Ask HN: SaaS company, customer wants to sue, what to expect?

[throwaway0601]

I know this is a question for a lawyer, and we are working with one, but I was hoping some of you had similar situation and can give us some idea what we should be ready for.

We are a young US based SAAS company, and due to many unfortunate events (including a customer's mess in data and our system failing to have a proper backup, as well as our customer support probably not communicating with a customer clearly enough), a customer wants to sue us for loses in their business. We are profitable, bootstrap, making less than 1M/year revenue, and the lawsuit would wipe out all the money we saved for paying taxes, growth etc. The money a customer requests is ~50k.

We have a standard for SaaS T&C on our website, written by a lawyer, T&C states that we are not responsible for loses in a business etc., a standard BS, not sure how much this protects us?

Any experience in such cases? Happy endings?

[siegel]

Depends on the wording of your ToS, of course. But a business customer will have a harder time avoiding the terms of your ToS than an individual consumer, at least. It's generally best to have some mechanism to show they actually accepted your ToS. Is that something you had?

[downrightmike]

If you can calculate what it cost them, like if you do data exchange, what is the per page rate, what is their typical volume at the time of the outage. So you breach the SLA by an hour, they normally send 100 pages in that time, at 3 cents a page. Total loss would be $3. If the pages were delayed 15 to 30 minutes, or the next day, and that is within their SLA for their recipients, no real impact. Or if this put their employees out of work for 1/2 a day, average that out. If you can control the customer and understand their impact you may be able to avoid lawyers, but if they push lawyer up.

[borplk]

I'm no expert in this but I suspect a good T&C should save you?

I mostly think that because I've never heard or seen anything like this even though lots of companies have screwed up lots of times.

If it was that easy to sue the average SaaS like this I think it would be a much more common problem and we would hear about it all the time.