Top ten legal gotchas for IT Businesses

TOP TEN LEGAL GOTCHAS FOR I.T. BUSINESSES

  • Why Good IT Businesses Sometimes Make Bad Legal Mistakes.
  • 10 Danger Areas to Watch Out for!
  • Get Access to over 20 years legal experience in blue chip IT enterprises.

By Ian Brookes-Howells LL.B (Hons), Client Legal Director, The Legal Director

With Spring hopefully not too far away, it’s a good time to have a Spring clean and consider the legal issues which may affect your business.

Remember that legal issues, if not managed properly, add to your company’s commercial risk affecting your bottom line. If you manage your legal affairs properly this will ultimately boost your profit margins.”

Ian Brookes-Howells of The Legal Director runs through some of the legal issues to check.

  1. Is there more than one owner or shareholder of your business? If your business has more than one founder, then whether you are a company, LLP or partnership you ought to have a properly drafted shareholders/partnership agreement– “a founders’ agreement”. If not you will be bound by the default regime in the relevant legislation which may not be appropriate for your situation. Think of it as a “pre-nup”: what do you expect from your partners, how are you going to run the business on a day to day basis, and what will you do if you fall out? Even if your business is well established it’s not too late to have such a founders’ agreement.
  2. Do you have Business, Brand, Product and Service Names? Is anyone else already trading with a similar name? Check that the names you want to use are available as a trademark or website domain and (if you are going to incorporate a company or LLP) at Companies House. If you have any brand names you should do a trademark search before using them(see the Government Intellectual Property Office http://www.ipo.gov.uk/). Even if the exact one you want is available avoid similar names that could be confused with an existing business (See also point 4 below on Intellectual Property).
About Ian Brookes-Howells
Ian is a highly experienced general commercial lawyer with specialist expertise in technology, communications and IT services. He has over 20 years’ experience working with some the World’s leading IT and communications companies. He is a member of UKITA. Ian joined the Legal Director having spent over 15 years with British Telecommunications plc (BT), the UK’s leading global communications company, where he have held various commercial and legal roles with different BT businesses. Ian is a specialist in commercial contracts (buy, sell and subcontracts) including service, outsourcing (including TUPE), and international contracts; as well developing standard terms and conditions for products and services. If your company would benefit from having its own part time in-house lawyer give Ian a call now.
  1. Have you protected any important information contained in your business documents such as your Business Plans, Strategy and Product Development documents? Keep your know-how and proprietary data safe. Do such documents contain confidential or proprietary information about your products or services which could be useful to a competitor? You should include an appropriate disclaimer and confidentiality statement on the first page and in the footer “© [Name] Ltd, 2009. Confidential.” Consider whether you should ask recipients, such as potential investors, customers or suppliers, to sign a specific confidentiality agreement (sometimes known as non-disclosure agreements or NDA) before you disclose your important company information.
  2. Have you protected your Intellectual Property? Is it important that you stop others copying your ideas, products or services? Applying for patents and trademarks is expensive and can take a long time, and is only effective if you are prepared to enforce (very expensive and time-consuming). You can use the ™ symbol without registering a trademark, although it has no legal significance in the UK. Do you sub-licence software belonging to third parties e.g. Cisco or Microsoft – check their terms to ensure you have the right to sub-licence to your customers and end users. Do you need to get your customers to sign end user software licences as provided by the software owner? Have you done an audit of the number of software licences you have and how many you have used?
  3. For your contracts do you have terms and conditions? Did you know you can easily enter a contract verbally and without knowing that you have done so? You will need properly prepared written terms and conditions (T & C’s) for your contracts with your customers/clients and suppliers. Make sure you understand what your obligations are in terms of the quality of your products or standards of service, delivery, and refunds. Always insist on trading with your customers on your own T & C’s. Do you know what terms you’re buying products and service from your suppliers? Check your ordering processes to make sure that orders are placed subject to your own standard T & C’s. Do you need your own procurement terms and conditions when trading with your suppliers? If you have to contract on the T & C’s of your customers or suppliers, have you read and understood them, do they set out everything you want?
  4. Data Protection – have your registered with the ICO? Register your business with the Information Commissioner’s Office www.ico.gov.uk and make sure you understand the rules on handling personal data. You will inevitably be holding personal data in your business even if it is just details of your customers, suppliers and employees.
  5. Are you selling by phone or online? Distance Selling: If you are selling to consumers (B2C) over the internet or phone you will need to comply with Distance Selling Regulations that specify what information you must give to customers, and an unconditional right to cancel and get a full refund in the first 7 days (Seewww.berr.gov.uk/whatwedo/consumers/buying-selling/distance-selling/index.html).
  6. Are you selling to consumers on credit? If you are dealing with consumers (B2C) and either hiring goods for more than3 months, or selling on hire purchase, or offering other credit terms you may need a Consumer Credit Licence (See www.oft.gov.uk/advice_and_resources/resource_base/credit-licence/requiring)
  7. Are you raising money from investors? If you are looking to raise money from investors you need to make sure you don’t fall foul of the rules on financial promotions– what you can say and to whom. If you get it wrong your investors can ask for their money back so this is one area where you must obtain specialist advice.
  8. How are you dealing with your lawyers? It is likely you will need to use a lawyer at some point for your business. Make sure you understand what you are asking your lawyer to do, and what you will and won’t pay for, and push for a fixed fee. Don’t be afraid to say if you think you’re not getting value for money. The best business lawyers can be a real asset to your growing business and become a trusted advisor. Ask for a package deal that includes support on ad hoc queries over the first few months of trading (note that you may be able to access this kind of legal support service through membership of organisations like the Institute of Directors or your local Chamber of Commerce). Even better, employ a part-time experienced in-house lawyer to manage your legal affairs and be proactive to avoid legal problems in the first place.

The Legal Director, a group of self-employed former in-house commercial lawyers, provides businesses with experienced, high-calibre in-house lawyers/legal directors on a part-time or flexible basis, who can not only provide you with legal advice from a business perspective, but actually manage your legal affairs. We strive to be transparent when it comes to fees and your initial consultation will be free of charge so that we can get to know you and understand your business. Following your free initial consultation we will be able to provide a quotation for our services, usually on a fixed-cost basis for specific tasks or a cost-effective day-rate for the provision of legal services on a regular basis, such as a day or two each month. Our structure means we can be flexible when it comes to our charges because we are employed on a consultancy basis and beholden to a large law firm dictating what we can charge. Our fees will always be agreed in advance so that you will never have any unpleasant surprises.

Ian would be happy to help your business by:

  • Ensuring you have terms and conditions to trade on which are fit for purpose;
  • Assisting you to respond to Invitations to Tender (ITTs) from major customers, such as helping you draft a compliance statement to any terms and conditions proposed by your customer. Ian can also support you in any contract negotiations which you may be involved in.

Ian can help your business be on a level playing field with blue-chip companies you may trade with by giving you his 20 years’ experience working for FTSE 100 technology companies.

The Legal Director is very happy to carry out a Legal Health Check of your business so that next time your business is not a GOTCHA!

Members Offer

The Legal Director is making a special offer to all members of UKITA for a Legal Health Check. By being pro-active it helps your business prevent legal problems before they occur, helps you manage commercial risk and protect your bottom line.

A Legal Health Check of 1 day – usual fixed fee £1,500 +VAT – members offer £999 plus VAT

The Legal Health check will look at such things:

  • Contractual relationships with your shareholders, investors, suppliers, strategic partners and customers.
  • Do you have adequate standard terms and conditions to trade on?
  • How you manage data protection and privacy?
  • How do you protect your company know-how, looking at confidentiality, trademarks and intellectual property?
  • Software licencing, do you have the necessary licences?
  • Any legal disputes or potential problems?

About Ian Brookes-Howells

I am a highly experienced general commercial lawyer with specialist expertise in technology, communications and IT services. Over 20 years’ experience working with some the World’s leading IT and communications companies and I am a member of the UK IT Association (UKITA), the Trade Association for the middle-tier IT sector.

I have joined the Legal Director having spent over 15 years with British Telecommunications plc (BT), the UK’s leading global communications company, where I have held various commercial and legal roles with different BT businesses. I am highly experienced in commercial contracts (buy, sell and subcontracts) including service, outsourcing (including TUPE), and international contracts; as well developing standard terms and conditions for products and services.

If your company would benefit from having its own part time in-house lawyer give me a call now.

CONTACT IAN

For a free initial chat about these contact Ian Brookes-Howells on 07777 673041 or email: ian.brookes-howells@thelegaldirector.co.uk. Web site www.thelegaldirector.co.uk