September 18, 2020
Software-as-a-Service (SaaS) is a field that is expanding year over year as companies switch their business model and new tech is developed to fill market gaps. If you’re among those who have started a SaaS company (or are about to), you are likely wondering about the legal challenges you may face. Of course, you’re wise to be looking into professional legal counsel, as starting any company has its tricky bits, but especially one dealing with an online product which could potentially have buyers anywhere across the globe.
When you’re looking for a new tech attorney, what are some things to expect? In this guide, we’ll go over some of the key areas that your lawyer will need to be familiar with in order to be effective as your SaaS legal representative.
SaaS Agreements and Contracts
The SaaS agreement is going to make up a bulk of the work that a SaaS lawyer will do for you, as it is probably the most important document. Your company’s agreement goes beyond just a legal shield to protect you from liability (although it will certainly need to accomplish that as well) to represent your promise to your customers.
You’ll want to spend a good deal of time thinking about the terms of your SaaS agreement. You’ll want to think through the entire lifecycle of your relationship with your customers and plan accordingly. Consider how payment will be processed, how auto renewals will work (auto renewal laws are surprisingly complex depending on where you and your customers are located), and the details of termination. You will also want to consider how disputes will be resolved and which laws will govern the interpretation of the agreement.
Unlike most agreements that people just tick to move on, you need to acknowledge each time you update your operating system, and your users will actually read this agreement in detail. SaaS is an all encompassing B2B industry, so you will be dealing with people working at all levels and your customers’ own legal counsel as well. For this reason, your attorney will have the critical role of crafting a tight contract that is approachable for legal and non-legal eyes.
Using too much technical jargon and legalese can be off-putting and may make it seem like you’re trying to hide something. Your lawyer will need to ensure that your agreement is solid, yet written for a wider audience than a typical agreement.
Beyond the core SaaS agreement, your lawyer will also be responsible for your end-user-license agreements, subscription and licensing agreements, along with your Terms of Use and Privacy Policy on your website.
Data Privacy
In order to include the most up-to-date clauses in the agreements and policies, your SaaS lawyer must keep abreast of the ever-changing data privacy laws and regulations. Since SaaS companies operate on cloud storage, they are responsible for huge amounts of personal information.
Given the high rate of internationally reaching SaaS companies, your lawyer must also be well-versed in laws abroad as well. For example, a few years ago, the law that shook the tech industry was the passing of the European General Data Protection Regulation.
A solid agreement will include clauses that address data privacy and protection topics that limit your company’s liability, while reassuring your customers that the necessary precautions are being taken at every step to reduce risk.
Some of these areas include:
Data ownership
Data storage
Notification process for data breaches
Software modifications
Intellectual Property
A good SaaS and Tech lawyer will be skilled in IP law, in addition to contracts, agreements, and data privacy. Your brand and products are the core of your business, so ensuring that you have all your copyrights, trademarks, and patents filed properly is crucial. In the case that someone tries to infringe on any of those, your lawyer will have your back and be able to take the necessary next steps. In most cases, a simple Cease and Desist letter will do the trick, but in other cases, especially internationally, things may get more complex.
Further, many SaaS companies license out their product, which means you will need a lawyer to draft a strong licensing agreement. Some negotiation may also be needed to obtain the best deal, so having a strong lawyer in this regard will be a great bonus.
Nice to Haves
The previously listed categories are the main boxes to tick when vetting legal counsel, however, if they have experience in either of the following that is an added bonus that could save you time and money.
Employment Law
Tech companies have recently come under fire for their hiring practices and HR horror stories. To ensure the next headline isn’t your company, make sure you have a legal professional review your hiring practices. Laws are constantly changing and depend highly on where you are operating out of. If you are located in California, you won’t be able to ask about prior salaries in interviews. This is something that is a common practice in many places to use as a gauge for new employees’ starting salaries, but is actually illegal to ask as of 2017.
Tax Law
While your accountants will be familiar with most of the day-to-day, they may still have some occasional legal questions that they need verified. In this case, having a company lawyer or legal service such as BizCounsel, who is also aware of tax laws for the tech industry can be beneficial.
Summary
It’s really important to ensure that your initial agreements are done properly. In the SaaS world, you can potentially be held liable for things that could have been easily prevented with a solid contract. Although you may be tempted by the online free resources to generate your own agreement, it is highly inadvisable to do so.
If you’re a small business just launching their product to the world, you need to start off with a good legal foundation. It’s understandable that money might be tight, but options like BizCounsel can help you meet your needs as a new business, while ensuring access to high quality legal counsel to suit your specific budget.
Sources:
https://techbusinesslawyer.com/saas-lawyer/
https://attorneyatlawmagazine.com/what-does-a-tech-lawyer-do
