussion will also highlight some of the key differences between the U.S. and Canada when it comes to supply agreements. A brief Q&A session will follow.

Presenters:
Ron Whitney, Partner, Honigman Miller Schwartz & Cohn LLP
Todd Sable, Partner, Honigman Miller Schwartz & Cohn LLP
Lawrence Murphy, Partner, Honigman Miller Schwartz & Cohn LLP
Robert Ford, Associate Legal Editor, Practical Law Commercial Transactions (Moderator)
John Mackie, Senior Lawyer/Editor, Commercial Practice, Practical Law Canada

CLE credit is available for: Arizona, California, Colorado, Georgia, Hawaii, Illinois, Indiana, Missouri, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Vermont, Washington. CLE credit is being sought for: Minnesota, Oregon, Tennessee, Texas, Virginia CLE credit can be self-applied for in: Florida.

The webinar also will be available on-demand.

Register for the webinar.

eSignLive by Vasco will present a complimentary webinar on the role authentication plays in digital transactions on Thursday, June 23, at 2 p.m. Eastern time.

Remote e-signature transactions are becoming the norm as mobile customers continue to demand service on their terms – anytime, anywhere, eSignLive says on its website. But how do you know exactly who you are transacting with? Authentication.

Authentication associates an e-signature to the person signing and ensures enforceability – so choosing the right user authentication method is important, the company says.

The session will include

• Authentication best practice and must-know tips
• Selecting the right authentication method
• Making it easy for customers
• 3rd party ID verification
• Mitigating risk

Register for the webinar.

Unlike most contractual disputes, it is not just merely the language used but also the circumstances in which the parties were contracting that will be determinative of whether direct claims are covered by the indemnity (and thus whether there will be reimbursement of legal fees), write Richard Levine, Peter Feist and Jessica Djilani in Weil, Gotshal & Manges LLP’s Global Equity Watch.

The authors write that “even a winning litigant in the U.S. typically cannot recover its attorneys’ fees and expenses – a principle known as the ‘American Rule.’ Indemnification provisions typically reverse the American Rule by providing that the indemnified party can recover its attorneys’ fees and expenses from the indemnitor.  Thus, whether an indemnification provision applies to claims between the contracting parties – say for breach of a representation or warranty – is often heavily litigated.”

This article is the first in a series on the subject.

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FedEx Ground Package System Inc. has agreed to pay drivers in 20 states $240 million to settle lawsuits claiming the second-largest U.S. parcel delivery company misclassified them as independent contractors, it said on Thursday, according to a Reuters report.

Reporter Daniel Wiessner said Beth Ross, lead lawyer for the plaintiffs, said in an email that the settlement, if approved, would be divided among 12,000 drivers, some of whom would receive tens of thousands of dollars.

FedEx previously contracted directly with independent operators in an effort to save on taxes, fringe benefits, health care costs, pensions and other workers’ costs.

“The deal, subject to approval by a federal judge in Indiana where the cases were consolidated, would end nationwide litigation claiming that because drivers were required to use company-branded trucks, uniforms and scanners, FedEx was their employer under federal and state laws,” Reuters reports.

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An article written by Raymond Patella and Michael Viscount of Fox Rothschild LLP outlines a handful of popular credit enhancements oil and gas companies may use to minimize their risk or exposure to a counterparty that they believe may be having financial difficulties.

“There are many different types of credit enhancements depending on the parties’ leverages, cash flow, size and risk. All of these factors should be considered to arrive at an enhancement best tailored to address the concerns of specific circumstances,” they explain.

The cover such topics as tighter payment terms, consignment, security interest, security deposit, credit insurance, guaranties, and setoff.

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Construction contracts are often such voluminous documents that it can be difficult for owners to recognize and adequately negotiate the key terms that play the largest role in how construction risk and costs are allocated, writes Mike Madigan in Kegler, Brown, Hill + Ritter‘s Ohio Construction Law blog.

In the article, he considers 10 questions owners should ask themselves before signing a contract with a contractor for a commercial project.

A few of those questions are: Is there a consequential damages waiver? Is there a liquidated damages provision? Is the contractor required to provide a performance and payment bond? What costs are recoverable by the contractor under a termination for convenience?and has the contract been coordinated with the requirements of the lending institution?

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In today’s business environment, bank officers are heavily recruited by competitors, and these competitors offer opportunities for promotion and higher salaries and benefits, write Amber M. Rogers and Alan J. Marcuis for Hunton & Williams.

If a bank doesn’t have a contract with its officers, it must consider the legal ramifications of an officer departing to work for a competitor when an agreement is not in place.

“Having an employment agreement with an officer and other key employees is advisable, as it is the easiest way to protect the bank’s interest when an officer departs,” the authors explain. “With proper planning and preparation, any financial institution can proactively prevent the disruptive event and potential loss of business that can be caused by the announcement of an officer’s resignation.”

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Thomson Reuters Practice Point, a new tool that integrates the legal resources attorneys need to advise, negotiate and structure business dealings, is hosting a series of free 30-minute webinars providing an overview of current in-house legal trends.

June 15: Practice Point Exclusive Sneak Peek: Labor and Employment, 1:30 p.m. CT, featuring Kate Bally, Co-Director of Practical Law’s Labor and Employment service.

June 16: Practice Point Exclusive Sneak Peek: Capital Markets & Corporate Governance, 1:30 p.m. CT, featuring Chris Roehrig, Senior Legal Editor of Practical Law’s Capital Markets & Corporate Governance service.

