Fisher Broyles LLP has posted a paper outlining the sources of liability for directors of private companies, such as breach of fiduciary duty, unpaid wages and payroll taxes, indemnity agreements, credit support and more.

“While the risk is greater in the public company context, private company directors can face substantial personal liability.” the paper says. “Potential claimants, include shareholders, creditors, unpaid employees and the government.”

Read the paper.

Failure to follow contractor licensing laws can have draconian consequences, writes Kraftson Caudle of Virginia on its blog.

“In California, for example, if a contractor is not licensed at all times while performing work, which includes bid submittal, then
the contractor is not entitled to any future payment and forfeits all prior payment,” the firm writes.

“In some states, like Virginia, a contractor’s good faith effort to comply with the licensing law is a factor
in determining whether that contractor may recover in equity,” the article continues.

Read the article.

Non-disclosure agreements or “NDAs” are often the first contract entered into by parties desiring to do business together, but it is important not to rush to sign a form NDA just to get the conversation started, write Emily R. Lowe and Glen Rectenwald on a Morgan Lewis blog.

They describe key provisions and potential pitfalls that should be considered when negotiating NDAs, including mutuality, requirements to label confidential information, restrictions on use and disclosure, definition and standard exclusions, residuals clause, disclaimer of consequential damages, and term.

Read the article.

When entering into outsourcing agreements, what provisions of the governing contract (such as a master services agreement) should both parties pay particular attention to? Seth A. Northrop of Robins Kaplan addresses that question in an article published on the firm’s website.

“Whether it is how each parties’ responsibilities are outlined or measured, how pricing operates, how disputes are resolved, data security and privacy issues, or what happens if the agreement terminates, spending time to understand these critical components at the front end of the agreement may be critical to building a relationship based on mutual benefit as opposed to animosity,” he writes.

The nine provisions include service definitions, pricing model and incentives, data security, IP ownership, service levels, governance and audit provisions, dispute resolutions, bankruptcy contigencies, and exit. He discusses each in detail.

Read the article.

Failure to pay proper attention to indemnification provisions in contracts can lead to painful surprises down the road, writes Michael Didriksen on the Baker Botts website.  On the other hand, a modest amount of forethought can address some of the more common defects seen in indemnification provisions.

His article focuses on commercial contracts, as opposed to M&A transactions.

He presents a sample indemnification clause that seems comprehensive and coherent, but which contains some subtle infirmities, and then analyzes potential problems with the agreement. He then presents a revised version that’s designed to avoid the problems in the first.

Read the article.

When an organization is contemplating a large commercial agreement or outsourcing arrangement covering global operations across multiple service locations, subsidiaries, or affiliates, it should consider the advantages and potential pitfalls of using a single global agreement versus local (or “site-specific”) agreements to govern the transaction, writes Emily R. Lowe in an article published in a Morgan Lewis blog.

She outlines the benefits of global agreements and of site-specific agreements and discusses some potential pitfalls.

Lowe also describes effective general approach that can benefit from the advantages of using a global agreement while avoiding its potential pitfalls: entering into a single global agreement applicable to all services from a single service provider that either requires or permits (as appropriate) the divisions, subsidiaries, or affiliates of the parties to enter into separate local agreements.

Read the article.

Contracts with tech vendors increasingly include requirements of cyber-risk insurance coverage, but where the value and risks associated with the data to be shared with or created by the vendor warrant such a requirement, you should probably take a look at the coverage – and not just a certificate of coverage – to see what you’re getting, writes Jon Neiditz in Kilpatrick Townsend’s Big Data Tech Law blog.

First of all, he advises, always make sure you know what if any critical digital assets other than personally-identifiable information (PII) are covered.

He categorizes the questions as general, amount and scope of coverage, insurance claims process and dispute resolution, and provisions regarding the defense of an underlying claim or lawsuit.

Read the article.

Zapproved has released its Third Annual Legal Hold and Data Preservation Benchmark Survey Report, the industry’s most extensive survey series focused on legal data preservation and collections practices, and the results show that processes still lack maturity.

More than 421 professionals dealing directly with litigation hold management participated in the Zapproved study.

One of the key findings shows that more than half of survey respondents still use manual processes for tracking litigation holds, and 3.5 percent communicate litigation holds verbally; nearly half of respondents now have a software system in place.

It also found that 34 percent of the survey respondents have had to defend their preservation efforts, a fact that underscores the importance of defensible processes. And 56 percent of respondents consider their organization to be “at risk” when it comes to legal holds.

