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socrateaser
socrateaser, Attorney
Category: Business Law
Satisfied Customers: 33502
Experience:  Retired (mostly)
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I am a computer consultant and have an open contract with a

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I am a computer consultant and have an open contract with a business attorney to provide computer services on an regular basis. The contract has an annual expiration date. In short, I am providing regular monthly services (i.e. tech support, system maintenance, website maintenance, etc.) on a discounted rate in exchange for a contract that is locked in for a year.

I have been working with this attorney for about four years and he has abruptly decided he would like to hire another computer consultant and terminate our agreement. He is now asking me to work with another consultant in order to transition his system to a cloud-based computer platform.

I recently sent him an e-mail with the following:

While your move to <> does not surprise me, the timing does. You and I do not have an at will employment agreement. Our contract is set to expire on April 1, 2012.

Section 3 states:

The Consultant shall provide the services for a period of twelve months, from April 1, 2008, through April 1, 2009. The term shall automatically renew for successive twelve-month periods unless either party gives written notice of non-renewal at least thirty (30) days prior to the expiration of the then-current term...

I take these annual contracts seriously as this is my primary business and I use them to plan for revenue and cash-flow. The parameters for the contract are that I offer a discounted rate on an "unlimited" service contract in exchange for a contract with an annual expiration. I also routinely offer additional services to my contract clients such as the website development and web programming at no additional cost as a retention measure.

Our agreement does not call for an immediate transition to another consultant without due notice. Please advise on how you plan to handle this.


His response was:

Hand over the keys to <> immediately.

The contract includes a provision for arbitration as follows:

... the parties irrevocably agree that any claim hereunder against the other party shall be decided by final and binding arbitration pursuant to the Streamlined Arbitration Rules and Procedures and the U.S. Arbitration Act, 9 U.S.C. Sec. 1 et seq. The parties will select a single arbitrator (or one will be selected for us if we cannot agree) who shall be a former judge or attorney with substantial experience in resolving business disputes. The arbitrator may not award damages exceeding or inconsistent with Section 12 (Limitations of Remedies & Liabilities). The arbitrator's decision shall be in writing. The parties will share the costs of the arbitrator equally. We will arbitrate any issue regarding the types of claims to be arbitrated. Arbitration may be compelled and an arbitration award enforced by any court of competent jurisdiction.

There are no questions of performance on my side of the contract. My client has simply decided to take another course of action without consulting me.

My question is should I work on initiating arbitration in order to collect the fees due to me to conclude the contract and should I work with the other consultant to transition the system prior to working through arbitration?
Submitted: 1 year ago.
Category: Business Law
Expert:  socrateaser replied 1 year ago.
My question is should I work on initiating arbitration in order to collect the fees due to me to conclude the contract and should I work with the other consultant to transition the system prior to working through arbitration?

A: You have zero obligation to provide transition services, unless expressly provided by your contract. However, the attorney can terminate the contract -- he's simply liable for the remaining charges, unless he can show that you weren't performing.

Naturally, as an attorney, your opponent will argue everything possible to try to avoid payment. On the surface, I don't see any grounds for the attorney avoiding the contract as long as you are willing to continue performance. But, I'm sure that the attorney will claim that you don't know a TCP/IP address from a house address -- in an attempt to discredit you and show that the attorney had no choice other than to terminate you, as you have totally wrecked the lawyer's business operations.

BotXXXXX XXXXXne, if you want to enforce your agreement with the attorney, then you will have to initiate arbitration per the contract terms and conditions. However, if the attorney wants the keys, then you may want to ask the attorney to please put his demands in writing, and that you will be happy to surrender the keys after receipt.

I wouldn't hold the keys any longer than necessary. As soon as you get the demand letter, you have evidence of the repudiation of the contract, and you can start arbitration. Even without the letter, if you don't receive your next month payment that would be evidence of the breach, and then you could initiate arbitration.

Hope this helps.

NOTICE: My goal here is to entertain while educating the public about the law. I hope my answer is useful and informative to you. During our conversation, the website may ask you to rate my answer. If you rate my answer lower than the middle rating, then the website retains your entire payment, and I receive nothing. It is entirely your choice as to how you rate my answer. However, because your payment to me is in the nature of a donation/gift, rather than as compensation for any services rendered, you are entitled to know how your rating affects the final distribution of your donation.

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Customer: replied 1 year ago.
Thanks for the quick response.

My client sent out an e-mail to everyone in the firm today stating:

I have asked --my name--, who has provided our IT services very efficiently for over four years, to continue providing services to the firm in the interim and making additional website changes

so, I don't think he would be able to claim I don't know the difference between TCP/IP and a house address. Overall, this has been a very positive relationship for four years with him constantly thanking me for saving him so much time, etc.

My last invoice to him was due 9/15 and has not been paid. I have already provided services for him in September, which I presume will not be paid considering how this is going. Should I ask that these two invoices be paid in full prior to "handing over the keys" or speaking with the other consultant?

Can you confirm what you mean by asking him to put his demands in writing as I have already received an e-mail from him asking me to help him transition? Are you thinking of having him write a letter to me on firm letterhead stating his intent to cancel our contract?

Another idea I had would be to figure our my portion of the fees related to arbitration and ask him to settle the account for the balance due minus any arbitration costs I may incur. Does this sound like a good idea?

I have also contacted a few arbitration companies to initiate an arbitration case. They have mentioned that I need to have the legal terms in my contract checked to make sure I can compel arbitration or to determine what type of arbitration I need. Can you recommend an arbitration company and let me know if I can compel arbitration such that my client does not simply ignore the demand?
Expert:  socrateaser replied 1 year ago.
My last invoice to him was due 9/15 and has not been paid. I have already provided services for him in September, which I presume will not be paid considering how this is going. Should I ask that these two invoices be paid in full prior to "handing over the keys" or speaking with the other consultant?

