The Senate has voted 51-50 to get rid of a banking rule that allows consumers to bring class-action lawsuits against banks and credit card companies to resolve financial disputes, NPR reports.

Vice President Pence cast the tie-breaking vote to rollback the Consumer Financial Protection Bureau rule banning restrictive mandatory arbitration clauses found in the fine print of credit card and checking account agreements, writes NPR reporter Scott Neuman.

President Trump is expected to sign the measure, which has already been approved by the U.S. house.

Neuman writes: “CFPB said it was redressing a situation in which consumers were forced ‘to give up or go it alone — usually over small amounts,’ while companies were able to ‘sidestep the court system, avoid big refunds, and continue harmful practices.'”

Read the NPR article.

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Optimus BT will present a free webinar providing a comprehensive overview of Legal Contract Collaboration by Optimus and Forrester for the Microsoft Cloud.

The webinar will be Thursday, Nov. 2, 2017, beginning at 11 a.m. ET / 8 a.m. PT.

Forrester, a leading analyst firm, along with Optimus, a leading Microsoft Cloud Contracts Platform, will be conducting this webinar to provide an overview of the key issues facing business and legal collaboration with a presentation along with scenario based demos of Contracts and Legal solutions for both SharePoint & Office 365.

The presentation will also highlight integrations with Outlook and Word to improve legal work productivity.

“We will review various aspects of the Contract Lifecycle including document and outlook based collaboration, contract metadata management, review and approval workflows, electronic signature integration, contracts search, repository and document generation processes, reporting and metrics, alerts setup and management, among others,” the company says on its website.

Register for the webinar.

By Christopher Barnett
Scott & Scott LLP

Many of our clients have been contacting us in recent weeks (mid-late 2017) regarding notices they received from Microsoft requesting an internal self-assessment of their license positions under their Services Provider License Agreements (SPLAs). Naturally, many of those clients have questions about that process and the ramifications of cooperating with Microsoft.

For those who may be unaware, SPLA is the principal licensing framework that Microsoft uses in order to enable online service providers to incorporate Microsoft’s software products in the solutions that those providers host for their customers over the Internet. Unlike traditional license agreements, which typically entail capital expenditures in order to acquire perpetual software licenses that can last longer than the term of the purchasing agreement, SPLA entails a monthly reporting model. Each month, service providers measure their usage of Microsoft products in their hosted environments, and they report that usage to authorized SPLA resellers. The resellers then generate invoices based on those reports, which the service providers typically pay as an operating expense.

Like all commercial Microsoft licensing agreements, SPLA gives Microsoft the right to conduct audits to verify that its products are being used (and reported) consistent with applicable licensing terms. In many cases, Microsoft designates third-party firms, such as KPMG, Deloitte or Pricewaterhouse, to gather the necessary inventory data and to prepare a report comparing the usage previously reported under SPLA against the deployments measured based on the audit data. Microsoft then reviews the auditors’ reports, and the audited companies then usually place supplemental license orders under their SPLAs in order to resolve any under-reporting identified through the audit process. For service providers with high volumes of monthly usage, the dollar amounts of those supplemental orders can be well into the millions of dollars.

Under most SPLAs, Microsoft has the express right to require its SPLA licensees to complete the self-assessment process in lieu of submitting to a “traditional” SPLA audit conducted according to the process described above. However, even if that right were not stated in the SPLA, we would recommend that our clients comply with the self-assessment process in an effort to avoid any more burdensome audit activity to be undertaken by a third-party auditor. The self-assessment process represents a much more favorable framework for verifying compliance with SPLA, for at least the following reasons:

• No deployment or usage information needs to be submitted to Microsoft. In most cases, the self-assessment process typically is completed when a licensee provides a signed, written certification confirming that it has completed an internal review and either (1) that all SPLA usage has been properly reported, or (2) that a supplemental report has been submitted in order to resolve any identified, past under-reporting. It usually is not necessary to provide Microsoft with any deployment counts or any further details regarding the results of the internal review.
• No under-reporting penalties appear to apply. The SPLA self-assessment notice message typically requires only that a licensee report additional license quantities to the reseller in order to resolve any past errors. In other SPLA audits, Microsoft has the right to apply a contractual penalty for any under-reporting, and that penalty typically consists of 25% markup over list SPLA prices. The self-assessment notice does not indicate that the contractual penalty would apply for any supplemental orders placed as a result of the self-assessment process.

