* Don’t Negotiate A Website Contract As You Would A Corporate Merger

Writing a website contract does not have to be a tortuous process.

By Erik J. Heels

First published 10/1/1997; Student Lawyer magazine, “Online” column; publisher: American Bar Association

In your careers, many of you will be called upon to write a Web site contract. Here’s a few thoughts to keep in mind as you begin that process.

I was invited to speak at a conference in New York City last year about Web site contracts. Having negotiated many Web site contracts with law firms and other clients in the legal market, I relished the opportunity to discuss some of the humorous issues that had arisen in the relatively new Web medium. One such issue was the tendency of law firms large and small to negotiate four thousand dollar Web site contracts as if they were multimillion dollar leveraged buyouts. The Web site development company that I worked for was very careful to make sure that its Web site contracts tracks de facto industry standards. So much so that our Web site contracts became, effectively, restatements of the law of Web site development. We even printed them up on four-part forms to emphasize that this is not rocket science. When my turn came to speak at that Web site conference in New York, I mentioned how firms should not enter into lengthy Web site contract negotiations to decide issues that had already been settled by de facto industry standards. I then mentioned that negotiating a preprinted four thousand dollar Web site contract was silly – a little bit like negotiating the preprinted terms on the back of your copier lease, “and after all,” I added, “who would bother negotiating those copier leases!” I expected laughter but got none. It was then that I realized that probably everybody in the room had negotiated their preprinted copier leases. And that they all intended to negotiated their Web site contracts with the same reason-be-damned fervor.

I suppose that I shouldn’t have been surprised at the resistance I experience from law firms in various Web site contract negotiation sessions. After all, law school teaches us to be risk averse. To expect the unexpected. To draft contracts that contemplate both performance (we hope) and nonperformance (God forbid). But I think that law school tends to emphasize the nonperformance part of the equations, since the majority of law is learned by studying the minority of cases that get appealed and written up in text books. And only a minority of business disputes end up in a trial court in the first place! It is good to be risk averse, but the amount of energy that one chooses to spend on being risk averse must be measured against the value of the deal one is contemplating. In other words, don’t negotiate your copier lease – or your Web site contract – as much as you would a merger of two Fortune 500 companies.

So what issues should a law firm consider when entering into a contract to develop a Web site?

First, know what you’re buying. Know the language. It’s silly to include definitions for “Web” or “Web site” in a Web site contract. These and related terms are defined by common industry usage. Besides, if you define “Web site” in some other way than that term is commonly used, you’re only asking from trouble. Good sources of definitions of terms include the Request For Comment (RFC) documents RFC 1866, the HTML 2.0 standard (http://www.internic.net/rfc/rfc1866.txt) and RFC 1594, new Internet users questions (http://www.internic.net/rfc/rfc1594.txt). Also, Ed Krol’s book “The Whole Internet User’s Guide and Catalog” is a great resource.

Second, know what happens if you’re not happy halfway through the contract. I strongly suggest dividing the development of a Web site into at least two phases. Phase one, a design specification (more on this below) and the home page. Phase two, the rest. Since the home page will most likely contain links to the major section of the site and will define the look and feel of the rest of the site, once the home page design is completed and accepted, the design of the rest of the site logically follows. If you are not happy with a particular phase of the contract, you should have the options to cancel the contact, take what has been completed to another contractor, and move on from there. You should also pay for all work that has been done on your behalf, whether of not a particular phase is completed. Web site developers are a lot like law firms. Law firms bill their clients, whether a case is won or lost (for the most part). Similarly, a Web site developer should be paid for all of its time and materials.

Third, know what happens after development if you want another Internet service provider to host your Web site. Virtual hosting (storing your files on a developer’s computer) and colocation (buying your own computer and locating it in your developer’s network operations center) are the best ways to publish your Web site. Why buy a computer, router, and high-speed Internet connection for your law firm when you can take advantage – for much less money – of your developer’s high-speed connection to the Internet via virtual hosting or collocation? Many Web site developers offer virtual hosting or collocation either at their own facility or at the facility of a local Internet service provider. But if you want to move your collocated server (or the files on a shared server) to another Internet service provider, you should be able to do that while maintaining the ability to modify and update the site. Most of the text on your Web site will originate from your law firm, but it will have be modified for publishing on the Web. In addition, graphics and program files (such as search engine software) will most likely be generated exclusively by your Web site developer. You should make sure that you have sufficient intellectual property rights in these files to be able to pack up and take your Web site with you. The logical and generally accepted solution to this problem is to have the developer assign all copyright to content files to the law firm and to assign a license to the program files for your future use and modification.

Fourth, make the design of the Web site a deliverable item. There are four stages in the creation of a Web site. Design, development, hosting, and maintenance. Design involves creating a piece of paper that defines your Web site. Development involves taking the paper design and turning it into a Web site. Hosting is the storing of files on a computer that is connected to the Internet so your Web site will be on the Net. And maintenance is the periodic updating of your content and program files. Of these four stages, design is the most important. A Web site design – like an architect’s blue print – defines the content, presentation, and experience of the site. Content design should focus on exactly which files will appear and in which directories. Presentation design should consider how graphics will be integrated into the site, how fonts will be used, and how each of the pages will be laid out. And experience design should focus on interactive site elements and navigation. Do not make the mistake of trying to design the site in your Web site contract. That is a recipe for disaster. Just as you hire an architect to design your dream house, hire your Web site designer to design you dream Web site. The deliverable paper Web site design can then be approved and turned over to your developer’s designers for implementation – let the coding begin! A proper design specification should enable a Web designer from any Web design company to implement your Web site.

Fifth, keep things mutual. If your firm insists on having boilerplate “limitation of liabilities” and “disclaimer of warrantees” and “indemnification” clauses – and 99.9% of the time these clauses serve no purpose – make sure that the terms are mutual. If you make the developer promise not to sue you for slip-and-fall injuries on your premises, make sure you can’t do likewise.

Fifth, keep it short! Is it really worth having a mandatory arbitration clause in a four thousand dollar contract? Probably not. Also, for every clause that you want to add to your contract, ask yourself this question: Does this change existing law? If the answer is no, don’t include that clause. In the end, if your contract is longer than a two-sided form, start over and edit out stuff until it fits on two pages. And don’t give your contract a title, because I guarantee that somebody will want to change it.

Remember, there are many business transactions conducted every day, only a few of those ever result in litigation, and only of few of those end up in appeals courts and law school text books. Be risk averse, but not at the expense of common sense. A two page Web site contract, assuming that it calls for the delivery of a design specification, can meet your needs quickly and efficiently.

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