Service-Level Agreements (SLAs) Don’t Need Legal Review (Lesson 4)

Many support, hosting and software-as-a-service (SAAS) and other “as a service” cloud-based technology and telecommunications solutions come with uptime and other service-level agreements.

However, when it comes to negotiating the core product, or solution licence or services agreement, the SLA is often considered a technical matter that does not require legal review. It is often assumed that the lawyers should focus solely on the “legal aspects” of the proposed agreement.

This is a myth. An SLA should always be reviewed by your lawyers prior to the agreement being entered into. Your lawyers can ensure that the service-level arrangements are acceptable, do not contain “gaping holes” and that they address the important issues that govern the performance of the relevant product or solution.

Why The Myth Exists

One reason for this myth is that many lawyers see SLAs as a technical (and not a legal) issue and therefore assume that their clients do not require their input on them. Equally, sometimes clients might assume that their lawyers do not understand the technical side of the transaction and also see a proposed SLA as purely technical in nature.

Further, many clients will assume that all SLAs are the same. Nothing could be further from the truth!

Service-level agreements are not all the same, and they should always be reviewed by a lawyer who understands the important performance issues related to the relevant product or service and the impact that can arise from non-performance.

We regularly advise our clients on the critical components of service-level agreements, what they should and should not include (from either a vendor or customer perspective) and whether a proposed SLA that has been drafted by the other party, or the other party’s lawyers, is suitable to the transaction that our client is negotiating.

A good lawyer will understand that the service-level agreement schedule is a critical part of the proposed agreement and should always be reviewed from a legal perspective, like all other parts of the agreement.

The fact that a service provider has presented you with an SLA does not mean that the SLA is good enough. As a senior executive responsible for procuring service providers and vendors to deliver products and services that your organisation relies upon, it is critical that you have all service-level arrangements properly vetted to ensure they cover the most important aspects and properly protect your organisation’s commercial and technical interests.

It is important to understand that no two SLAs are exactly the same, and, just because an SLA might look comprehensive, it does not mean that the content will provide any assurances around performance of the relevant product or service or that there are no “gaping holes” in the proposed SLA. Only once an SLA is examined with a fine-tooth comb will the existence of problems and gaping holes in the proposed SLA regime become apparent.

To your success,