The study also covers training in data preservation, benefits of automating the legal holds process, and more.

Download the complimentary report.

A recent 9th Circuit Court of Appeals decision suggests that in certain circumstances overly broad language in a no-rehire provision may violate California law (namely, section 16600 of California’s Business and Professions Code) as a contract restraining the lawful practice of a profession, writes Daniel J. Kanter of Ogletree Deakins and published on Lexology.com.

“When resolving an employment dispute, employers often wish to include a ‘no-rehire’ provision in the settlement agreement,” he writes. “In a typical no-rehire clause, the parties agree that they wish to resolve their dispute and sever any relationship they may have now or in the future. The employee agrees that his employment has ended and promises not to seek reemployment with the company. Further, if the employee obtains reemployment with the company or any related entity, the employee agrees that his or her employment may be terminated immediately without any legal recourse.”

The article discusses the ruling and offers some key take-away conclusions.

Read the article.

Every foreign business person who enters into a contract with a Chinese company needs to consider a fundamental question: how will the contract be enforced, writes Steve Dickinson on the China Law Blog, published by Harris & Moure. in the article, he discusses how to be able to pursue a claim successfully against a Chinese company.

“First, there must be a written contract between the parties, executed by both parties in accordance with the requirements of Chinese law,” he writes.

“Second, the contract must be enforceable in China. As a practical matter, no Chinese court will enforce a foreign judgment and it can be quite difficult to get them to enforce a foreign arbitration award.”

Read the article.

Saxe Doernberger & Vita has released a comprehensive survey that examines several key issues relating to the scope and extent of workers’ compensation requirements and immunity across all 50 states.

This comprehensive survey examines several key issues relating to the scope and extent of workers’ compensation requirements and immunity across all 50 states. It discusses, among other topics, exclusive remedy protections and the application of such protections in the Consolidated Insurance Program (a.k.a “wrap up”) context.

For each state the survey reviews:
• Type of Workers’ Compensation Insurance (private or state funded)
• Workers’ Compensation Exclusive Remedy Statute
• Principal/Statutory Employer Doctrine
• Application of Exclusive Remedy Statute to Principal/Statutory Employers
• Application of Exclusive Remedy Statute to Wrap-Ups
• Subrogation Waiver Prohibition by Statute

Why This Survey is Important
A fundamental principle of workers’ compensation laws is that an employer who provides compensation to an injured employee (pursuant to the applicable state statute) is entitled to immunity from civil actions by that employee or his/her representatives (i.e., an employee’s exclusive remedy is workers’ compensation benefits). Under certain circumstances and in some jurisdictions, this immunity is extended to upstream parties such as a project owner or general contractor. This survey should help construction professionals begin to navigate the complex world of worker’s compensation immunity law.

Download a complimentary copy of the survey.

Saxe Doernberger & Vita P.C.
From the firm’s release: “Saxe Doernberger & Vita, P.C., is a national insurance coverage law firm focused exclusively on representing corporate policyholders. Our experienced trial lawyers are admitted in courts across the country and represent clients in multiple industries including construction, power and energy, real estate, and more. At its core, SDV’s practice is about the prevention and resolution of insurance disputes.”

Many attorneys representing a client who procures technology from a service provider know to request a security audit, but there is still confusion even among sophisticated technology attorneys about which security audit to request and how to interpret the report once it is received, writes Amanda Witt in an article in Big Data Law Tech blog at Kilpatrick Townsend & Stockton.

The article, reposted by Lexology.com, describes the types of security audits and third-party security certifications that are most frequently requested by customers or offered by vendors.

“As concerns about the security practices of service providers continue to grow with the occurrence of each high profile security breach, the reliance on security audits and security certifications will continue to steadily increase.” she writes.

Read the article.

An article by Adam Groff in Global Construction gives some advice on what construction companies need to remember when drawing up a contract.

The article features sections headed “Construction Contracts: A Changing Landscape,” “Common Contracts in Construction,” “Union Contracts” and “Hiring Types.”

“If you work in the construction industry, then you already know how important contracts are,” he writes. “Although construction contracts have changed over the years, there are still some basic guidelines to follow when creating a contract.”

Read the article.

A generation ago, mediation of construction disputes was unusual, writes Bruce W. Ficken in Pepper Hamilton’s Constructlaw blog. Today, it is rare that a construction claim goes to trial without some effort at mediation first. Indeed, a substantial percentage of construction contracts require mediation as a precondition to filing suit or demanded arbitration.

