If you have been in business long enough, you are likely to be threatened with a lawsuit. In the context of allegations of a failed ERP software implementation, you need to quickly assess risk and create opportunities for early resolution. The goal is to make effective decisions to avoid the actual filing of a lawsuit. To maximize the chance of an early resolution that avoids litigation you should consider at least the following:
- Contracts: As a software vendor or a provider of software implementation services, you should have standard form contracts in place that contain language reviewed and drafted by attorneys that is designed to both minimize the likelihood of a lawsuit and designed to minimize your monetary exposure if a suit is filed against you. You should avoid using customer contracts and you should avoid modifying clauses and provisions in your form contracts designed to protect you. There is probably no greater tool that you can utilize more effectively to minimize the likelihood of litigation than solid, well drafted and carefully negotiated contracts.
- Communicate: If a customer is pointing the finger at you and your consultants for an implementation that is not going well, you need to reasonably assess the validity of the complaint. It makes sense to engage with the customer and address its concerns as reasonably as you can. Failed ERP implementation lawsuits can be expensive to defend. The cost oftentimes vastly exceeds any fees you have received for the implementation and will most likely exceed the cost of doing whatever it takes to right the ship. It usually makes sense to do whatever you can within reason to make the customer satisfied as soon as possible – even if it means providing free or discounted services and dedicating full-time on-site resources. The fastest way to get sued is to ignore or minimize the customer’s concerns and walk away from the implementation.
- Contact Your Insurer: Certain types of business policies may cover the cost of a lawsuit (either covering any damages you may be required to pay, attorney fees or both). If you have reason to believe a claim may be asserted against you it is critical to review your policy and understand any notification obligations you may have.
- Engage An Attorney: If the threat of litigation seems real or you believe you have some liability, you need to hire a lawyer as soon as possible. You need counsel experienced in software licensing and litigation that understands potential legal strategies, and common reasons behind ERP implementation failures.
- Gather Information And Assess Vulnerability: If the threat of litigation seems real, you need to identify and maintain all information that is remotely related to the implementation. This includes all project documents, documents related to the sales cycle, emails, invoices, accounting records, files, memos, notes and communications. You should also interview key players involved in the implementation. You need to assess what implementation practices make you vulnerable to a potential lawsuit.
ERP software lawsuits are difficult, expensive and time consuming. When faced with a threat of litigation, your goal as an ERP software vendor should be to do what you reasonably can to assess your vulnerability if a lawsuit is filed, reduce the risk of being sued and create opportunities to resolve the dispute before it becomes a lawsuit.