We therefore ordinarily recommend that our clients cooperate with SPLA self-assessment requests.

In theory, the self-assessment process should mirror a SPLA licensee’s monthly reporting process. If the licensee has mature software asset management (SAM) processes in place, then each month it should be gathering and archiving all the data that it should require in order to confirm its usage of any Microsoft products installed in its environment. For that reason, a confident licensee in that position could sign and return the requested self-assessment certification immediately upon receiving the self-assessment request.

However, many licensees are not in that position, and for them, the self-assessment represents an excellent opportunity to assess and review their internal monthly reporting processes. We regularly work with SPLA licensees to conduct those sorts of initiatives, identifying tools that would be capable of gathering information relevant to licensing information as well as reports that should be generated and gathered each month in order to confirm usage levels. While the kinds of reporting used will vary, depending on the kinds of Microsoft products being licensed under SPLA, the typical set of reports includes the following:

• Hardware Inventory – One or more reports identifying all physical and virtual servers and the operating systems running on those machines.
• Software Inventory – One or more reports showing all Microsoft products installed on the computers identified in the hardware inventory.
• Virtualization Data – Reporting that maps virtual machines to their physical hosts and provides relevant information regarding those hosts’ hardware configurations.
• Active Directory – Reporting that identifies the computers included in the hosting domain(s) and also the user groups and accounts with access to those computers.
• Secondary Inventories – While not requested in every audit, Microsoft’s auditors also may ask for secondary data sources to validate the completeness of the device inventories generated from the other sources identified above. The list of devices from an anti-virus solution is a common request.

We also typically advise our clients to create and maintain archives of all reports gathered each month in order to support their SPLA reports, so that historical usage may be validated during any SPLA conducted in the future by one of Microsoft’s selected audit firms. Absent that kind of historical data repository, Microsoft’s auditors often attempt to extrapolate historical usage levels based on data collected during the audit – those extrapolated findings often are inaccurate and can result in inflated SPLA audit resolution demands from Microsoft.

Business leaders who receive self-assessment requests from Microsoft should work with their teams to determine their level of confidence regarding the monthly SPLA-reporting practices. If there is any doubt regarding the maturity of those practices, then the team should undertake an initiative to implement any appropriate improvements and, absent any unique concerns, to provide a timely response to the self-assessment request. If the team believes that it lacks any subject-matter expertise in order to complete that initiative, then it makes sense to engage a knowledgeable attorney to assist with the process.

Charles Sartain, a partner in Gray Reed, uses a recent 5th Circuit ruling on a liftboat construction contract to illustrate his advice on how to administer and perform a contract, especially one with a friend.

Writing in the firm’s Energy & the Law blog, he discusses Semco, LLC v. The Grand, LTD. The case involves a $15.9 million contract between long-time friends to construct a liftboat, a construction project that involved numerous change orders.

“At some point, the parties ‘got away from the change order program’ and informal requests were approved by email or orally,” Sartain explains. Then allegations of fraud were raised.

Read the article.

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Before entering into a long-term contract, you should consider that the longer the contract, the greater the risk of a change in the contract counterparty’s financial situation. A safe credit risk in 2017 might find itself filing for bankruptcy by 2020, warns Jeffrey A. Krieger, a partner in Greenberg Glusker Fields Claman & Machtinger LLP.

For those who respond that they’re not worried because the agreement includes a bankruptcy termination clause, Krieger says: “The U.S. Bankruptcy Code has a lot to say about the rights of both the debtor and the non-debtor party once a bankruptcy is filed – often to the chagrin of the non-debtor party.”

“A Right to Terminate clause is unenforceable because the non-debtor party’s termination would violate the ‘automatic stay’ of Bankruptcy Code section 362. Once a bankruptcy is filed, section 362 puts a halt to any action to obtain possession of, or exercise control over property of the estate,” he writes.

He offers an approach that could deal with this potential problem before signing the agreement.

Read the article.

Businesses are adapting to the new reality of cybersecurity threats by shoring up technology and educating employees regarding best practices and risks associated with an online presence, writes Marc C. Tucker, a partner in Smith Moore Leatherwood LLP.

