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What the Walking Dead Can Teach Us About Vendor Agreements

As fans of the AMC hit series, The Walking Dead, last night’s mid-season premiere drove home that the show is fundamentally an examination of basic morality. And contract law. And the vital importance of “vetting” third-party contractors. Think we’re stretching things?  Read on… for what the Walking Dead teaches about your vendor agreements and dealing with third-party service providers.

Put splitting zombies’ heads aside and the one basic permeating every episode as characters scramble up and down Maslow’s hierarchy of needs is “trust.” Will a person/group do what they’ve said?  Can they be counted on in tough times? Are our goals aligned? Is there a long term benefit to this relationship? The agreements and alliances throughout revolve around vetting others correctly, culminating in the famous “three questions” that Rick, the main character, settles on to gauge whether newcomers’ can be trusted enough to join his group.

Perhaps it’s because we live and breathe contracts, vetting vendors, conducting due diligence and drafting contractual language, but we saw lessons for clients in last night’s episode.

Zombie Apocalypse Service Level Agreements

Virtually every contract for third-party services (i.e., email, infrastructure, call center/support, marketing, promotions, etc.) contains a form of “Service Level Agreement.” SLA’s scope out continuous performance levels agreed upon and, crucially, the remedies and penalties for failing to meet them.  SLA’s for cloud or other services key to a business’ ongoing daily operation are often rightly criticized as offering the equivalent of a “One Free Pizza” coupon.

When Rick temporarily went off the rails at the end of season three, essentially breaching his unwritten SLA with the group, they had no effective “disaster recovery plan” to deal with what to do.  And in last night’s episode, when Rick remains unconscious for a day leaving his son Carl to fend for himself, Carl makes important self-discoveries about what “service level” he’s capable of – concluding he isn’t ready to “in-house” everything needed to survive alone.

What would you do if a key vendor’s services stopped?  What does your SLA provide if they do? Do you have a back up and recovery plan for when things go wrong?  Have you tested it?

Avoiding the Undead When Vetting Third Party Service Providers

What ultimately matters in any vendor relationship is results, not intentions.  Carefully drafted agreements provide each parties’ stated intentions and obligations, taking into account all the “what-ifs” or, at minimum, a mechanism for dealing with unforeseen events.  What occurs in practice is frequently different.  And where “trust” comes into play front and center.

In TWD, Rick’s trust in Daryl bears fruit, after Daryl proves he’s competent, loyal and consistent in putting the group’s welfare before his.  Conversely, when Carol lost Rick’s trust, ironically because she put the group before individuals, he banished her.  And everyone in TWD who’s crossed paths with “The Governor” failed – to their detriment – to sufficiently vet his capacity for evil, being initially taken in by representations and warranties that sounded reasonable.

What TWD highlights is “vetting” is a continuous and constant process, not a one-and-done event at contract signing.  Risk management programs and contractor vetting demand regular reviews and “audit rights” in vendor agreements. Because trust is bolstered when promises can be and are verified.

If your agreements contain audit rights to review vendors’ WISPs, information security practices and how and with who customer data is shared are you exercising them?  If not, why not?  Likewise, if your agreements lack a right to verify and audit contractors’ practices and procedures is that gap one you’ll survive when a zombie herd overruns your perimeter?

Building a Team That Works in the Long Run

Last night’s episode began with Rick’s group dispersed to the four winds after a catastrophic battle between his team and the Governor’s.  Though losses for Rick’s people were heavy we bet they’ll regroup and recover.  The Governor’s group is done.  Finished. Think of him as a service provider that made too many promises it couldn’t keep and who negotiated in bad faith with “clients,” rendering any contract made with null and void ab initio.  Lilly certainly thought so when she finally dispatched the Governor to the great beyond.

Given that up to 87% of all company mergers & acquisitions never result in any positive gain for the acquiring company, adequate due diligence (especially regarding IP and trade secrets) can mean the difference between a team with survival success or one surrounded by hoards of the undead.

Finally, at the risk of reaching for one too many TWD metaphors, to weed out service providers that can’t be trusted, who don’t perform per contractual obligations and whose failure results in significant liabilities or business disruption ask the equivalent of Rick’s three questions at the start of any potential relationship.  To that we’d add a fourth: “Does our law firm know what three questions we should be asking?”

Feel free to contact us regarding your own vendor requirements, contracts and vetting (and what legal lessons you’ve seen in TWD episodes) at 203 307-2665 or info@smartedgelawgroup.com.

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The Author

R Santalesa

(p) 203.292.0667 (e) rsantalesa@smartedgelawgroup.com Richard Santalesa is based in Fairfield, Connecticut and New York City.
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