Sample Data Recovery Contract

Posted on 2009-02-15
Last Modified: 2012-05-06

A friend of mine is thinking of doing some independent computer consulting, and asked me if I could help him draft a data recovery contract. Although I have done lots of data recovery over the years, it was always within my company- not as an independent contractor. My Google searches have led me to some contracts, but they seem rather complex and geared more towards a larger service entity. Would someone know of a good resource I could tap to get what he's looking for?
Question by:Darth_Sidious
    LVL 34

    Accepted Solution

    If your company has a good model agreement, why not have his attorney (I'm making a big leap here and assuming you aren't an attorney :-) ) use it as a jumping-off point.  The contract that a "small" entity needs is going to need to cover the same territory that a "big" company needs to cover.  The big companies spent a bundle on that agreement, and they have each word in there for a reason.

    Take the sample agreements that you find to a lawyer in your friend's state (laws vary from state to state, and you need an agreement that is "tuned" for the state that it is domiciled in) that is familiar with the industry (attorney needs to understands the unique pitfalls of this line of business), and ask for help in producing a usable contract.

    I know.  I know.  He "doesn't want to spend the money" on an attorney.  My vote: If the business isn't worth the investment in a professional agreement, then don't fool with taking on the business.

    This is a complex service with lots of areas of potential liability, and the liability can far exceed the price of the service.

    • What happens if he can't recover the data?  What happens if he is only able to recover a portion of the data?
    • Even worse, what happens if he recovers data that he deems to be valid, and it isn't?
    • What happens if he further damages the media while it is in his possession?  (Drive spins when he gets it, and is dead when he returns it, for example).
    • What happens if the media or recovered data is lost, stolen, or accidentally disclosed while in his possession?
    Personally, I hate writing checks to insurance companies and attorneys, but in a risky business like data recovery, you just have to do it.

    - Gary Patterson

    Author Closing Comment


    Thank you for really sending home the message that this is not an area to be taken lightly by either re-packaging existing materials or addressing it so vaguely; too much potential liability with this one.
    LVL 34

    Expert Comment

    by:Gary Patterson
    In IT, we touch a lot of critical, valuable, confidential stuff.  Particularly if you are working as a consultant in the US, you need to get some barriers between yourself and a lawsuit.  I've been fortunate, and I've never been sued by a client, but I've seen it happen.

    Just in the past few years, I've seen consultants:

    • Mistakenly overwrite a critical backup tape (cost was significant - maybe 500 man-hours to recover).
    • Code a bug in a program that resulted in over half a million dollar error in the client's GL.  Dealing with the error and fixing the problem cost over 50K.
    • Mistakenly power down a large production system mid-day, putting nearly 1,000 workers out of work for over an hour, and  causing client to implement disaster plans to reroute customer service calls to other call centers.  Upper 5-digit direct costs.
    • Delete a key record in a production database, thinking it was a test database.  Shut down all business functions that couldn't revert to manual processes for two production days, and completely shut down manufacturing for two days  Cost was not disclosed to me, but certainly into low 5 digits.
    • Code a bug in a pricing routine that was not discovered for over a year, resulting in nearly a million dollars in lost revenue.
    I can't even begin to list all the disasters I've witnessed in 21 years in the field working on problems and projects for a couple hundred companies.

    No matter what you do in IT, you can trip into huge liability.  If you work as a 1099 consultant, consider:
    • Incorporating or setting up an LLC.  Best shield money can buy if you maintain it properly.
    • Investing in a good attorney and a good standard services agreement that strictly limits your liability and getting EVERY CUSTOMER TO SIGN IT.
    • Having your competent attorney give you some advice on how to judgment-proof yourself and your company, and follow the rules that you are given.
    - Gary Patterson


    Author Comment


    Thank you once again for your comprehensive contributions, I can see you are very experienced and have practically seen it all. I work at a major bank and try to be as meticulous as possible in my work habits, logging my activities and using checklists to make sure I don't forget critical steps. I try to avoid computer consulting because of time and many of the headaches you pointed out, especially with respect to data recovery.

    I found clients particularly thick-skulled when it came to following best practices, reading any of the documentation I wrote up and then causing a storm when they lost their data due to abuse of production machines. When I was asked if it would be OK to install IE8 Beta on a particularly important machine, I decided I had enough. I told them if it "blew up" I was not going to fix it. I had just fixed the same machine a week earlier- it's not their business, what do they care?

    Have a good one!

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