Tech & Sourcing @ Morgan Lewis

As a follow-up to our recent post on third-party contract due diligence in outsourcing deals, this post focuses on how customers in outsourcing deals handle the disposition of legacy third-party contracts—one of the thorniest and most work-intensive work streams—once diligence has concluded.

The due diligence review of existing third-party contracts is a critical component of any outsourcing deal. For the company that is outsourcing part of its business functions to a third party, reviewing existing third-party contracts for certain key terms is an important part of the outsourcing process.

Complexity in sourcing transactions relates to the interdependence between the parties executing a program.

Even with the standard independent contractor provision in a Master Services Agreement, when employees of the contractor work at a client's site, there can be a heightened risk for joint employment liability, especially where such employees were hired by the contractor as part of an outsourcing arrangement.