Contracting: Designing an Agreement that Reflects Joint Interest and Expectations January 11, 2018 Katherine B. Ilten Fredrikson & Byron, P.A. (612) 492-7428 kilten@fredlaw.com

What are lawyers good for? Reading. Writing. That’s why lawyers are good at contracts.

When should I start to care about the contract? Before you even see a draft. Your contract should reflect the parties’ final decisions about the “deal”. Unfortunately, the contract is often an afterthought, which can be problematic: Program implementation hiccups Disagreement about the deal Disagreements about performance standards Unrealistic expectations No historical parties left to resolve

Main deal points Parties Services – who, what, when, where? Standards Payment Term Termination options Dispute resolution

Letter of intent Also called memorandum of understanding Helpful for larger deals/arrangements Non-binding Include only the main deal points “LOI creep”

Parties Know your entities! Can the contract be assigned? Can the duties be subcontracted?

Services Know what hat you are wearing. Does the agreement actually describe the services? You can use exhibits, but don’t get sloppy. Incorporate RFPs, SOWs, proposals, pitch materials

Services Are there deliverables? Who is doing the services? Can they be replaced? What is the timeline? Location? What do you need to perform the services (supplies, space, support, information) and who will provide it?

Standards How will the services be performed? In accordance with what requirements and/or framework? Licensing, accreditation, third party payer, government, internal organizational requirements . . . . Related to evaluation. Consider timeline for evaluating services.

Payment Who pays who? How much? (Increase over term?) How? When? Invoice required? Information to be submitted for payment? What about disputed invoices?

Term Not just about length. When does the work start? Effective date versus commencement date. When does the work end—on a date or upon an event? Initial terms and renewal terms.

Termination Material breach if no cure Without cause (notice period length)? Non-renewal Immediately upon certain events? Death, disability, termination of service provider?

Effect of termination, post termination Penalties for early termination? Remaining work Confidentiality Non-compete, non-solicit Transition process

Dispute resolution Plain old termination notice Take into account the type of agreement and the hat you are wearing when considering Discussion process Mediation Arbitration Injunctive relief

Other terms Recitals Duties of party receiving services Qualifications Records Audit rights Compliance Data/Confidentiality Intellectual property

Other terms Indemnification Insurance Amendment Subcontracting Assignment Notice Survival Governing law

Myths heard in negotiations “This is a standard template. It cannot be changed.” Most contracts can be negotiated; some terms cannot. “If we include that term for you, we would have to include it for everyone.” “The law requires this language.” “Only the lawyer can approve that.”

Myths heard in negotiations “We don’t need to address that in the agreement. The contract language doesn’t really matter.” “It’s the same as your current contract so you don’t need to review it.” “I can talk to you without your lawyer being present.” “It’s okay to change the contract based on our oral conversation.”

A word about exhibits Exhibits are part of the agreement Sometimes they are an opportunity

A word about side letters Also an opportunity Helps to preserve the “template”

Terms that probably can’t be changed Non-discrimination and Affirmative Action Government Data Practices Act EEOC Business Associate Agreement provisions, if a BAA is required

Contracts you should really read before signing. High dollar contracts Contracts involving PHI Third party billers Contracts with vendor in heavily regulated area

Questions? Katie Ilten (612) 492-7428 kilten@fredlaw.com This presentation does not constitute legal advice or create an attorney-client relationship with any member of the audience.