Your company has been working for months to land the "big deal," and it wasn't easy. You've spent many late nights and earned countless frequent flier miles wooing the big customer, negotiating key business terms, and finally, everyone is ready to put things into writing. You then call your attorney and ask him to give you a "standard form" of agreement for you to use for the software development, licensing, distribution, or other similar transaction that you've negotiated. When you finally get the agreement from your attorney, you are dismayed to find that, while it is lengthy and full of legalese, it does not seem to describe your transaction at all. After spending hours with your attorney trying to explain the deal and trying to conform the agreement to the transaction at hand, and after spending weeks negotiating seemingly irrelevant deal terms with the other side, you finally sign the contract. When you finally get back to doing the real work of maintaining or repairing the relationship with your customer, you receive a huge legal bill from your attorney. The end result is that the deal took longer and cost more than it should have, and worse yet, started off the relationship with your customer on the wrong foot.

By learning to efficiently and cost effectively use your legal counsel in software transactions, your company will be able to get deals signed more quickly, and you will end up with an agreement which accurately reflects the transaction, while protecting your rights, without spending an inordinate amount of money or damaging business relationships.

SELECTING AN ATTORNEY

One of the most important decisions you can make in this process is choosing the right attorney. You first need to determine whether or not your attorney is experienced in software transactions. You might not have an attorney experienced in these types of transactions if he doesn't know the difference between an ASP and an SUV, or if when asked if she is familiar with client/server environments, she starts talking about her favorite restaurant. All kidding aside, an attorney who has little or no experience in software transactions will likely delay the process, and you will likely end up with diminished protection for your company. If you use a law firm that has put together a team of attorneys to work on your account, find out who specifically on the team will work on your software transactions. Sometimes it makes economic sense to have a junior attorney from the team work on a given transaction, but you will want to be sure that the senior software transaction attorney is engaged as well. Also, keep in mind that while intellectual property issues are typically paramount in software transactions, these transactions can also involve complex corporate, securities, tax, and employment matters. Therefore, it is helpful if the attorney handling your work is experienced in some of these areas, and has access to experts in other areas of law within his or her law firm.

GETTING YOUR ATTORNEY UP TO SPEED

On Your Company. An experienced software transaction attorney is still only as good as his or her knowledge of your company. Make sure your attorney takes the time to learn about your company and your specific industry. Make sure he or she clearly understands your technology, products and related requirements. While your attorney might not necessarily bill you for time spent getting up to speed on your company, any time and money spent up front should pay dividends later in the process. You can assist by providing your attorney with relevant information.

On the Transaction. Make sure that you provide your attorney with a clear summary of the important terms of the transaction. This includes not only the key business and economic terms, but also any special concerns or risks you think are relevant. You will also want to give your attorney some indication as to where you feel both parties to the transaction are in terms of bargaining strength, so that your attorney can appropriately determine what would be realistic terms and conditions for inclusion in the first draft of the definitive agreement, or how to best respond to the initial draft if it is prepared by the other side's counsel.

COLLABORATING WITH YOUR ATTORNEY

Your attorney's primary function is to create a legal and binding document that sets forth the rights and obligations of each party to the agreement, and protects your company's key interests. An attorney experienced in software transactions can bring insight into solutions to some problems which are not solely legal in nature, as well as better perform his or her primary functions of creating an appropriate document and protecting your interests. A proper collaborative environment is the key to unlocking this potential.

Be realistic in your expectations and don't expect your lawyer's "standard form" to be directly applicable to your transaction. Some kinds of transactions do lend themselves very well to fairly standardized agreements (for example, end user license agreements). However, even seemingly simple software transactions may have unique aspects requiring drafting of new contractual provisions, and more complex transactions can involve significant amounts of customized language.

GETTING YOUR ATTORNEY INVOLVED AS EARLY AS POSSIBLE

A brainstorming session among your attorney and the key business and technology people in your company early in the transaction can help to enlighten both you and your attorney as to various possibilities and risks, and will help guide you towards structuring the transaction in the most advantageous manner.

When your attorney provides you with a first draft of the definitive agreement, or his or her first round of comments to an agreement prepared by the other party's counsel, review it carefully, and have the applicable technical and business people within your company carefully review it as well. Communicate your comments to your attorney, and ask questions if there are provisions or concepts that you do not understand. While a legal contract is full of "legalese," most concepts are understandable if properly explained, and it is important for the people within the company ultimately responsible for the transaction to understand and be comfortable with the rights, obligations and risks which are set forth in the agreement.

The best attorney-client relationships are collaborative. When you hire a mechanic to repair your car, or a doctor to perform a surgery, you ask for work to be done, and then you receive a finished product or service. Properly using an attorney in a software transaction, on the other hand, is more like using an architect to design a building, where the client presents a vision of what the end product needs to accomplish, and there is give and take between client and service provider as the vision becomes a reality. By keeping these concepts and mind, you should be able to more to efficiently and cost effectively use your legal counsel in software transactions.

Mark Skaist is a partner, and Michael Cobb is an associate, in the corporate department of Stradling Yocca Carlson & Rauth, a full-service business law firm of more than 100 lawyers based in Newport Beach, California. Mr. Skaist and Mr. Cobb work extensively with companies in the high technology/information technology industries. Stradling Yocca Carlson & Rauth's commercial practice concentrates on corporate securities, corporate finance, mergers and acquisitions, public offerings and other related matters. The firm also has significant litigation, intellectual property, tax, employment law, real property and public law practices. Stradling Yocca Carlson & Rauth's Orange County office is at 660 Newport Center Drive, Suite 1600, Newport Beach 92660. For more information, phone 949-725-4000 or visit the firm's website at www.sycr.com.

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