- Hey everybody, I'm Dave Hecker. Every software project needs basic legal stuff,
like service agreements, and SOWs and NDAs, but when you go offshore it's a
totally different story. So how do you protect yourself when you go offshore?
That's what we're going to talk about today after the break.
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I'm not a lawyer, and nobody at SourceSeek is a lawyer, but here's what we see,
and here's kind of how we look at it. There're two primary types of legal
protection. There's the performance concept, which means that we're writing
into a contract that you are going to do a great job. You are going to write code to
our standard. You're going to put in enough hours, you're going to show up.
It's about quality, performing well. The other part is about protection. This is
basically saying you're not going completely screw us. You're not going to
take our money and walk away, you're not going to steal our stuff, and stuff like
that.
Let's talk about these two individually. We'll start with performance. Performance
contracts generally don't work at all, and this goes for domestic or offshore. If a
vendor is not performing well, it's usually not because they don't want to
perform well, or because they're criminals or lazy, it's because they can't do it.
They're having resource issues. They don't have good management. Their good
developers quit, or they took on too much business, or they did a bad job
estimating, stuff like that. So having that on paper saying, "Look, here's the
contract, you have to perform," doesn't really help. These kind of legal cures
just don't really work. You can't wave a contract to a developer and say "You have
to have this quality." If the developer can't do it, they can't do it.
So the way to address the performance and the quality issues is definitely have a
good contract, and you can have some performance stuff in there, but really try
to mitigate this at the beginning by choosing a really good vendor. And look at
that vendor closely. Make sure they don't just have one developer who's really good,
but make sure they know what they're doing, the management is good, they can do
the work, and you can trust them for this quality.
All right, let's move on to protection from things like default and breach, and
stuff like that. We have kind of a simple way of looking at this. We look at the
value of the project, and compare that to the cost of actually enforcing a contract,
and getting some kind of recovery if there's a breach. If your project is worth
$10,000, and your developer is in India, I can tell you for $10,000 you're not going
to be able to fly over there, go to court, get a judgment, collect a judgment, and
come out ahead. So it's not worth it. So you can legal up all you want, but it's
not really helping you at all. A $100,000 project, maybe you could.
Certainly all the flights and legal would be covered for $100,000, maybe. But
remember that in a lot of countries these things could take years and years, if you
have a large enough project to really be concerned with the ability to enforce your
contract, and get a recovery.
Choose your location very carefully, not all countries are the same. For example,
India, it's very very difficult and time consuming to go to court. Eastern Europe
is maybe a little better. South America, a little better still. China is just sort of
a nightmare. Mexico is not too bad. Anywhere in the EU is pretty good. So,
choose your venue accordingly. And be sure to hire an attorney at the destination.
You don't want to send an American contract and expect to be able to enforce
that overseas. And if you get a judgment here in the states from a court, that's
going to be pretty hard to enforce overseas. So get an attorney who knows
what they're doing, maybe write a dual-jurisdiction contract, something like
that. But make sure that you have council on both sides, and are ready to actually
enforce it.
When it comes to NDAs, NDAs are very very difficult to enforce anywhere in the
world, including America. Overseas, enforcing an NDA, I don't know about that.
I think that's going to be very very difficult. So if you have something that
is actually so unique that you think somebody could just rip it off and
completely screw you, I wouldn't send it overseas at all. And I would actually be
very careful even if I kept it domestic.
Okay, that's our high level approach of how we look at legal issues and risks when
going offshore. I hope that's helpful. Be sure to give us a call if you have any
questions, and we'll see you back here next time.
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