UK: Law Firms And Contracting For The Cloud

Last Updated: 14 January 2015
Article by Richard Kemp

The growth of cloud computing as a means of obtaining computer and IT service presents opportunities and challenges for law firms. The opportunities – in terms of scalability, flexibility and ease of use and, for most firms, pricing – are well documented, not least by cloud service providers themselves. This article will set out a number of the risks, challenges and considerations to be borne in mind by law firms taking the decision to switch some or all of their computer and IT requirements to the cloud, whilst outlining possible solutions. The question of cloud contracts throws up a slew of issues, both general and pertaining specifically to law firms, covering commercial, technical and operational terms, general and specific law firm regulation. Law firms need to maintain trust and service with their clients and effective working relationships with their suppliers – and both with the Solicitors Regulatory Authority (SRA) - so these issues need to be dealt with. Like all areas of IT, the cloud is replete with acronyms and a short glossary is provided below for clarity.


ASP (Application Service Provision)

An intermediate stage between traditional on-site, server-based, licensed software use and SaaS where the server is located at the data centre but still dedicated to the customer, whose software is licensed to run on that server


The IT metaphor for the Internet

Cloud computing

The supply as a service of software, storage, processing and other computer resources from a data centre by a third party cloud service provider

Cloud service provider

A provider of cloud computing services

Data centre

The central location where the servers and other equipment used to provide cloud computing services are housed and managed


The provision of one or more elements of cloud computing by a cloud service provider, normally through the provider's data centre

Hybrid cloud

The supply of cloud computing services on a mixed public cloud and private cloud basis, typically where the public cloud provides additional flexed capacity to the primary private cloud service on an as needed basis.

Private cloud

The supply of cloud computing services where the servers (by which the service is provided) or the space in the data centre (where the servers reside) are dedicated to a single customer

Public cloud

The supply of cloud computing services where servers and space are not dedicated to a single customer but pooled between customers through virtualisation

SaaS (Software as a Service)

The supply by a cloud service provider of standardised software functionality as a service (not a licence) on a secure, 'web ready', one to many, scalable, per-user priced basis


The creation of additional processing capacity on a single server by a software hypervisor which organises the deployment of multiple operating systems running simultaneously on that server

Cloud computing is at an early stage of development right now and as the number of law firms opting to use it grows, so the temptation can be to rush into it as a catch-all, simple answer, without performing the due diligence which would be par for the course when contracting out other services. In an increasingly competitive and Darwinian law market environment, the fear of being left behind by competitors and not offering 'the latest thing' can blind law firms to the need to proceed in a cautious and thorough manner, but it's vital, for all parties, that a structured approach to Cloud procurement is adopted. Steps around this begin with producing a statement of requirements, drawing up an internal bid and then running a structured procurement process, whether this is based on open tender or preferred bidders. Compiling an internal risk and compliance report will help to crystallise any concerns and will provide a useful touchstone as the procurement process moves forward. Questions which need to be asked when putting this report together include the recovery and continuity arrangements that are in place in the event of things going badly wrong, whether a switch to an alternative supplier is viable and how long it would take, and an examination of the regulatory compliance of the supplier. Before any contract is agreed, the law firm should carry out technical, financial, commercial and legal due diligence on the supplier.

Bearing in mind the value and importance of the information which a law firm is going to be storing in the Cloud, supplier stability is a key point to establish, especially as the market is at a stage where many new businesses are being formed, not all of which will last the course.. There is no magic here, but it is a question of doing the necessary to run current credit searches, and take references from other former and current customers. Cloud computing increasingly involves the assembly of different parts from different sub-contractors so the law firm should look carefully at whether and if so how the cloud service provider uses third parties, in particular to check that there is no single point of failure. Having gathered together all of this information, it's important that you ask your supplier to set out, in writing, exactly what their policies and procedures are in terms of security, in particular the suppliers ongoing ability to meet their contract requirements on matters such as security and passwords in the event of a system failure or outage of some kind.

One of the issues which has to be firmly established when a SaaS or other cloud computing contract is being drawn up is that of data, and, most importantly, what commitments the supplier can give as to return of customer data both during the agreement and after it has ended. Details which have to be pinned down include the file format of returned data, whether this is a form which the law firm will easily be able to use, the length of time between the request for and return of the data, and whether the provider will 'return first, argue later' - commit to return customer data no matter what the circumstances at the time of the request. The law firm should consider whether it is practical to keep the up to date data on site or elsewhere – most law firms use Mimecast so will (already) have their email data stored and accessible through them. Whilst this may seem to negate the convenience offered by Cloud storage it will offer a degree of security and reassurance whilst not, if only recent data is included, throwing up too much in the way of extra IT work.

