And the nominees are . . . reviewing statements of work, part II

Well, it’s awards season again. With the Golden Globes just passed and the Oscars to come, I present to you my nominations for the most egregious practices that I have observed in technology vendors’ statements of work in 2017.

Lisa R. Lifshitz

Well, it’s awards season again. With the Golden Globes just passed and the Oscars to come, I present to you my nominations for the most egregious practices that I have observed in technology vendors’ statements of work in 2017. As Bette Davis memorably said in the film All About Eve, “Fasten your seatbelts, it's going to be a bumpy night!”         

Putting in ‘offer expiration dates’ 

This one is low-hanging fruit, but considering the amount of time and effort that clients put into negotiating their deals (from business stakeholders to legal advisors), I find it odd that some vendors still persist in referencing expiration dates in their SOWs. SOWs are not akin to fresh produce and ought not to have best-before dates. If the parties are working in good faith to close outstanding issues, then the purchaser should not have any additional worries that the terms on offer are set to expire by some arbitrary date.     

Deemed acceptance 

I support agile implementation, iterative approaches and extensive collaboration and partnership, but at the end of day, the purchaser is still paying the vendor to provide it with acceptable services and deliverables that meet the purchaser’s stated business needs. Accordingly, even time and materials statements of work should have some performance metrics that measure client satisfaction. The vendor’s obligations should not be discharged by merely providing the purchaser with the number of estimated hours.

Contradictory ownership provisions (or none at all) 

Drafters of SOWs increasingly seem to be divorced from the underlying legal agreement that articulates the actual business relationship, so it’s not surprising that many statements of work fail to incorporate previously agreed-upon ownership provisions regarding deliverables.  Nevertheless, it remains disconcerting when a SOW presented for signature flat out contradicts terms that the parties had previously spent months negotiating regarding ownership rights of key documentation, software code or otherwise. Before sending the draft SOW to the purchaser, the vendor should verify what customizations are required to its standard SOW template language to properly incorporate the defined terms or concepts, which were agreed upon in the underlying legal agreement, rather than leaving it to the purchaser’s counsel to clean up.     

Single bullet descriptions 

Succinctness is good, but I also witnessed SOWs of astonishing brevity with one- to three-word descriptions during the past year. Is anyone really comfortable just signing up to pay fees for “risk planning” or “quality planning” or “hardware/service procurement”? Statements of work are not intended to be novels, but they should contain concise but meaningful descriptions of the services or deliverables to be provided by the vendor.     

Agreements to agree

I reviewed several SOWs where vendors had refused to put in the necessary time upfront to determine project scheduling, the appointment of project managers, an accurate description of the deliverables or services or establish the deliverable acceptance criteria, etc. until after the document had been signed. Accordingly, these bare-boned SOWs are little more than “agreements to agree” and effectively contained big, gaping holes regarding the true scope of the proposed work. It’s really too late to wait for the project kickoff meeting to discuss and finalize material provisions of the overall deal such as the dispute resolution or escalation process.    

Unilateral changes/unilateral responsibilities

If collaboration is the new buzzword between vendors and purchasers, then why do template versions of statements of work start off by allowing the vendors to make unilateral changes to project terms, resource allocation or even pricing without prior review and signoff by the purchaser? At the same time, many vendors are not shy to pile obligations on customers regarding short turnaround times for decision-making and resource allocation without accepting the same obligation on their own part. If the purchaser is being asked to review and revert to a vendor’s request within three business days, then the purchaser should expect the same consideration from the vendor.

Disclaiming all representations and warranties

It is not unusual to see SOWs that contain language like the following: “Under this Statement of Work, we do not make any representations, warranties or conditions with respect to the deliverables/products/software/services provided.” This would be problematic in its own right, but it is even more so when one considers that the vendor may actually be ignoring those hard-fought pages of representations and warranties that the purchaser insisted on being added to the underlying master services agreement, supply agreement, licence agreement or other related document (including procurement documents). This could be a double knockout blow, since most SOWs also provide that, in the event of any inconsistencies or conflicts between the terms and conditions of the SOW and those of the existing legal agreement(s), the terms and conditions of the SOW will prevail. Not cool.       

The wrong master services agreement/no master services agreement

Arguably worse than contradicting the existing master services agreement are statements of work that actually reference the “wrong” underlying legal contract and incorporate capitalized terms or business concepts from other legal contracts. I have reviewed SOWs that reference non-existent procurements or past, incorrect proposals and other events. This does not exactly engender vendor trust. Some vendors also try to bury all new deals and their related statements of work under existing master services agreements, whether appropriate or not, just because the parties happen to have one in place that may not actually pertain to the new services on offer and even if the procurement documents speak to the preparation of a new deal’s documents.

The other side of this are the “floating” SOWs that do not seem to reference any underlying legal agreement (either because no one verified whether that one was in place, wanted to involve the vendor’s respective legal department for fear of “slowing up the deal” or because the initial contract had actually expired and was not renewed) so that parties try to use shortcuts to fill in the gaps. So, instead of referencing the appropriate language in the master services agreement, you may see stopgap language such as “the parties will provide and adhere to a timely decision-making and issue-resolution process to prevent delays in project progress.” OK, sure, but where is it and what exactly does it say?

Honourable runners-up

The honourable mentions are random capitalized terms, acronyms/short forms with no description (w.r.t.), statements of work that are replete with the vendor’s marketing blather (i.e., “we are a group of highly skilled professionals who pride ourselves in successfully delivering complex projects with multiple technologies”) and SOWs that reference past dates (I like science fiction as much as anyone else, but time travel is still not an accepted practice).

Drumroll, envelope please . . . and the winner is

Number 8. If the vendor doesn’t understand their own paper and cannot customize their SOW properly to correctly reference the underlying legal contracting vehicle, then you likely have a vendor whose legal team is not sufficiently engaged in the deal process. As I have written before, both vendors and purchasers benefit enormously from having their respective legal counsel involved (the earlier the better) in reviewing and finalizing relevant deal SOWs for accuracy, clarity and overall alignment with agreed-upon business terms. Failure to do so may result in a significant impact on the prospective deal.

Thank you for watching, er, reading!


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