John Rhodes, associate, Simmons & Simmons
Practice Area Focus: Information, Communications & Technology (ICT)
9 October 2009
15 April 2014
8 April 2014
12 May 2014
26 March 2014
New Model Services Contract — New Model Contract precedent for government ICT and business process outsourcing contracts
11 April 2014
ICT (sometimes called Telecommunications, Media and Technology (TMT) in some firms) covers a diverse range of commercial transactions relating to the buying, selling, using and outsourcing of technology and communications goods and services.
What is ICT?
ICT (sometimes called Telecommunications, Media and Technology (TMT) in some firms) covers a diverse range of commercial transactions relating to the buying, selling, using and outsourcing of technology and communications goods and services. ICT also generally encompasses a variety of regulatory and consumer protection work such as data protection and data security.
What is the working culture like in an ICT team?
Our team is tight-knit, friendly and supportive and the culture is very much client-focused. We are a relatively small (compared to other departments in the firm), busy group and we work on a mixture of transactional and advisory work, from small scale single jurisdiction deals to complex, high value multi-jurisdictional transactions. Because we tend to get regular work from our clients rather than one-off, infrequent transactions, we get a good understanding of the products and commercial drivers underpinning our clients’ businesses.
What is the typical makeup of an ICT lawyer’s client base?
An ICT lawyer’s clients are predominantly specialist technology providers or large corporates which are heavily reliant on IT and/or communications services or outsourced services. In particular, we do a great deal of work for telecoms companies and financial institutions (commercial and investment banks, hedge funds, insurance companies, etc.) as well as for public sector clients. Some ICT practices will have either a user or supplier basis but we deliberately maintain a balance between the two.
Which other practice areas do you work most closely with?
A large outsourcing transaction which would be coordinated by the ICT group will typically involve an employment lawyer (to advise on TUPE issues), an employee benefits/pensions lawyer (to advise on the transfer of employee benefits for transferring staff) and a tax lawyer as many outsourcings (particularly for financial institutions) can require complex tax structuring. We also provide a specialist support role in transactions or matters which have particular IT elements and issues (for instance providing technology/telecoms input to M&A transactions or helping the commercial litigation team when clients require dispute resolution and litigation advice relating to technology/telecoms matters).
What skills make a good ICT lawyer?
ICT lawyers, as with other commercial lawyers, need to focus on understanding a client’s business, both its key objectives for the specific transaction and its wider commercial drivers. Communication skills are crucial in order to provide quality advice to the client, as is understanding and appreciating the technical nature of the technology or systems involved. As a specialist, and also working for clients in an ever-evolving industry, it is important to maintain an understanding and knowledge of new products and services, and to continually develop the legal skills needed to provide innovative solutions and a value-added service.
What impact has the recession had on your practice area?
In contrast to other practice areas, the recession has had less of an impact on IT and outsourcing. Unlike when the ‘.com’ bubble burst in the early 2000s, businesses have not significantly cut investment in IT and telecoms during this recession. Historically, investment in IT and telecoms was a discretionary spend (i.e. a ‘would like to have’). Whilst discretionary spending has obviously been slashed as a result of the recession, IT and telecoms are now so integral to business that more of that spending is now ongoing, direct and non-discretionary and requires continued legal support. What’s more, businesses are in fact turning to technology as a means of achieving efficiencies and saving costs. For instance, holding meetings by video conference diminishes the need for high cost national or international travel, and telecoms providers have seen demand for this technology and data services increase.
Outsourcing is also an obvious way of significantly cutting costs and headcount, and is therefore counter-cyclical. Support or ‘back office’ functions are outsourced to lower-cost, specialist third party providers who are able to take advantage of economies of scale by providing the same or similar services to more than one customer.
Which prominent ICT deals has your firm been involved in?
Simmons & Simmons advised Virgin Media, the digital TV, broadband, mobile and home phone provider, on the outsourcing of the management, operation and support of its voice and data network to BT Managed Services (part of BT Wholesale). The contract is worth an estimated £98m over five years, and under the terms of the agreement Virgin Media will enjoy reduced costs and greater freedom to focus on developing its future business. We advised Virgin Media on the negotiation of the contract including the complex process of defining the processes and services to be provided by BT Managed Services, and the transfer under TUPE of 184 skilled Virgin Media employees to BT as part of the agreement.
What do you think will be the future shape of ICT departments?
ICT departments are becoming more and more multijurisdictional, owing to the commoditisation of IT and telecoms services and the savings available by sourcing services offshore. For instance, data centres (secure facilities for the hosting and processing of data and computer applications) are increasingly being transferred from a business’ own premises to dedicated third party facilities. This is as a direct result of mounting energy costs and environmental pressures, and the increased resilience and security of such third party “next-generation” facilities.
As a result of this global commoditisation, we will be required to work when and where our clients want. We are increasingly using our international network of offices and contacts as part of a cohesive international practice group. We also have to continually adapt the way we provide and charge for our services so that we deliver the most value to our clients. Using technology ourselves is obviously a key part of that.
What phrase is an ICT lawyer most likely to use and what does it mean?
“Service level agreements” or “SLAs”: a service level agreement is part of (and importantly not separate to) any outsourcing or other agreement for the provision of technology or telecoms services. It is a fundamental part of the overall contract because it sets out the detailed specification of the services to be provided and the standard that has to be met by the service provider in providing the services. The SLA can be very technical, depending on the nature and sophistication of the services. From a purely legal perspective, SLAs provide the stick with which the service provider is incentivised/penalised: failure to adhere to the agreed service levels often results in the supplier being liable to pay ‘service credits’ or other compensation to the customer, or the customer having other contractual rights such as step-in or termination.