Many issues can arise during the lifecycle of a cloud contract, and a few are listed here as requiring consideration:

  • What is the duration of the contract, the renewal process and the amount of notice required?.
  • What is the SLA - the cloud service provider's commitment to service levels and service credits for service outage?
  • Who bears the risk of Internet and telecoms downtime?
  • How much liability does the provider accept in the case of breach (12 months charges is common) and does this operate outside the service credit regime?
  • Are there higher liability limits for infringement of confidentiality or third party intellectual property rights?
  • What are the maintenance and support arrangements (especially if the monthly per seat charge is quite low)?
  • What flexibility does the provider have to increase charges or changes other contract terms?
  • What does the contract say about disaster recovery and business continuity arrangements and can you test them periodically?
  • How does the contract deal with exit/disengagement – is there a written plan which sets out what is to happen if the law firm wants to move away from the provider (regardless of circumstances at the time)?

A particular feature of law firm cloud contracts is regulatory compliance. In the language of the SRA Code of Conduct (code), moving to a cloud platform is likely to constitute outsourcing of legal activities or operational functions that are critical to the delivery of any legal activities. Accordingly, Outcome (O)7.10 of the code states that the SRA, or its agent, must, throughout the duration of the contract, be able to 'obtain information from, inspect records of, or enter premises of the [Cloud service provider] in relation to the outsourced activities or functions'. O(7.10) also requires that the outsourcing must not be allowed to adversely affect SRA monitoring compliance, nor alter a firm's obligation to its' clients, or cause any breach of SRA authorisation requirements.

Where, as is likely, data held in the cloud is also personal data – data referable to living individuals – under the Data Protection Act 1998 (DPA), the law firm will need to ensure that data protection requirements are also met. Generally, the cloud service provider will be a data processor, rather than a data controller for DPA purposes, but care will need to be taken as to when a provider may become a data controller in relation to the personal data that the law firm holds.

Details such as these must be addressed in the contract and should be linked back to the protection policies, procedures, notices and terms existing within the law firm, factors which also include whether the data will ever be exported outside the EU.

The third regulatory area for attention in law firm cloud contracts is data sovereignty – the extent to which data is subject to the laws (especially law enforcement access and privacy) of the country where it is located. Snowden, the uncertain ambit of the US Patriot Act and the ongoing 2014 proceedings around US authorities seeking to subpoena data from Microsoft's Dublin data centre whilst each generating more heat than light, continue to point up the growing importance of this issue. Generally, it is fair to say that in certain circumstances the possibility of lawful access by home or (through the web of international Mutual Legal Assistance Treaties) overseas law enforcement or intelligence agencies cannot realistically be excluded.

So when a law firm is selecting a cloud service provider, the location of its operations, subsidiaries and data centres should be a selection criterion on the initial due diligence list. Another point to consider is whether law firms embarking on cloud computing should include in their client engagement letters terms – a bit like the usual anti-money laundering provisions – dealing with data sovereignty.

This leads to the last point this article looks at – the extent to which cloud computing can impact on other contracts or policies of the law firm. So, if using multiple Cloud suppliers, for example, it is vital that the firm maintains a consistent approach across all suppliers, thus ensuring a standard level of service. It may be considered useful to include a term in general client engagement terms around the firm's use of cloud computing if this is relevant, or to vary the current terms when a vital IT or service component is being shifted to the Cloud. This variation could be especially relevant where a law firm client either is regulated by, say the Financial Conduct Authority (FCA), or requires its vendors (increasingly seen as including law firms) to comply with specific policies on matters such as data security.

Law firm Cloud Resources and materials:

The Law Society: Cloud computing (April 2014)

SRA: Spiders in the web: the risk of online crime to legal business (Mar 2014)

SRA: Silver Linings: cloud computing, law firms and risk (Nov 2013)

ICO: Guidance on the use of cloud computing (Oct 2012)

NIST (US): Cloud computing – features, benefits, risks & recommendations for secure, efficient implementations (June 2012)

The Law Society: Data protection, Information security, Business continuity (Oct 2011)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions