Case Note: Negotiating a Complex Software Services Agreement
29.05.2025
Co-authors: Ilia Martynov, Zuhair Mansour.
Background
Our firm was recently instructed by a UK-based data analytics and software solutions provider, to lead the drafting and negotiation of a high-value service agreement they are in discussion to enter with a prominent corporate client. The agreement between the our client and the counter party had a value exceeding £400,000, requiring technically complex and commercially detailed assistance governing the provision of bespoke data platforms, API integrations, maintenance, and strategic software support services.
Upon the instruction from our client, we first conducted a comprehensive review of the business model, to understand the intricacies of the services which would be offered. Subsequently, we began drafting the service agreement covering important provisions of multi-phase software development, live deployment environments, strict service level obligations, and future modular expansions. The client’s intellectual property and core algorithms were central to the deal, requiring careful control over usage rights and licensing scope.
The draft prepared by us and proposed by our client, initiated negotiations between ourselves and the counter parties’ legal representatives, which at one point became a point of contention in regard to the the ownership and licensing of any software developed preceding the agreement, particularly in relation to custom modules built to the client’s specifications.
The counterparty initially proposed broad assignment rights, which could have potentially transferred significant elements of our client’s proprietary codebase and architecture to the customer. Had this position been accepted, it would have undermined the long-term scalability and reuse of client’s core IP across future client engagements.
With continuous negotiations, we were able to restructure the relevant clauses to clearly distinguish between pre-existing IP, client-specific customisations, and jointly developed modules in a way which satisfied both parties, and ultimately benefiting our client.
Using our clients’ position, and our attention to the ambiguous proposed clauses by the counterparty, we successfully persuaded the counterparty’s legal team to adopt this revised framework, reinforcing our client’s commercial position without derailing the deal.
Outcome
The final executed agreement protected our clients long-term business model and IP integrity, while offering the client strengthened operational rights and service guarantees. The contract also included favourable milestone-based billing terms, detailed SLAs, and a structured change control process. Our ability to effectively surmount the counter parties requested structure, allowed us to successfully maintain a strong and safeguarded position for our client.
