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There’s an app for that – mitigating risk during software development

There has been a massive growth in the number of businesses looking to enter the app development market. Five years ago the industry barely existed in Australia, now it’s worth millions.
There is no typical app entrepreneur, said Anna Pino CEO of Lighthouse Business Innovation Centre, a virtual accelerator for start- up businesses.
“We see both individuals with an idea, and established businesses who want to extend their product or service offering by including an app,” said Ms Pino.
“They come from a range of backgrounds and their ideas for apps spread the full gambit of sectors from healthcare and education to business services and games.
“One of the problems many of these entrepreneurs face is that while they are the subject matter expert, they are not software developers,” added Ms Pino.

Scott Chamberlain CEO of Chamberlains Law Firm believes that many start- ups engage a software developer without fully understanding what they need to do to protect themselves or their idea. He provides three tips to mitigate risk:

1. Have a Non-Disclosure Agreement (NDA) in place when briefing prospective developers
An NDA protects the confidential information you might disclose when exploring the possibilities for a deal or project with another individual or business. Without an NDA, the other party can exploit your information and make it available in the public domain. So, at that first meeting before you discuss what you want your app to do, make sure you get the developer to sign an NDA.

2. Understand the Australian copyright system
Software code is considered a literary work. It is owned by the person who wrote it or the employer of the person who wrote it. If the coder is not your employee, you do not own the software unless copyright has been formally assigned to you, which can cause all sorts of problems when it comes to updating or modifying the app. It is therefore important to make sure that any contract you enter into with freelancers, contractors or software companies,- and even co-venturers – deals with this issue. What about if you want to seek investment or bring on an external partner? Assignment is also important.

3. Set clear deliverables and milestones in your contract.
While no developer can promise that their software will be completely error free or that it will perform exactly as per your original brief, it is important to make sure you have a contract that focuses on deliverables. Milestones are a good place to start. Having clear milestones that are tied to payments helps avoid disagreements at the end of the project especially around changes in scope. For app developers this might mean a deposit at the start and milestone payments at the wireframe stage, after first revisions are implemented, again after second revisions are implemented satisfactorily and then a final payment once you receive a fully functional app.

Getting Help
Chamberlains Law Firm is the only law firm in the world that offers online access to its legal documents and supporting services.
The Chamberlains Law Firm Start-Up document library contains both a Non-Disclosure Agreement as well as a Software Development Agreement, along with a number of other legal documents most business start-ups need.
Go to to:

– Get access to fully customisable legal documents for your business start-up and beyond.
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– All for an annual subscription of $950 p.a