Why IT Companies Need a Lawyer: Three Case Studies from My Practice

Why IT Companies Need a Lawyer: Three Case Studies from My Practice

A lawyer's work is much like a doctor's: clients usually come to us only when the problem can no longer be ignored — three days before a court hearing, or when they face a claim under a contract they signed without reading. I will tell you about cases where seeking my advice in time helped clients protect their business.

Case 1: How a Service Aggregator Can Avoid Liability for a Contractor's Actions

On August 20, 2023, a tragedy occurred: a group of seven tourists and an urban explorer died in a collector tunnel near the Moskvoretskaya Embankment. The tourists had booked the tour through the online service "Sputnik," and on August 22 its CEO, Alexander Kim, was detained and charged with providing services that failed to meet safety requirements, resulting in the negligent death of two or more people.

This decision sparked concern and justified outrage among entrepreneurs. For instance, Yandex executives have never been held in pretrial detention over accidents involving their taxi drivers, nor has Tatiana Bakalchuk been dragged into court disputes between marketplace sellers and buyers.

This case prompted one of my clients to ask me to draft a legal memorandum on the liability of a service aggregator for harm caused by the platform's contractors.

We discussed the issue, and the client asked me to address the following questions:

• How can an aggregator mitigate liability risks under Russian law for harm caused by its contractors?
• How is aggregator liability regulated under EU and English law?
• Is an aggregator liable for its contractors as if they were its employees?

I purposefully mentioned Yandex driver cases above, as they are arguably the most common source of harm in similar scenarios.

In one such case, an injured passenger demanded that Yandex compensate for earnings lost during medical treatment, pay moral damages, and cover legal fees.

Yandex defended itself predictably: (1) the service merely connects passengers with taxi drivers rather than transporting them, and (2) the platform contracts with taxi depots, which should bear liability for passenger injuries.

The court rejected these arguments and granted most of the plaintiff's claims. In its ruling, the court held that Yandex is liable for harm caused to taxi passengers because the consumer reasonably perceives they are dealing directly with Yandex, not the actual carrier.

European courts take a similar approach. In Judgment C-434/15 of December 20, 2017, the Court of Justice of the European Union concluded that Uber provides not only intermediary services for finding a taxi but also transport services.

In England, however, the situation differs somewhat. In [2023] UKSC 43, the UK Supreme Court held that the relationship between the food delivery service Deliveroo and its couriers is not an employment relationship. This indirectly suggests that Deliveroo is not liable for harm caused by its couriers. In Russia, such a ruling would mean that Yandex would not be held responsible if a courier on a reckless moped knocked you down on the sidewalk.

Based on these cases, the client and I (1) revised the company's documents to clearly delineate the platform's services from the contractor's services, (2) added a prominent notice in the app specifying which services are provided by the contractor, and (3) established additional compliance requirements for contractors to prevent courts from accusing the client of negligence in selecting a counterparty.

Case 2: Don't Sign a Contract Blindfolded, or You'll Go Bankrupt

For some clients I provide ongoing support — reviewing contracts, amending internal policies, and drafting user guides on a retainer basis. Once, a client received a contract that could be summarized as: "You owe us everything, and we owe you nothing."

The contract was governed by English law and granted exclusive jurisdiction to the English courts. It was drafted in English, with no Russian version provided.

I cannot disclose the draft contract, so I will outline its most egregious provisions in my own words:

• The client would be liable for any harm caused by independent contractors registering on the platform.
• The client's liability was completely uncapped, whereas the counterparty was only required to compensate for direct damages (loss of profit and indirect/consequential losses were excluded).
• The client would be liable not only for its own actions or those of independent contractors, but also for decisions made by government authorities anywhere in the world.

I strongly advised the client against accepting such terms and proposed amendments that essentially limited the client's liability to its own actions, with liability for breach of contract shared equally between the client and the counterparty.

Case 3: There Is No Worse Enemy Than an Angry Employee

A client once decided to terminate a remote employee for failing to respond to communications for two days (Article 312.8 of the Russian Labor Code). It seemed straightforward — just a 20-minute task…

About two months after the termination, the client received a "chain letter" — a court summons. The plaintiff demanded reinstatement, payment of salary for the period from termination to the filing of the claim, and compensation for moral damages.

Nothing to do but litigate. Not that I was upset — my career in legal consulting actually began in dispute resolution — but such cases are tough to fight: judges are often predisposed to favor employees and actively assist them during proceedings.

Together with the client, we gathered the evidence likely to be needed in court: the employment contract, supplementary agreements, correspondence, and proof of the lawfulness of the termination.

I then drafted a statement of defense, clarifications addressing the plaintiff's rebuttals to our defense, and a draft court judgment — judicial clerks appreciate this, as no one wants to write a ruling from scratch.

Unfortunately, it didn't help: the court of first instance ruled in favor of the employee and granted most of their claims. But we didn't lose heart — we prepared and filed a notice of appeal, making it clear we would not back down and would litigate as long as necessary.

As an alternative, we offered the former employee a settlement: the client agreed to pay compensation on the condition that the employee dropped the reinstatement claim.

The plaintiff initially resisted, but once it became clear the client was serious, we reached an agreement.

But how do you motivate an employee to agree to a mutual termination, attend a court hearing, and move to approve a settlement agreement?

We designed and implemented the following settlement procedure:

• The client and the employee sign an out-of-court settlement agreement outlining the general resolution framework (the compensation is split into two unequal portions: 33% and 67%).
• The first portion is paid after signing the termination agreement (this obligation is expressly stated therein).
• The second portion is embedded in the court settlement agreement and paid after its judicial approval.

As a result, at each stage the former employee retained a financial incentive to move forward, while the employer paid only upon completion of each milestone (the termination and the court's approval of the settlement).

Of course, the employee could have rejected the settlement, but that carried two risks: (1) losing on appeal or cassation and receiving nothing, and (2) spending a great deal of time fighting through every court instance. It's like the marshmallow experiment, where you can take one marshmallow now or two in fifteen minutes — except with an added twist: you might wait and end up with none.

This case is particularly valuable to me because I not only defended the client's interests in court — a classic zero-sum game — but also negotiated directly with the plaintiff, ultimately finding a solution acceptable to both parties.