June 22: Practice Point Exclusive Sneak Peek: Intellectual Property & Technology, 1:30 p.m. CT, featuring Rita Berardino, Senior Legal Editor of Practical Law’s Intellectual Property & Technology service.

June 23: Practice Point Exclusive Sneak Peek: Commercial Transactions, 1:30 p.m. CT, Featuring Laszlo Serester, Senior Legal Editor of Practical Law’s Commercial Transactions service.

Register for the webinars.

When negotiating and drafting a contract on behalf of a business, one of the most important considerations is whether it will create personal liability for the individual signing on behalf of the business, as illustrated by a recent decision from Florida’s Third District Court of Appeal, Frieri v. Capital Investment Services, Inc., writes Adam B. Edgecombe of Jimerson & Cobb, P.A.

“Frieri involved an investor who contributed $6 million to a business trust that he formed with the president of a small corporation, with each of them owning 50% of the trust,” Edgecombe explains. “In exchange for the investor’s contribution, the president of the corporation was to transfer 78% of the corporate stock to the trust. However, after the investor paid over his $6 million contribution, the president of the corporation never transferred the stock.”

The investor sued both the president of the corporation and the corporation, alleging that the defendants had breached the stock-purchase agreement. The trial court agreed, entering a final verdict in the amount of $7,369,222.00 against the corporation and the president individually. On appeal, the president and the corporation argued there was no basis for his personal liability.

“The Third District disagreed with the president’s position, finding that, when two businesses contract, the entirety of the document must be analyzed to determine whether the parties intend to bind the businesses alone or whether the obligation extends to the signing agents in their individual capacities,” Edgecombe writes.

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Practical Law will present a free 75-minute webinar in which Matthew A. Karlyn, partner with Foley & Lardner LLP and co-author of “A Guide to IT Contracting: Checklists, Tools and Techniques,” to discuss practice tips on data privacy and security provisions of SaaS and other cloud service agreements, including a discussion of recent trends and issues.

The webinar will be Wednesday, June 15, at 1 p.m. EDT.

Data privacy and security are key issues for businesses who seek to upload their information onto the cloud, the company says on its website. Customers need assurance that the software as a service (SaaS) or other cloud service provider will maintain effective policies and practices to safeguard the confidentiality and security of their information.

In seeking this assurance, it is not enough for the customer to conduct due diligence of the provider’s practices because those practices, like the laws and regulations that govern them, can be a fast-moving target. Only by the skillful drafting of the customer’s cloud service agreement can counsel aim to ensure that the customer’s confidential, trade secret, and personal information stay well protected and that both the service provider and customer remain compliant with data privacy and security laws.

A key case is the pending replacement of the EU-US safe harbor framework with stringent requirements of a new, EU-US Privacy Shield for the handling of personal data. It is crucial to businesses that their cloud service agreements include terms broad enough to anticipate such legal developments, technological advances, and changes in standards and practices.

In this program, attendees will:

• Learn how to avoid common errors in data security, privacy, and disaster recovery provisions and provide for proper data protection both during and after the term of the cloud agreement.
• Explore effective remedies for breaches of data privacy and security.
• Consider the requirements of the EU-US Privacy Shield and its anticipated impact on cloud service customers and providers and the terms of their cloud service agreements.

A short Q&A session will follow.

Presenters:

• Matt Karlyn, Co-Chair Technology Industry Team, Foley & Lardner
• Paul Connuck, Senior Legal Editor, Intellectual Property & Technology

CLE credit is available for: Arizona, California, Colorado, Georgia, Hawaii, Illinois, Indiana, Mississippi, Missouri, New Hampshire, New Jersey, New York, North Carolina, Oklahoma, Pennsylvania, Vermont, Washington. CLE credit is being sought for: Louisiana, Minnesota, Oregon, Tennessee, Texas, Virginia CLE can be self-applied for in: Florida.

Register for the webinar.

While subscription services (sometimes referred to as auto-renewal programs) can be lucrative, companies should be mindful of the applicable laws to avoid the costs of fighting off the type of lawsuits that led to Sirius XM Radio settling an auto-renewal case for $3.8 million and Angie’s List settling a similar suit for $2.8 million, warn Andrew Klungness and Aaron Ginsburg on Bryan Cave’s Retail Law blog.

They discuss the the three main categories that various states use to regulate automatic renewal programs as they relate to contracts.

“Given the significant penalties and potential litigation costs associated with non-compliance, companies should work with experienced professionals to maximize compliance without adversely impacting the business,” the article says.

Read the article.

Anyone who has purchased a product online or downloaded software for a computer, tablet or mobile device has likely encountered “browsewrap” and “clickwrap” agreements, write Carolyn S. Toto and Kimberly Buffington on Pillsbury Winthrop Shaw Pittman‘s Social Media & Games Law Blog.

In the article, they write, “Such agreements are the bread and butter of companies that sell or license products or provide services via websites or web applications. Clickwrap agreements require a user to affirmatively click a button to affirm his or her assent to the agreement’s terms, whereas with a browsewrap agreement, the user’s assent to the agreement’s terms is inferred from the user’s use of the website. (Often, the terms of a browsewrap agreement are accessible from a hyperlink placed on one or more webpages of the company’s website.)”

The discuss a few recent cases that have addressed what exactly constitutes a valid, legally binding and enforceable contract.

Read the article.