Software Escrow Guide

Introduction Escrow services Escrow contents Release conditions Escrow lawyer Summary

Software escrow lawyer

This section considers the role of specialist lawyers/attorneys in the software escrow area.

When to get a lawyer involved

When it comes to setting up a software escrow legal agreement / contract, you should speak to the following people in sequence:

1) Your software vendor: Always talk to the vendor first. They may already have an acceptable escrow agreement in place.
2) The escrow business: They can help you with a draft escrow contract if you need one.
3) A lawyer/attorney.

In short, talk to your lawyer last - when you already have a reasonable idea what software vendors and escrow businesses provide for software escrow. It is much better if you go to your lawyer saying "I have this proposal for a software escrow agreement. What do you think ?" rather than "I know nothing about software escrow. Please provide me with an agreement I can ask the vendor to sign". This approach is better for the following reasons:

1) Software escrow contracts are 80% the same: These agreements tend to be fairly standard. If your vendor has already gone to the effort of drawing up such an agreement, they do not really want another one-off special escrow contract from your lawyer.
2) Know your bargaining power: Vendors should be positive about escrow agreements (it is good for their business), but there is a limit. If you negotiate too hard on escrow, the vendor may simply conclude your business carries too much overhead and is not worth having.
3) This is a technical IT area: A legal agreement that does not actually work is pointless. If you have your own IT people, they need to talk to the software vendor first about what is in escrow (see software escrow contents). Or you may decide to get an external IT consultant involved in this decision. You are fairly unlikely to find any lawyer who can do this level of technical work for you.

Where a lawyer can help

It therefore makes sense to get a lawyer involved only in a review capacity. You can expect them to help in the following areas:

1) When you get the contents from escrow: see escrow release conditions. The issues here should be familiar to a typical commercial lawyer.
2) Jurisdiction: The three parties to the software escrow contract (your organization, the software vendor and the escrow supplier) may not all be in the same jurisdiction. This issue was discussed in software escrow services. Your lawyer can explain the consequences of that.
3) Escrow supplier terms: Escrow companies will assume no liability if the escrow agreement goes wrong because of the actions of yourself or the vendor. They will also limit their liability if their own actions are less than perfect. This will be part of the escrow agreement that all three parties sign. Your lawyer can review these contract clauses and explain to you if they are reasonable. Your lawyer can also review what happens if the escrow company itself goes out of business.
4) Dispute resolution: Some factors here are common to any commercial agreement. For example, the likely cost/benefit of legal action to resolve a dispute. Some factors are technical. For example, the possible use of a commercial arbitration service to resolve disputes of a technical nature. Your lawyer can advise on all these issues.

Your circumstances may be different

Of course there may be unique factors in your situation. For example you trust your lawyer to negotiate the entire agreement from the start. Or perhaps your business has an in-house legal team that must be completely involved. The key point remains you should co-operate with your software vendor to secure a mutually beneficial escrow arrangement that works when you really need it to work. Abrasive arms-length negotiations through lawyers are not likely to be helpful for software escrow contracts.


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