Canadian Lawyer InHouse

5 Cloud ���gotchas��� every in-house lawyer should know Don���t overlook a ���deadbeat��� clause: Some agreements may not specify it, but cloud providers must be prohibited from deleting data for non-payment, delayed payment, or other contractual hiccups. Get the right SLA guarantees: Often cloud service level agreements distance themselves from quality of service issues. If the service is available, for example, but performs poorly, clients might not be compensated. If they are, it might simply be a credit for additional cloud services, and in some cases there might be a cap on such credits or the liability to which providers are willing to compensate their clients. Signed, sealed, or deleted? When companies want to change cloud service providers, how will data from the first provider be handed over? Will it be returned back to the customer in the same format in which it was given, or should it be in a different format? Does the agreement ensure that what is handed over and returned is the only copy, and that data does not remain in any form on the previous provider���s servers? Beware of unscheduled maintenance: It happens, and it could mean service interruptions, lost data, or worse. If your firm is depending on the cloud to run a business, there needs to be proper notification before anything gets turned off, even for repairs. Don���t be a customer for life: Understand clearly what happens at the end of year one in a cloud service contract. Is renewal automatic, and if so, can the renewal occur with an escalated price? What other terms might change or be amended following the renewal? Define these parameters before the agreement begins. 30 ��� D ec em b er 2012/ January 2013 INHOUSE resides on a customer���s servers are now using every marketing trick at their disposal to encourage them to move to a subscription-based model whereby applications or other technologies are hosted in their own data centres and provided on an as-needed basis. To a certain extent, they are making headway. In a recent webinar hosted by Stamford, Ct.-based technology market research firm Gartner Inc., research director Ed Anderson predicted that, within the next two years, 57 per cent of organizations across North America will consider moving applications to a cloud computing model. ���We rarely have a conversation these days with either an IT service provider or an end-user organization who is not having a discussion about cloud,��� he said. The only problem is, according to even the most ardent cloud proponents, in-house counsel is often left out of those conversations until it���s too late. Important information about what data will now reside with a provider ��� and where that provider is located ��� is left with IT or other parts of the business who set up agreements on their own, according to Kratz. Risks are not properly evaluated, and sometimes the implications for IT security are not properly understood. Contract terms are often non-negotiable, with limited warranties that exclude provisions for data loss, data corruption, or loss of service. And even when corporate counsel are brought into the loop, they���re not always prepared to offer the best advice. ���I think the challenge for in-house counsel is that they are rarely specialists. You���ll have one GC who is very experienced but not necessarily in the specifics of something like cloud computing,��� says Edward Fan, a lawyer with Torys LLP who gave a presentation to in-house lawyers on the cloud in September. ���Without an awareness of what the major issues are, or being part of specific conversations, there can be things that get lost in translation.��� Charles McCarragher can sympathize. As senior counsel at TD Bank Group, he focuses exclusively on technology law, and he acknowledges that

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