Sky in the pie, EDS burns fingers

By | 9th February 2010

In a judgement dated 26th January 2010 and running to more than 500 pages [BSkyb Ltd & Anor v HP Enterprise Services UK Ltd & Anor (Rev 1) [2010] EWHC 86 (TCC) (26 January 2010)]  Mr Justice Ramsey accepted one of the five main claims by BSkyB against EDS in their long running dispute. As a result, BSkyB looks forward to an award of around £200 million at a damages hearing expected to take place later his month.

The limitation of liability clause in the contract did not help EDS in the end as the judge found the company guilty of deceit in making fraudulent misrepresentations to win the original contract. HP, now the owner of EDS, has indicated it intends to appeal.

What does this mean? Are there any messages for the technology industry, bearing in mind that, until the appeal is decided, the judgement represents the current state of the law?

At the very least, I think it means that IT companies/suppliers will have to be careful in future about the claims they make when selling their services. The judgment is lengthy and if you want to read it, the link is above. However, in simple terms, the judge found that an employee of EDS “oversold” the capabilities of the system EDS was selling in order to win the contract. While the actions of Mr Galloway may be peculiar to this case and, therefore, the effect of the judgment may be restricted to this particular case, I think there are sufficient elements of general principle to give the case wide significance and, if nothing else, it constitutes a salutary warning to all those inclined to overstate their own capabilities or the capacity of the technology they are seeking to sell.

If we can draw a moral from the case, it is this: you need to be sure of your suppliers and what they are seeking to sell. How do you do this? You make it a priority to get to know them before you really need their help.

Relationships are a key part of any strategy for litigation or for those who have to get to grips with IT procurement, and particularly the technology to deal with e-disclosure effectively.

With whom should you have these key relationships? Answer: With those with whom you feel comfortable, with those you like or who come well recommended. This means having relationships with a small number of reliable service providers in advance of when you need them. After all, when you have a tight deadline to meet, you will not have the time to search for, meet, go out to lunch with and otherwise get to know a supplier because your client has made it clear they need a view from you tomorrow, the disclosure deadline is next week, the date for the CMC is fast approaching, or the other side has just served on you a list which looks as if it may run to 50,000 documents, or perhaps a million!

It does not take much time or effort to get to know several reliable providers or to ask colleagues whom they recommend. After all, most litigation lawyers know a number of reliable Counsel they go to regularly, or Clerks on whom they can rely to give the problem to a suitable member of Chambers. I know that the position with experts is often the same, so why not with providers of e-discovery services? Many of them are real experts in their field and have had significantly more experience of dealing with the problems of e-discovery than most lawyers. They act regularly for a range of law firms and their clients in a wide range of disputes. By definition, they see more of this work than even the most experienced litigation lawyer.

It comes down to trust in the end. If you leave all your decisions to the last moment, how do you know you can trust the providers you talk to? If you know them already and have, perhaps, had the chance to assess their capabilities or have spoken to others who have, you will be in a better position to make the judgment call when you have to.

You may not always get it right, but it seems crazy not to try. At the very least, you stand a better chance of avoiding the experience of BskyB, and who knows, you might actually like what you see?!