Best Practices for Canadian Information Management and Supporting Technologies

Overcoming the Challenges of Integration: The Legal Issues

A Bennett Jones PresentationToronto, Ontario

Lisa Abe-Oldenburg, Partner

Bennett Jones LLP

November 2, 2012

Integration Legal Issues

• Due Diligence

• Corporate Policies

• Contracting for Integration of Information and Supporting Technologies

• Types of agreements

• Defining requirements

• Legal issues

• Practical Strategies and Best Practices

Due Diligence

• know what you want to achieve, how resources are related, quality and what is missing, where value and innovation can be created

• IT (software, hardware, data, databases, devices, domain names, websites, etc.)

• IP (patents, copyrights, trade-marks)

• equipment, premises, personnel

• existing contracts (services, licenses, etc.)

• test that you can achieve it – slow phased in approach, flexibility, tied to change processes and governance of the relationship

Corporate Policies

• Business process management (BPM) is a systematic approach to making an organization's workflow more effective, more efficient and more capable of adapting to an ever-changing environment, thereby defining roles and responsibilities.

• Corporate policies need to be drafted to ensure business processes, including integration of information and technology, are effectively defined and described to avoid miscommunication, human error, and to optimize operations.

• BPM is also moving into the cloud and SaaS offerings

Contracting for Integration• Non-disclosure and Confidentiality agreements

• RFI's, RFQ's, RFP's

• Letters of Intent, Term Sheets

• Employment contracts

• Supply, Subcontracting or Outsourcing contracts

• Transitional Services contracts

• Equipment Leasing and Facilities contracts

• IP ownership Assignments, Licenses and Waivers of moral rights

• Cloud Computing agreements

• Data Processing agreements

• Distribution and Agency contracts

Contracting for Integration

• Defining requirements

• Inventory of assets, data, databases, software, hardware, devices, processes and services (including related third party contracts)

• What development work is needed and who will own the IP?

• New services, e.g. cloud, hosting, testing, training?

• How are Integrator and customer dealing with existing 3rd party contracts? Maintain, take over (assignment vs. agency), terminate, renew, renegotiate, amend? Costs and liabilities? Transitional services?

Contracting Legal Issues• Existing contract review, assessment, termination, cost analysis, procurement law requirements (e.g. Directive)

• Advising on transitioning-in and roll-out of integration, implications to corporate structures and governance

• Competition law, sensitive information disclosure concerns

• Employment /HR issues

• Open source software issues – tainting of proprietary technology

• Privacy law compliance for any data and database disclosure, access, transfer (Federal and provincial privacy laws, health information privacy laws, regulations for control of information in specific industry sectors, e.g. financial services )

•Security issues, audits, standards

• Tax planning, cross-border and international issues

Contracting Legal Issues

• Affected parties: affiliates, customers, other

• Service Level requirements (SLAs)

• Scope, change management, measurement, reporting, audit, remedies, weighting, severity

• Technical and functional standards, results-based

• Pricing: fixed, variable, base, band, flow-through

• Acceptance testing terms: criteria, timing, notice, remedies

• Warranties: timing, scope, remedies for breach

• Indemnities: third party claims, exclusions, actions

• Limitations on liability: types of damages, caps, exclusions

• Timing, term and termination, survival obligations

Practical Strategies and Best Practices

Business and IT need to align cultures, objectives, goals, strategy and technology, in order to implement a successful integration. This means that the business objectives must correspond with the information technology requirements of an enterprise.

Suggestions on how to accomplish this?

Practical Strategies and Best Practices

• Communication must be optimized between executives who make the business decisions and IT managers who oversee the technical operations. Business executives must communicate effectively as to what outcomes and results are needed, and must give IT department the ability to implement flexible business plans and IT architectures, as well as cost allocation.

• Technical department managers need to formulate and submit proposals that are tailored to the business outcomes and ensure they achieve expected return on investment (ROI).

• Business executives should attend IT department meetings and seminars to improve their understanding of the technical capabilities and limitations of the enterprise.

Practical Strategies and Best Practices

• Clearly defined project management, contract administration, governance and dispute resolution processes in the integration agreement

• Allow for flexibility in design, phased-in approach with sufficient testing, analysis and change order mechanisms

Questions?

Lisa K. Abe- Oldenburg, B.Comm., J.D.

Abe-oldenburgL@bennettjones.com

Tel.: 416-777-7475

www.bennettjones.com

• This presentation contains statements of generalprinciples and not legal opinions and should notbe acted upon without first consulting a lawyerwho will provide analysis and advice on a specificmatter.