GOLDILOCKS Bob Carpenter focuses his practice on high impact transactions and counseling. While most of his engagements never make the news, some do. And, when they do, they demonstrate that Bob’s work is often on the cutting edge of legal developments.
Two weeks ago The Wall Street Journal unveiled the “Goldilocks Strategy” in an article by Essec Business School (Paris) Professor Jérome Barthélemy that captures an important lesson for those businesses outsourcing information technology services. The article begins: Not too lax. Not too rigid. A contract that falls somewhere in the middle is the one that works best when a company is turning over its informationtechnology activities to an outside firm. Contracts are critical to IT-outsourcing success because they help organize the relationship between client and vendor, providing companies with protections against unwarranted fees and subpar service. But contrary to popular belief, a contract that tries to anticipate and address every contingency that might arise during the course of a business relationship can be just as damaging as one that leaves too much to chance. It can create an atmosphere of distrust that saps a vendor’s motivation to provide good service and go the extra mile when a client needs it most, such as when the business environment changes unexpectedly.
Bob Carpenter has recently used this approach with two different major IT vendors to design mutually acceptable, and beneficial, provisions relating to liability for data security breaches and the sources of financial responsibility for such liability. Bob practices balancing the parties’ interests in all provisions of IT outsourcing contracts, whether the concern is data ownership and return, The Handsome Ransom (Nov. – Dec. 2008); SLAs that a vendor can realistically achieve and that result in end-user service satisfaction, Goin’ To The Dogs (Mar. – Apr. 2006); or realistic transaction pricing in the face of new demands on vendors, Data Processors Forced to Reevaluate Pricing Strategies? (Dec. 2004).