Service Level Agreements: Structuring Performance Credits and Other Incentives

The IT services environment evolves daily and drafting service level agreements (SLAs) presents unique challenges for counsel to customers, service providers, and vendors.

SLAs, at their most straightforward, address the current level of anticipated service. Well-drafted and effective SLAs also outline what happens when the unanticipated occurs, relationships break down, or the parties need to make additions, deletions and modifications to the service levels. Of central importance to these agreements are service levels and corresponding performance credits, as well as non-monetary incentives.

Individual service levels vary in their criticality and their associated remedies. Some service levels have associated pre-determined monetary remedies called performance credits, payable by the service provider to the buyer for missed service levels under the terms of the contract. Understanding the “math,” value of these performance credits, and the practical operational impacts can be critical to the success the service.

Listen as our authoritative panel of transactional attorneys provides guidance on structuring performance credits and other incentives in SLAs, including a detailed discussion of strategically using key calculation formulas and valuation provisions to minimize client risk.

1. Overview
2. Service level agreements
3. Performance credits and other incentives
4. Anticipating common areas of dispute and streamlining negotiations

The panel will review these and other key issues:

• What are best practices for structuring and drafting the service levels and the remedies?
• What are the key questions corporate counsel must first consider before undertaking negotiating and drafting provisions related to performance credits in an SLA?
• What are the terms and conditions to always include related to performance credits?
• What are the most commonly disputed issues with performance credits, and what are best practices to resolve them?