“Still, as pervasive as mediation has become, misperceptions about mediation persist among the contractor population generally.

“What does a mediator decide? Who controls the proceedings? Is there such a thing as binding mediation? How confidential is confidential during and after a mediation?”

The author addresses those questions in the article.

Read the article.

Defining and incentivizing high-quality performance is often key to the structure of complex service or technology-oriented agreements, writes Steve Gold, a McGuireWoods LLP partner in a legal alert from the firm.

“In this class of agreements, merely having a performance warranty that answers a yes or no question – in breach or not in breach − just doesn’t do the job. To augment those performance warranties, a common approach is to use a ‘service level agreement’ (SLA). The SLA is a familiar and essential feature in information technology-oriented agreements, such as outsourcing, cloud computing, software-as-a-service and the like,” the alert says.

Gold writes that SLAs, when properly structured and negotiated, can be an effective tool for more nuanced vendor management than a performance warranty alone could afford.

His article catalogs some of the best practices for structuring a service level agreement and discusses elements enterprise corporate counsel can put to use in the IT and service contracts that come across their desk.

Read the article.

The Eight U.S. Circuit Court of Appeals has concluded that the Arkansas Supreme Court would likely adopt the majority rule that a covenant not to compete can be assigned to the purchaser of a business, reports Jackson Lewis in its Non-Compete and Trade Secrets Report.

The case is Stuart C. Irby Company, Inc. v. Tipton, No. 14-1970 and 14-2682 (8th Cir. Aug. 6, 2015).

The appellate court reversed an across-the board win for defendants in this Arkansas non-compete dispute, disagreeing with the district court on almost every point, writes V. John Ella and James R. Mulroy of Jackson Lewis. They report that one of the take-aways of the ruling is that assignability of restrictive covenants is often a source of confusion, and best addressed explicitly at the drafting stage, even if no merger or acquisition is on the horizon.

Read the article.

A new white paper from Mitratech titled “An Ounce of Prevention is Worth a Pound of Cure: A 6-Step Health Check for your Organization’s Data Privacy Program,” is designed to help readers learn more about how to diagnose a company’s security measures.

As security regulations are forming, now is the time to proactively ensure that your company’s private data is safe, Mitratech says. Legal departments can partner with IT to enforce the inevitable guidelines that will be implemented in your organization.

The white paper guides readers through a check of their organization’s data privacy program:

Download the white paper.

The National Association of Corporate Directors has made available a complimentary article titled “In Practice: How to Think Like an Activist Investor,” a feature in the organization’s NACD Directorship magazine.

“Too often, boards realize too late that the battle for their company has already begun—and they are ill-prepared and outflanked,” NACD says.

This article in the latest issue of NACD Directorship magazine provides directors with recommendations that can help boards to enhance their readiness, protect their reputation, and better represent the interests of their shareholders.

NACD Directorship magazine is an exclusive benefit of NACD membership, but this article is being made available to the public to sample the valuable insights NACD provides to its members.

Download the article.

A New York court earlier this year explored the issue of disclosure obligations in “as-is” commercial transactions and came to an unexpected answer, writes DLP Piper’s Michael Hamilton in Commercial Property Executive.

The state appellate court ruled “that the seller of an apartment building in New York City had a duty to disclose certain facts about the building’s physical defects where those facts were not known to and not easily discovered by the buyer,” he writes. “The court found that the seller was obliged to provide those facts not only under its contract but also under common-law fraud doctrines.”

The case was TIAA Global Investments L.L.C. v. One Astoria Square L.L.C.

Read the article.

Software publishers and entities like the BSA, The Software Alliance and the SIIA regularly audit companies to investigate copyright infringement claims. These entities seek monetary penalties if any infringement is discovered, and in the majority of cases, reach an out of court settlement for an agreed upon sum, writes Keli Johnson Swan, an associate at Scott & Scott, LLP.

Sometimes, settlement negotiations break down and one or both parties resort to pursuing claims in court. In many instances, the auditing entity will pursue litigation if it believes that the audit target is refusing to participate in the audit process or is unwilling to reach an amicable resolution. In other instances, a company may choose to fight any potential copyright infringement claims in court rather than participate in an arbitrary auditing process defined by the publisher or auditing entity. There are a few key costs to consider when determining how to defend against software infringement claims.

Read the article.