“A business’s electronic data is quickly becoming its most valuable asset— an asset worth protecting,” he explains. “If data is trusted to a third party, the parameters of what is expected to keep your data safe should be memorialized in a contract with that service provider.”

“Strategic third-party contracting practices will not eliminate all cyber risks but is an additional arrow in the quiver as you strive to protect sensitive data.”

Read the article.

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Determine, Inc. and Jason Busch of Spend Matters will co-host a webinar titled Contract Compliance — Why it Matters to Procurement, on Tuesday, Oct. 24 at noon Eastern time.

The webinar will be available on-demand for anyone who registers.

Presenters will discuss why ensuring contract compliance through effective contract management isn’t an afterthought; it’s at the functional heart of successful end-to-end procurement savings, efficiency and supplier performance.

Topics include:

• CLM – the nexus of compliance, stakeholders, suppliers and customers
• Why compliance is the new savings
• Integrating contracts and procurement seamlessly
• How process management simplifies collaboration

Register for webinar.

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In workplace harassment cases — both in Hollywood and in the rest of the American workforce — many companies try to use nondisclosure agreements to protect the employer from legal consequences for wrongdoing, according to Bloomberg Law. And the NDA can also serve to keep criminal behavior out of the public eye and the courts.

That’s how someone like Hollywood producer Harvey Weinstein can be a repeat offender without consequence, explains Bloomberg reporter Rebecca Greenfield.

She quotes Peter Romer-Friedman, an employment lawyer at Outten and Golden: “It’s buying silence. It’s buying confidentiality. It’s trying to sanitize. These agreements are often protecting criminal activity.”

“NDAs are geared to ensure that the fraction of people who do come forward can’t warn others or bring claims to light, all of which contributes to the culture of silence around workplace harassment.
Legal scholars are now asking if settlements backed by nondisclosure pacts are protecting criminal activity,” Greenfield writes.

Read the Bloomberg article.

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ContractWorks will host a complimentary live webinar titled “Focus on Higher Value Works: How General Counsel Can Improve Their Contracting Process” on Wednesday, Nov. 1, at 11 a.m. Pacific time.

Managing contracts manually can be extremely time-consuming for general counsel and their teams, taking focus away from higher value work, ContractWorks says on its website. During this webinar, participants will hear about ways legal counsel can spend more hours on legal matters and less on contract management.

Participants will learn:

• How to obtain better contract visibility and avoid missed or lost contracts.
• How to automate contract approval and signing.
• How to mitigate contract risk and compliance issues.

Anyone unable to watch the webinar at the time of presentation may register and receive the recording after the webinar.

Register for the webinar.

In structuring overseas postings, multinationals inevitably struggle with the interplay between expatriate assignment strategy and the legal ramifications of a particular foreign posting, points out Donald C. Downling, a shareholder in Littler Mendelson P.C.

“The various types of cross-border personnel moves raise questions of how best to structure a given international assignment,” he writes. “To resolve these questions, we address four threshold issues: (A) who is and is not an expatriate?; (B) four expatriate structures; (C) selecting the best expatriate structure; and (D) written expatriate agreements.”

A link at the end of the article on Littler’s website connects to the full report.

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Contracting parties frequently use terms such as “commercially reasonable efforts,” “reasonable efforts,” “best efforts” or similar standards when describing their expectations regarding the performance of a party’s obligations, according to a post on the website of Morrison Foerster. However, these terms are inconsistently interpreted by courts and are often subjectively applied.

The post’s authors discuss how these three contracting terms have been interpreted in recent court decisions and considerations with respect to the use of such terms by contracting parties.

The article concludes with a list of best practices when negotiating and drafting agreements to avoid conflict.

Read the article.

Carl R. Pebworth, a partner in Faegre Baker Daniels, asks and answers the question: What tort obligations does a design professional on a construction project owe to non-parties — like, for example, the persons who will use what has been designed after it is built?

he discusses an Illinois case in which a court addressed whether an engineer who had contracted to design a “replacement” for a bridge deck had a professional obligation to “improve” the bridge deck after it failed and third-party motorists were killed.

“As long as the design professional sticks to what the designer has contracted to do and does that work professionally, the designer cannot be obligated to go beyond those duties,” Pebworth writes.

