comment on lawsuit between cs and dealer over confidentiality / Argument for long term agreements March 26, 2018

KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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comment on lawsuit between cs and dealer over confidentiality / Argument for long term agreements
March 26, 2018
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comment on lawsuit between cs and dealer over confidentiality from March 15, 2018 article
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Ken
    Reading over your post on NextAlarm v. Cen Com [March 15, 2018] reminded me of two hellish years I spent buried in a litigation quagmire in a prior career.  Speaking only to the details that are matters of the public record, our medical practice used Vendor 'X's software to store medical records.  We weren't happy so we switched to Vendor 'Y'.  
    Since the loss of our account had the potential to erase Vendor 'X's profit margins, litigation was commenced.  The crux of their claim was not that we didn't pay through the end of the contract (we did), rather that retrieving all our patient records, reformatting them, and importing them into Vendor 'Y's software, was reverse engineering 'X's software and enriching Vendor 'Y'.  The case ended in a settlement (defined as an agreement under which both parties feel equally ----, um, "disadvantaged.")
    When dealing a CS, I want to have clear answers to: who owns our data, how will you use it, how will you return it to us?
    Sounds like a job for the Kirschenbaum central station agreements?  To echo what Mark Fischer said in a prior post, we seem to be in a state of flux over who 'owns' information.  I nearly wanted to strangle a Silicon Valley venture capitalist who explained to me, "Oh these data beaches are horrible - we suffer tremendously!  All that information that was leaked is now available for free, when we could have charged for it.  Massive profits gone!  We need relief from these damn consumers suing us just because they had their credit wrecked.  They'll be better in seven years when it rolls off their report, our profits are lost forever! We're the true victims here."
    Now that we've solved (or at least groused about) the world's problems, I have some wine that's not kosher for Passover that I need to 'dispose' of.   
    Best Regards,
Bob Long, Senior Advisor
Insane Packets, LLC
CELEBRATION FL  34747-5162
1 321.939.4182
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Response
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    Alarm dealers have plenty of issues, business, legal and emotional, that they need to attend to, and the relationship with the central station is priority, even if the issues are not considered when the relationship is forming and even maturing.  That's a complex way of saying, "what the heck is your deal with the central station, and did you consider the most important issues?"
    If you don't know the most important issues then you most likely didn't consider them.  But even those that do know what is important often don't bother to address these issues, concerning themselves more with the cost per account and what the anticipated monthly charges for monitoring will amount to.
    Who owns the data is a priority consideration; it becomes number one priority when you are trying to move your accounts and don't have access to the electronic data.  In fact, I'd put this issue second only to "who owns the lines or has right to the lines if you want to move accounts?"  [that is clearly number one consideration.]
    What distinguishes the Kirschenbaum TM Dealer Agreement?  The check box items on the face of the contract.  It identifies the "important" issues and clearly lets the dealer know the "deal".  That's significant, because knowing the "important" issues is half the "battle", negotiating the issue the other half.  While you may very well end up making a crummy deal with your central station, at least if the cs uses the Kirschenbaum TM Dealer Agreement you'll know you made a risky deal [presumably you received something of value that caused you to agree to a "bad" deal].  
    Central stations usually know the important issues, but it's not their responsibility to "represent you" when negotiating.  Good idea is to retain an attorney expert in the alarm industry who can assist.  If you can't think of one, give me a call.
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Argument for long term agreements 
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Ken
    From time to time we are challenged on the term of the contract.  We use your Standard All in One agreements, which are 5 year for residential and 10 years for commercial.  Too often we fumble around with a response and we are wondering if you can provide some guidance on how we might better respond to this kind of challenge.
Anonymous
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Response
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    Good question, and perhaps one that deserves a more thorough response than I have time for today.  
    There are a number of ways to respond and the circumstances of the transaction and your relationship with the subscriber will undoubtedly influence what approach you take.  It's also a complicated issue because there are unrelated factors that come into play with the length of the contract.
    Here's an easy one.  Commercial account [fire or intrusion or anything else], existing system, subscriber wants to engage you for Repair Service only and it's on a "per call" basis.   You use the Commercial All in One [either fire or security].  It's got a 10 year term with month to month renewal.  Sub complains about the term.  Your response is that because it's a per call relationship the sub can call or not call, and you can come or not come, but if you do come to do the repair, the terms of the agreement govern.  You don't want to have to get new contracts signed.  The term should not matter since the sub can always stop calling you for service.
    Of course your goal should be to get RMR items:  monitoring, inspection, repair service.  The sub wants to know why it's a 5 or 10 year term.  Why not one year or month to month? [some subs just want the right to cancel any time].  Here the justification may be more razzle dazzle.  I think it will come down to price, cost to the subscriber.  You will have to explain if it's not obvious from whatever promotion you are running, or pricing you show the customer, i.e., different levels - bronze, silver, gold, all priced differently.  So a 3 year monitoring contract may be at $50, 4  years at $40 and 5 years at $30.  This way the length of the term has obvious financial differences.  Perception can be clouded, because in this example the total revenue increases as does the years, yet the subscriber may see the lower RMR as the best deal.  
    A more abrupt conversation may take place when the subscriber wonders why any term other than "at will" is necessary.  Well, that subscriber can be given the choice of paying for the system with no anticipated RMR.  That could mean that the sale and installation goes from $300 to $1800.   
    This comes up with commercial fire alarm installations.  The sale contract is often with the GC and it won't sign up for the RMR and the owner doesn't want to either at time of installation.  So all you have is the sale and installation.  If you don't think you will get the RMR items, inspection, monitoring and repair, you need to consider if you're making enough on the installation to warrant the risks.  Risks because not only are you not getting the additional revenue from the RMR but you are signing a GC's agreement, not your Fire All in One, and you are taking on added risks [indemnity, insurance, liability].  Reaching out to the owner and explaining that the fire alarm needs all the RMR items and it may as well be you that provides those services, but you need to know now, before you commit to the installation.  
    I am sure that the marketing and consulting services can offer additional advice on how to deal with contract challenges.  For my part I want to remind that you that's you're not in the alarm business so much as you're in the "getting the contract signed" business.  Learning how to sell the contracts to your subscribers may not take as long as it took you to learn about the alarm systems you're selling, but it's something you do have to learn about.  
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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301
ken@kirschenbaumesq.com
516 747 6700
www.KirschenbaumEsq.com