Airtight Contracts Can Ward Off Tech Claims Against Banks
Sunday, April 16, 2023
Charles Nerko outlines key steps in American Bankers Association's ABA Banking Journal article
NEW YORK, Feb. 7, 2023 /PRNewswire/ -- Charles Nerko, co-leader of the Cybersecurity Team and a partner in the Commercial Litigation and Financial Institutions & Lending Practice Areas at the law firm of Barclay Damon, says in an ABA Banking Journal article that banks can stave off tech litigation with smarter contracts.
Many tech legal claims cover acts that actually are the responsibility of the tech vendor, and it's critical for banks to know how to shield themselves, Nerko wrote in his piece posted by the Journal's Risk and Compliance Channel on January 26. The Journal is published by the American Bankers Association.
Such claims by customers, credit card companies and other financial institutions typically range from privacy and accessibility issues to overdraft fee calculations.
"Banks can protect themselves by crafting a tech contract that is as airtight and comprehensive as possible," wrote Nerko.
"It's not just an agreement. It's a risk-management tool, especially as millions of dollars in liability--and the bank's reputation and customer relationships--can be at stake," he added.
Nerko advises banks large and small to follow a checklist when drawing up contracts with tech vendors:
-- Create a realistic indemnity framework and make sure conflicting wording
does not appear in the contract.
-- Leave no doubt as to the vendor's responsibilities, deadlines, expected
level of performance and remedies.
-- Pay attention to contract end dates; when a contract feature is added
later, it sometimes starts the contract's clock anew.
-- Include strong security measures that cover everything from firewalls,
authentication and remediation to notification.
-- Make clear that even though the vendor can access bank data, the bank
owns the data.
-- Spell out key fees in the contract; don't refer to "standard" or
"customary" rates.
-- Rely on subcontracts only if it is clear the vendor is responsible for
the subcontractor's work and the bank knows the subcontractor's identity
and approves of the use.
-- Consider pursuing non-contract claims, if a bank is saddled with
liability and contract remedies are limited.
Click here to read the article.
Nerko principally represents clients in complex commercial litigation involving data protection, privacy, technology and commercial contracts. He advises and litigates on behalf of clients whose critical business relationships, reputations and confidential information are at risk. Nerko also guides clients on strategies to achieve business goals while minimizing legal risks.
He serves as lead counsel to financial institutions and businesses throughout the United States in litigation against some of the largest providers of outsourced technology services.
Nerko also represents a wide range of clients in bet-the-company disputes concerning the protection of trade secrets as well as competitor law firms in matters implicating legal ethics and the protection of privileged information.
About Barclay Damon LLP:
Barclay Damon attorneys team across offices and practices to provide customized, targeted solutions grounded in industry knowledge and a deep understanding of our clients' businesses. With nearly 300 attorneys, Barclay Damon is a leading law firm that operates from a strategic platform of offices located in the Northeastern United States and Toronto. For more information, visit our award-winning website at barclaydamon.com.
Contact:
Charles Nerko
Co-leader, Cybersecurity Team
Partner, Commercial Litigation and Financial Institutions & Lending Practice Areas
Barclay Damon LLP
New York, NY
212.784.5807
353286@email4pr.com
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SOURCE Barclay Damon
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