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By Eric Begun
King & Fisher

You’re thinking that something about the title of this post sounds familiar, right? Information technology (IT) vendors and third party service providers have been in the spotlight for security breaches for some time (see, for example, vendor-based security lapses affecting Target, CVS, and Concentra, as just a few), and it doesn’t sound surprising that an IT vendor has been sued related to a security incident. After all, whether you’re an IT vendor or an IT customer, if you draft or negotiate contracts for a living, these situations are what you try to contract for, right?

Right…but…the recent federal class action suit filed in Pennsylvania against Aetna and its vendor surfaces several new privacy and security considerations for vendors and their customers. The vendor in question was not an IT vendor or service provider. Instead, the plaintiff’s allegations relate to Aetna’s use of a mailing vendor to send notification letters to Aetna insureds about ordering HIV medications by mail. According to the complaint, the vendor used envelopes with large transparent glassine windows – windows that did not hide the first several lines of the enclosed notification letters. The plaintiff asserts that anyone looking at any of the sealed envelopes could see the addressee’s name and mailing address – and that the addressee was being notified of options for filling HIV medications. As a result, the vendor and Aetna are alleged to have violated numerous laws and legal duties related to security and privacy.

For all vendors and service providers, but especially those that don’t focus primarily on privacy and security issues, the Aetna complaint is enlightening. To these vendors and service providers, and to their customers: Do your customer-vendor contracts and contract negotiations contemplate what Aetna and its mailing vendor may not have?

• Do your contracts for non-IT and non-healthcare services fully consider the risk of privacy and security litigation? A noteworthy facet of the Aetna case is that the mailing vendor was sued for privacy and security violations that were not exclusively due to the customer’s acts or omissions. That is, while the contents of the mailer certainly were key, the vendor’s own conduct as a mailing services provider (not an IT or healthcare provider) was instrumental in the suit being filed against the vendor (and Aetna). Vendor services that previously didn’t, or ordinarily don’t, warrant privacy or security scrutiny, may, after all, need to be looked at in a new light.
• Do your contract’s indemnification and limitation of liability clauses contemplate the possibility of class action litigation? Class action litigation creates a path for plaintiffs to bring litigation for claims that otherwise could not and would not be brought. Class action litigation against data custodians and owners for security breaches is the norm, and the possibility and expense of class action litigation is frequently on the minds of their attorneys and contract managers who negotiate contracts with privacy and security implications. But, for vendors and service providers providing arguably non-IT services to these customers – the idea of being subject to class action litigation is often not top-of-mind.
• Before entering into a contract, have you considered whether the specific vendor services being provided to the particular customer in question implicate laws you hadn’t considered? Vendors that operate in the information technology space – and their customers – generally are well-aware of the myriad of privacy and security laws and issues that may impact the vendors’ business, including, as a very limited illustration, the EU General Data Protection Regulation, HIPAA, New York Cybersecurity Requirements, Vendors that aren’t “IT” vendors (and their customers), on the other hand, may not be. For example, the Aetna mailing vendor may not have contemplated that, as alleged by the Aetna plaintiff, the vendor’s provision of its services to Aetna would be subject to the state’s Confidentiality of HIV-Related Information Act and Unfair Trade Practices and Consumer Protection Law.
• Have you considered which specific aspects of vendor services may directly impact potential legal liability, and have you adequately identified and addressed them in the contract? No, this is not a novel concept, but it nonetheless bears mention. A key fact to be discovered in the Aetna litigation is whether it was Aetna, or the vendor, that made the decision to use the large-window envelopes that, in effect, allegedly disclosed the sensitive and personally identifiable information. Given the current break-neck pace at which many Legal and Contract professionals must draft and negotiate contracts, however, unequivocally stating in a contract the details and descriptions of every single aspect of the services to be provided is often impractical (if not impossible). But, some contract details are still important.

Whether or not this class action suit is an outlier or is dismissed at some point, consider data security and other privacy and security issues in contracts and how vendor or service provider conduct may give rise to a security breach or security incident.

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Gary J. Ross, writing for Above the Law, takes a look at the potential impact that the use of smart contracts will have on the legal profession.

He offers reassuring prospects: “The smart contract carries out what it is programmed to do, and that’s it. It doesn’t think independently, nor does it provide any reasoned analysis.”

“A smart contract is best for carrying out the simple “if thens” of the agreement. Basically, the first page of the term sheet,” he writes.

Ross is a partner at Ross & Shulga PLLC.

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The validity of arbitration clauses in employment contracts is unclear and is now before the U.S Supreme Court, points out Mary An Couch in Bradley Arant Boult Cummings LLP’s Labor & Employment Insights blog.

The Supreme Court heard oral argument in National Labor Relations Board v. Murphy Oil, USA, Inc. and two other consolidated cases about whether such clauses violate the National Labor Relations Act (which governs employer-employee relations) or whether the Federal Arbitration Act (which governs arbitration agreements) trumps the NLRA, she writes.

The relevant cases being considered are from the 5th Circuit, which found the arbitration clause did not violate the NLRA, and the 7th and 9th circuits, which found similar clauses unenforceable.

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Cozen O’Connor has published an update that reviews the new construction contract documents adopted by the American Institute of Architects (AIA).

” In 2017, AIA updated some of its core documents, including the A102 (Standard Form Agreement Between Owner and Contractor), A201 (General Conditions of the Contract for Construction), and B101 (Standard Form Agreement Between Owner and Architect), among others,” the client alert states.

“Because of the widespread use of these forms on construction projects, it is important for industry professionals to be aware of the 2017 revisions to allow for efficient review and finalization of contract documents without running the risk of overlooking a critical change.”

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Onit will unveil its Contract Lifecycle Management (CLM) solution at the 2017 ACC Annual Meeting in Washington, DC,, Oct. 16-18.

The company is offering 30-minute demonstrations to show how the new solution can manage the entire lifecycle of contracts — from origination to execution, storage, administration and renewal.

Some unique features include:

• A clause library with various clause-level controls to help drive workflow with the legal department
• Version control and negotiations management to allow multiple parties to manage versions during the redlining process
• Contract authoring functionality that gives users the ability to build custom contracts with clauses from a clause library

Simply fill out the form below and let us know when you can join us in our demo room on the exhibit floor.

We are also scheduling demos of our other offerings (ie. legal e-billing, matter management, legal holds, legal service requests, NDA management, etc).

Download our whitepaper “Simple Contract Management” (direct PDF download) to learn more.

The Civilian Board of Contracts Appeals recently issued a decision in Turner Construction Co. v. Smithsonian Institution, addressing how a board should respond if the contracting parties cannot agree to a firm price for an undefinitized contract that a contractor fully performs, reports Lisa Markman for Bradley Arant Boult Cummings LLP.

The board is the federal administrative court tasked to resolve disputes between government contractors and federal civilian executive agencies,  she explains.

“The case was unique because Turner and the Smithsonian were supposed to have negotiated a firm fixed price contract during the design phase of the contract, but the parties failed to do so,” Markman writes. “This failure meant that the Smithsonian could not rely on ‘many of the safeguards and defenses that would have been available to it under a firm fixed-price agreement,’ including the contract’s equitable adjustment clause. Instead, the CBCA agreed with Turner and concluded that Turner was entitled to recover in quantum meruit.”

Read the article.

In an interview, Annamaria Porcaro, associate general counsel, contracts at Ascena Retail Group and winner of the General Commercial Individual of the Year award at the 2017 Global Counsel Awards, gives her opinion on what it takes to be a successful in-house counsel, the best way to advise senior leadership and what winning the award meant to her.

In the interview published by Lexology, she describes her role in the company, what led to to a career in-house, the most challenging situation that she has faced, what challenges in-house lawyers are likely to face over the next few years, when outside counsel is used, the essential qualities for a successful in-house lawyer, and what’s important for in-house counsel to consider when advising senior leadership.

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In a new article, Covington’s global cross-practice Digital Health team considers some key questions that companies across the life sciences, technology, and communications industries should be asking as they seek to fit together the regulatory and commercial pieces of the complex digital health puzzle.

In this installment in the three-part series, Covington’s team discusses the questions:

1. Will you own or have rights to use the data that is collected and generated, and any insights, models, and algorithms that are developed?

2. Do you have commitments from your suppliers to provide functions at service levels suitable for the health sector and designed to maintain patient/user trust?

3. When you are structuring strategic collaborations to develop and deliver a digital health service, have you taken into account uncertainties as to the ultimate composition of the service, its customers, and its reimbursement model?

Read the article.