A: If it were me, I would just give him the keys and start the arbitration ball rolling. I don't know how much your remaining contract is worth, but if its $10,000 or less, then you could offer to stipulate in writing that you and he can resolve the dispute in small claims, so as to save both of you the arbitration filing fees, which are likely to be more than the small claims filing fees. But, I wouldn't hold the keys, because the attorney will just counterclaim against you for interference with personal property, and try to get damages for the cost of rekeying the office.

Can you confirm what you mean by asking him to put his demands in writing as I have already received an e-mail from him asking me to help him transition? Are you thinking of having him write a letter to me on firm letterhead stating his intent to cancel our contract?

A: Basically, yes. Email is notoriously difficult to get admitted into evidence in court, so I would prefer a "snail mail" letter. But, if you can't get it, then email will have to do.

Another idea I had would be to figure our my portion of the fees related to arbitration and ask him to settle the account for the balance due minus any arbitration costs I may incur. Does this sound like a good idea?

A: I never make offers for less than what I'm owed. I let the other party try to argue for a reduction. I can't say that your idea is bad -- it's just not my approach.

I have also contacted a few arbitration companies to initiate an arbitration case. They have mentioned that I need to have the legal terms in my contract checked to make sure I can compel arbitration or to determine what type of arbitration I need. Can you recommend an arbitration company and let me know if I can compel arbitration such that my client does not simply ignore the demand?

A: The cost of getting a legal opinion on the validity of the arbitration clause will be more than the arbitration filing fees. You may as well let the arbitrator decide whether or not the clause is valid.

Hope this helps.

NOTICE: My goal here is to entertain while educating the public about the law. I hope my answer is useful and informative to you. During our conversation, the website may ask you to rate my answer. If you rate my answer lower than the middle rating, then the website retains your entire payment, and I receive nothing. It is entirely your choice as to how you rate my answer. However, because your payment to me is in the nature of a donation/gift, rather than as compensation for any services rendered, you are entitled to know how your rating affects the final distribution of your donation.

If you need to contact me again, please put my user id at the beginning of your question ("To Socrateaser"), and the system will send me an alert. Please Click the following link for IMPORTANT LEGAL INFORMATION. Thanks and best wishes!

Customer: replied 1 year ago.
A: Basically, yes. Email is notoriously difficult to get admitted into evidence in court, so I would prefer a "snail mail" letter. But, if you can't get it, then email will have to do.

Last question: if my client does not want to do this, is there anything I should do to document the case should it end up going to court prior to turning over any passwords and such?
Expert:  socrateaser replied 1 year ago.
If you're managing an internal email server, you could make copies of any correspondence between you and the attorney and staff that you believe may be important and then store it on the server somewhere where no one else can find it. Then, if the attorney were to deny the existence of something during discovery, you could tell the court that you saved the information and that you can reproduce from the defendant's own computer system if given the opportunity. If the court agrees, then you would have proof that the attorney destroyed material evidence, and that would give the court grounds to not only sanction the attorney and/or immediately give judgment to you (aka "doomsday sanction"), and, it would probably be the end of the attorney's career, because when the state bar finds out, it will probably disbar the attorney from practice.

I wouldn't remove any of this data to your own systems, because that could be viewed as a theft, since it's really not your property.

Am I evil or what?

NOTICE: My goal here is to entertain while educating the public about the law. I hope my answer is useful and informative to you. During our conversation, the website may ask you to rate my answer. If you rate my answer lower than the middle rating, then the website retains your entire payment, and I receive nothing. It is entirely your choice as to how you rate my answer. However, because your payment to me is in the nature of a donation/gift, rather than as compensation for any services rendered, you are entitled to know how your rating affects the final distribution of your donation.

If you need to contact me again, please put my user id at the beginning of your question ("To Socrateaser"), and the system will send me an alert. Please Click the following link for IMPORTANT LEGAL INFORMATION. Thanks and best wishes!

Customer: replied 1 year ago.
"I wouldn't remove any of this data to your own systems, because that could be viewed as a theft, since it's really not your property."

That opens up another can of worms. I do remote backups of his server to one of my systems. What should I do about data retention there? I don't want to keep it too long as to indicate some form of theft, but I don't want to delete it immediately as I could be on the hook if he deletes a file and expects me to recover it. Let me know your suggestion.
Expert:  socrateaser replied 1 year ago.
If the attorney has repudiated the contract (and he has, based on your allegations), then he is in breach, and you have the right to seek damages for the breach. Meanwhile, the contract is terminated, and you have no right to maintain the backups (and no corresponding obligation to train a new service provider -- unless it's written into your contract).

If it were me, I would tell the attorney, here's your backups, here's your keys, see you in court -- let me know if you change your mind.

Hope this helps.

NOTICE: My goal here is to entertain while educating the public about the law. I hope my answer is useful and informative to you. During our conversation, the website may ask you to rate my answer. If you rate my answer lower than the middle rating, then the website retains your entire payment, and I receive nothing. It is entirely your choice as to how you rate my answer. However, because your payment to me is in the nature of a donation/gift, rather than as compensation for any services rendered, you are entitled to know how your rating affects the final distribution of your donation.

If you need to contact me again, please put my user id at the beginning of your question ("To Socrateaser"), and the system will send me an alert. Please Click the following link for IMPORTANT LEGAL INFORMATION. Thanks and best wishes!

socrateaser, Attorney
Category: Business Law
Satisfied Customers: 33502
Experience: Retired (mostly)
socrateaser and 7 other Business Law Specialists are ready to help you
Customer: replied 1 year ago.
Thank you for all of your help. I am accepting this answer.

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