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Business legal advice for solution providers: Managing crises and contracts

At ConnectWise IT Nation 2013, attorney Bradley Gross provides business legal advice for solution providers, addressing the most common problems.

ORLANDO, Fla. -- Bradley Gross, attorney at law with the law office of Bradley Gross PA, on Friday gave a lot of straight talk about crises that managed service providers in particular and businesses in general are likely to encounter at some point, to about 75 attendees at a breakout session here on the closing day of ConnectWise IT Nation 2013.

Gross kicked off the session with what he described as the best free business legal advice: Avoid litigation at all costs.

If you don't describe what you're supposed to be doing [in a statement of work], there are rules and you're not making them; your client is making them.

Bradley Gross,

In the participatory session, Gross, whose business is based in Weston, Fla., addressed liability, contracts and how to mitigate worries about the business.

As a technology attorney for 18 years representing tech companies ranging in size from small to global, Gross presented a list of common problems his clients experience: data loss, the dreaded letter from an attorney, clients who won't pay, competing employees who shouldn't be, not being able to deliver what was promised and being badmouthed online by an employee, among others.

With only enough time to tackle some of the problems that make business owners sweat, Gross' business legal advice began by addressing what it means when they receive the dreaded attorney's letter that states, for example, that the partner business shouldn't have deleted customer data or that there was a breach of contract or violation, etc.

The first thing is to remember not to panic, Gross said. Why? Because, he said, most of the time -- but not always -- lawyers send such letters knowing that there won't be a response, but they do it anyway to see what happens.

Drilling down into the topics addressed in a lawyer's letter: What obligation does a partner have to retain customer data because the customer needs it in a lawsuit? "Unless you the partner are the one being sued, there's no obligation to hold onto it unless you receive a court order to do so," Gross said. If the target of a lawsuit or a potential lawsuit is the partner, the partner is legally obligated to save the data. This is referred to as a litigation hold.

All partners, he said, should have a contract with customers that addresses the obligation to keep, hold and preserve data and the ability to destroy a customer's data. They also need an internal policy covering data destruction.

What about when your company can't deliver what it promised?

The first step here is to know what you're promising. The way to do that is to have a master service agreement that includes a statement of work -- in other words, what your company is supposed to be doing. "If you don't describe what you're supposed to be doing, there are rules and you're not making them; your client is making them," Gross said.

That said, in a dispute, companies that have statements of work need to look at what they did deliver to the customer and compare that with what the customer contends it was promised but didn't get. The difference is what's at issue.

"In my experience, most cases would be resolved with an apology," Gross said. He advised partners to be up-front, apologize and ask what they can do to resolve the problem. "A crisis is not a crisis most of the time if you apologize," he added.

And, he said, as unbelievable as it sounds, most states have a statute that in essence says you're not presumed to have liability if you say you're sorry.

The final topic of discussion around legal liability addressed employee non-compete and non-solicitation agreements. The takeaway: A non-solicitation agreement is more important than a non-compete agreement.

In most states, non-compete clauses are illegal, according to Gross, with a few exceptions. (Some job types qualify as an exception; if someone is subject to a non-compete clause, it has to be reasonable in time and reasonable in geographic scope.)

But non-solicitation agreements are enforceable, he said.

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