Customers may sometimes ask that we extend our liability cap beyond the current limits in the MSA, which offers caps that match the fees customers have paid over the previous 12 months.
We draw a pretty firm line on changes to limitations on liability for a few reasons. First, for smaller customer, when we transact at smaller dollar values we have to move with velocity. If we negotiated key provisions for every contract of small value we would not be able to have the appropriate scale for or legal team and that would increase our costs. In addition, we have calibrated the legal risk burden appropriately such that neither party takes on outsized risk. The provision customers are are trying to strike balance out that limitation of liability such that it does not apply to the items we indemnify each other for because those are important things on each side (i.e. on our side if we didn’t have the IP to sell what we are selling you, you want to have protection more than just the standard limitation of liability).
The real reason that substantive provision is in our contract - that the liability cap doesn’t apply to indemnification obligations is both for customers and us. On our end - the real meaty reason we have them indemnify us is if a third party sues US because the Customer used our product in some way that violates the law. So say they use Gem to hire only White applicants - and then WE get sued because we sold the tool to them. We can’t control that they used it in that way - and we could get included in that suit - and if we did the amount they are paying us might not be anywhere near enough to cover our costs
The following can be shared externally:
For customers who want increased LoL:
Given the nature of the data that Gem is processing, which is largely already public data (e.g. the data for candidates that is pulled from their public LinkedIn profile and their email information which our subprocessors are also sourcing from publicly available data sources), the actual risk from a data breach is actually very low. However, if Gem were to offer an increased cap for these risks to customers, it does raise our risk profile with our insurers which has a material impact on our insurance costs.
For customers who want changes to indemnification:
Our indemnification provisions are carefully tailored to meet the standards of the market for a SaaS offering like ours and are closely calibrated to the risks that are present. For a contract of this size, and because of the nature of the services we provide, we feel confident that our indemnification provisions are acceptable on the market and have met the needs of 100s of customers situated similarly to you.