
Ask HN: Large client demands our code be given to a trustee - throwaway32123
We&#x27;re a small startup, providing a whitelabel SaaS. A large potential client demanded that a copy of our source code would be entrusted to a third party (attorney) to be released to them only in case our company goes belly up.<p>We have reservations about code not being under our control.<p>Has anyone experienced something similar? What are the risks? Could they be mitigated?
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chollida1
This is a perfectly normal request and also perfectly reasonable.

They'll also expect very clear steps on how to install it and get it running.

Consider the scenario from the clients perspective. They are being asked to
base a portion of their lively hood on a small company. They just want to make
sure they can continue to function if you get bought and shuttered, or go
bankrupt.

I'm not sure what reservations you'd have. I mean a trustee's entire value is
in their reputation, so if they give away your source code they are done. I'm
going to guess your source code isn't what some lawyer wants to end their
career on.

Maybe turning the question on its head, what possible reservation would you
have with this?

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throwaway32123
Basic reluctance for someone having some 'claim' on our code, that could
potentially legally limit us in the future. Perhaps future investors would
have reservations?

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ramtatatam
It depends on how this is put together in your contract with this customer.
Escrow should be treated as insurance rather than claim - your work is not (or
at least should not be) made available to this customer, it's with trusted
party.

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throwaway32123
Thanks!

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ramtatatam
Hey, it's good problem to have, especially if you are a small startup :-) That
means there is probably enough interest in you for those big guys to build
something serious on top of your product. If I was CIO or anything else at
exec level I would not continue with you until your code went through proper
escrow (not only 3rd party storage but also 3rd party audit) - this is
reasonable, especially if you plan to base some high-revenue plans on new
product.

You will be fine as long as you have other customers and your survival is not
dependant on that particular customer. If you are unsure here then you might
be better to ask their intentions and if these are very serious maybe they
will buy you off and save the hassle :-)

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csixty4
This is pretty standard for dealing with enterprise clients. They literally
just want a copy of your code in escrow so they're not left hanging if you go
out of business. They usually pay the escrow costs and you ship a CD-ROM or
something. In my experience, this just happens once and nobody thinks to ask
for updates once it's done.

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ranaway
I've seen that being required of very small software houses selling to
bluechip corporations. There are professional services like Iron Mountain that
specialize in code escrow.

I'm not a fan of it, it's a stupid idea frankly. But it does exist in the
wild.

