New York City Saas Lawyer
While you might know that New York City is a major player in the American tech industry, you might not know that the city is a particular hotbed for Software-as-a-Service (SaaS) startup companies. According to Bowery Capital, the growth of SaaS investment in New York has even surpassed SaaS investment in the Bay Area.
The 2004 IPO of California-based Salesforce is widely considered to be the event that brought SaaS into mainstream business culture. But since that moment, New York City SaaS startups have been making up ground on their West Coast counterparts. These days, the size of the SaaS ecosystem in New York rivals that of Silicon Valley, according to several key metrics. For example, New York has become a preferred U.S. launching pad for Europe-based SaaS companies — even over Silicon Valley — according to a Paddle report from 2021.
The New York City tech industry writ large benefits greatly from the city’s status as a center for global commerce. But this status bodes particularly well for the future of New York City SaaS startups. Given the dominance of horizontal B2B platforms like Salesforce, future growth in SaaS is likely to come from serving specific industry verticals. With the city hosting major players from so many different industries, New York’s SaaS ecosystem will be well-positioned to service different industries.
Almost two decades after the Salesforce IPO, New York has come to dominate the present and future prospects of SaaS. As such, New York City SaaS lawyers are kept busy assisting both SaaS providers and their customers.
What Is SaaS?
If you have used Salesforce or even Google Workspace, then you have used a SaaS platform. Technically speaking, it is a licensing model that allows software applications to be accessed online, typically through a subscription. The service provider hosts the software on its servers, maintains it, and typically updates it regularly. This is a different approach from previous software business models involving customers buying and installing software on a device.
Many businesses use SaaS applications as a way to quickly gain use of valuable technology without the investment and complexities associated with developing their own software or purchasing and installing proprietary software. In a typical arrangement, SaaS providers will back up their online offerings with tech support, limited data storage, and cybersecurity features. Many providers will also offer scalability and customization.
Why Do I Need a SaaS Lawyer?
Before working with a SaaS platform, customers must agree to a contract outlining the various aspects of the services provided. Individuals looking to use a SaaS platform have very little room to negotiate and typically agree to a standard contract.
Agreeing to a SaaS contract at the corporate level can be complicated, and companies on both sides of the agreement will almost always seek legal counsel from a SaaS lawyer.
Companies that use SaaS applications do not have as much control as they would if they relied on in-house applications, as providers must operate in a way that suits their own best interests. For example, if multiple client organizations need complex tech support at the same time, a provider might be forced to prioritize support.
Users of SaaS applications also need to be concerned about future price increases, unforeseen technical issues, maintenance, and timely updates. Users also need to be concerned about the financial viability of their SaaS providers. Users are suddenly stuck without an essential application if a provider goes out of business.
For customers, there are also liability concerns related to using SaaS applications. If an organization is sharing sensitive data with its SaaS provider, it needs to be concerned about potential data breaches of the provider’s servers.
While contracts can be an issue to navigate for customers, contracts are a way for providers to secure business and revenue. That being said, entering into an agreement with a client company also contains an element of risk. Providers have to be particularly careful about not overpromising and under-delivering. With the help of SaaS lawyers, a provider should establish reasonable terms related to maintenance, tech support, data governance, and liability.
SaaS lawyers primarily focus on service-level requirements that detail the provider’s obligations related to performance and service. Customers expect providers to meet a certain threshold for “uptime” — or the percentage of time when a SaaS platform or program is guaranteed to be up and running, which is typically higher than 99 percent. Providers and new customers could negotiate the measurement period for determining uptime and the terms related to scheduled downtime for periodic maintenance.
SaaS lawyers will also negotiate terms related to a provider’s service requirements, including expectations for service hours, response times, and resolution times. Requirements might include the awarding of service credits in the event a provider cannot meet their response or resolution deadlines. Terms can also include the various media to be used for support, including online chat, phone, and email.
For obvious reasons, providers prefer to negotiate lenient terms with respect to uptime requirements and service availability. Providers tend to want limited remedies in the event that terms are not met, such as a cap on service credits.
SaaS lawyers are also needed to negotiate terms related to intellectual property rights. The use of SaaS applications typically involves sharing of software and information. Client companies will want to maintain ownership rights over any data shared with a provider, including data generated through the use of a provider’s application. Providers will want to glean insights from client data for the purpose of improving their service. If clients are willing to allow their data to be used, a contract should outline how, where, and how long client data can be used.
What Does a SaaS Lawyer Do?
Because every situation can be different, SaaS lawyers are often needed to address any client’s unique requirements.
The job of a SaaS lawyer is often focused on negotiating and developing contracts between providers and client organizations. This process starts with researching the parties involved to assess risks and benefits. Each party’s legal counsel will typically review the history, policies, and operations of the opposite party. Legal counsel can then advise on the terms of the agreement based on this due diligence. For example, legal counsel for a potential client of a very new startup may recommend ways to mitigate the risk of the startup company going through a major executive shakeup.
The work of a SaaS lawyer largely depends on whether they represent the provider or the client side of the equation. When working with a provider, a SaaS lawyer might draft subscription, licensing, and terms of service agreements. Attorneys for a provider will also work to protect the valuable intellectual property related to the service being provided. SaaS lawyers can advise on legal matters related to software development, data infrastructure, cybersecurity, and support expectations for providers looking to work with third-party vendors.
For customers, SaaS lawyers will often focus on issues related to compliance and security. If a service involves data being stored in the cloud, customers will typically want to transfer their compliance obligations to the provider. However, SaaS providers will resist accepting all responsibility because they typically lack important industry knowledge needed to fully comprehend the risks and costs associated with compliance, especially in highly regulated industries like healthcare and finance.
While part of a SaaS lawyer’s job is to research a provider’s security measures, customers’ attorneys also play a role in preventing sensitive information from being passed to the provider. Legal counsel for customers should establish strict controls on how sensitive data might be used and the provider’s security obligations.
Other security issues addressed by a SaaS lawyer through contract provisions might include data backup measures, data storage locations, future auditing of security measures, procedures in the event of a security breach, and any responsibilities after a breach has occurred.
SaaS lawyers also outline indemnification provisions for liability claims from a third party, such as a third party affected by a data breach. Customers will want indemnification from the provider in such a situation. Likewise, providers will want indemnification from third-party claims related to the nature of customer data.
Providers also tend to seek provisions limiting their liability, particularly with respect to damages. SaaS lawyers working for a provider will typically avoid provisions determined to be too low or broad in scope. On the other side of the equation, customer attorneys will negotiate for high caps on damages and limited liability exceptions.
Let Our Team of New York City SaaS Lawyers Help Your Organization Navigate Tech Industry Law
At Fridman Law Firm, we regularly work with SaaS providers and customers to address the important legal issues surrounding this technology. In particular, our team of New York City SaaS lawyers is highly experienced when it comes to developing essential contracts, including terms of service and licensing agreements.
Our team is also experienced in the various areas of intellectual property law that are related to intellectual property. Both providers and customers have a very strong interest in protecting their respective intellectual properties. We can help providers and customers with any and all issues related to copyright, patents, and trademarks. If a SaaS application uses open-source software, our attorneys can advise on issues related to potential copyright registration.
We can also help New York City SaaS startups with all kinds of common startup law issues. Emerging companies have very different legal concerns compared to fully developed enterprises. Our New York City attorneys can help emerging SaaS companies handle everything from corporate structuring to fundraising to securities law.
If your company is looking to partner with a SaaS vendor, and you would like to learn more about our experience and expertise, reach out to us online or call our office in New York City at 212-262-9823 to arrange for a consultation.