Company:UK company jointly designing bespoke products with its clients
Industry: New Product Development
Indemnities, warranties & intellectual property to help close the deal quickly
Introduction
This UK-based company jointly designs products on behalf of its clients for onward sale within a variety of territories throughout EMEA, AMER, and APAC. The client was referred by another professional advisor due to the experience and successful completion of contract projects in connection with technology-focused products. The client received pragmatic and commercial advice that enabled it to more quickly conclude contract negotiations and close the deal.
The (Pain Point)
The client designs and distributes its own range of products, as well providing a design consultancy service to support its clients to create and design products for themselves, many of which seek to disrupt the current market in which they operate. The client has its own team of experienced and qualified designers to work with its clients to design the look of the product and also to provide technical support and advice. Whilst this client is a relatively new entrant into the market, its growing reputation of providing effective technical solutions and customer-focused designs, has attracted well-known and leading businesses from within the EU, Asia, and the US.
The Challenge Faced
As an early start-up the company had been using a number of basic contract templates that had been previously used by some company individuals and/or acquired through industry a number of years prior to the client becoming incorporated. The client initially saw this as a low cost way of on-boarding its first clients. However, it found that it was more often being required to amend its contracts to suit its partners, often at the expense of compromising its own legal position in some key areas.
During negotiations with a new and potentially high-value business opportunity, the client recognised that its new partner was using a lawyer behind the scenes to dilute its various indemnity and warranty obligations, whilst seemingly enhancing their own intellectual property rights. Whilst the client wanted to conclude the deal quickly to significantly increase its revenue stream, it was also conscious that this rather difficult prospective partner could represent a business risk to it in the future.
Why Chosen
I have worked with many businesses in connection with technology-related projects and contract negotiations in a variety of scientific fields, and supported a number of research-based organisations based within the UK. In particular I have helped businesses prepare, negotiate, and successfully conclude high-value research and commercial contracts due to my experience and knowledge with contracts and intellectual property.
The client needed to swiftly conclude the deal without overly comprising its position in a number of key risk areas of the contract. It also wanted to retain as much of the current agreement as it could and had no desire to start afresh. Time to conclude the deal remained critical. It accepted that the contract was not entirely fit for purpose, but nonetheless wished to focus on the key areas of the indemnities, warranties, and intellectual property clauses.
The client needed a responsive lawyer who was able to quickly understand its position, advise it, and on short-notice attend to the contract negotiations and amendments with an eye to concluding the deal within a preferred timescale. The client has over the years generated a trusted network and approached another specialist advisor for a recommendation.
I was known to the client’s advisor who recommended me not just because of my experience in this area, but also because of my appreciation of the challenges many new and startup businesses face: being able to give them a responsive level of service, and in doing so taking a pragmatic approach to legal challenges, and ultimately a commercial outlook to deals.
The Response
The client had a defined scope and focus on what was to be achieved and appreciated its risk. It was necessary to be able to accommodate the client in terms of availability, responsiveness, and its preferred timescales. Once the client’s business model was understood and the nature of the particular business opportunity, it became clear that future risks with the design client would be more effectively dealt with under other (related) commercial agreements. It was agreed with the client that the best approach was to allow each party’s lawyer to directly negotiate the key areas of the current agreement. This would avoid unnecessary double-handling and improve response times. An agreed deadline was set and the parties worked to complete the deal within that time.
Overall Results
- successfully concluded the deal within its preferred timescale;
- had preserved protection in key areas of concern under the contract;
- reserved its position for more sensitive and commercially lucrative opportunities to be accommodated by new and robust commercial agreements;
- set about discarding its old templates and required new commercial agreements to be prepared and introduced into its ecosystem;
- is now better prepared and protected with its bespoke legal documentation.
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- Beware of using another’s document including old legal agreements. Not only could these be subject to protection against unlawful use, but they are most likely to be ineffective and not suitably dealing with your specific business requirements
- Use an experienced and qualified lawyer to prepare and negotiate your business agreements
- Consider risks to your business and appreciate what could go wrong when using old template documents
- Suitable business contracts that specifically address your business requirements will enable you to better define your position, secure the right type of revenue, provide for alternative commercial opportunities, and more effectively manage potential disputes with less distraction to your business whilst mitigating against future costs and risk