Software Development Contracts for Increased Agility

A crucial aim of a software development contract is to mitigate concerns and risks associated with the project for both the client and the service provider. Strong contractual clauses offer a sense of security to both parties involved. In agile software development, where success hinges on collaboration, transparency, and trust, contracts should reflect these values. While it’s challenging to capture the dynamic and iterative nature of agile projects in contracts, it’s essential to prioritize the project’s goals over departmental interests and unrelated targets. Lawyers who overlook the operational intricacies of agile projects may unintentionally create contracts that hinder progress. Software development contracts can be fixed and progressive.

Fixed Contracts: Risks and Limitations

Fixed contracts are often associated with fixed-price and fixed-scope software development projects. In these contracts, the scope of work, timeline, and budget are predetermined and agreed upon before the project starts. While this may seem straightforward, it comes with inherent risks and limitations that both clients and service providers should be aware of.

Risks Associated with Fixed-Price, Fixed-Scope Projects

Overlooking User Groups:

In a fixed contract, there’s a risk of not fully understanding or accounting for all user groups during the initial planning phase. This oversight can lead to significant challenges later on when trying to accommodate new user needs.

Costly Redesigns:

If new requirements or user groups emerge after the project has started, implementing changes can be costly and time-consuming. The fixed nature of the contract may not allow for easy adjustments, leading to potential project delays and budget overruns.

Late Discoveries:

Discovering issues or missing requirements late in the development process can put considerable pressure on the project’s timeline and budget. Rectifying these issues may require redoing parts of the already implemented functionality, further complicating the project.

Evolutionary (Progressive) Contracts

Evolutionary, or progressive, contracts are designed to be more flexible and adaptive compared to traditional fixed contracts. These contracts embrace the iterative nature of agile software development, allowing for changes and adjustments as the project progresses. Here are some key features that set progressive contracts apart:


Progressive contracts are designed to accommodate changes in scope, requirements, and priorities throughout the project lifecycle. This adaptability allows for greater flexibility in responding to market changes, user feedback, and evolving project needs.


These contracts foster collaboration between the client and the service provider. By working together closely, both parties can make informed decisions, prioritize tasks, and ensure alignment with the project’s goals and objectives.


Progressive contracts emphasize transparency in project management and budgeting. Clients have visibility into the project’s progress, costs, and deliverables, which helps build trust and maintain open communication throughout the development process.


The Role of Lawyers in Contract Negotiation

Lawyers play a crucial role in contract negotiation, ensuring that the interests and rights of their clients are protected. While their primary focus is often on legal compliance and risk mitigation, it’s essential to recognize the broader aspects that contribute to successful project outcomes.

Legal Compliance:

Lawyers ensure that the contract adheres to applicable laws, regulations, and industry standards. They review and draft contractual clauses to minimize legal risks and liabilities for their clients.

Risk Mitigation:

Identifying potential risks and liabilities is a key responsibility of lawyers. They assess the terms and conditions of the contract to anticipate and mitigate risks that could impact the project’s success.

Dispute Resolution:

Lawyers include clauses and provisions related to dispute resolution mechanisms, such as arbitration or mediation, to resolve conflicts efficiently without resorting to litigation.


Potential Pitfalls When Lawyers Overlook Operational Details

Impeding Progress:

Lawyers who focus solely on legal formalities without understanding the operational details of agile projects may inadvertently create contracts that hinder progress. This lack of alignment can lead to delays, misunderstandings, and dissatisfaction among project stakeholders.

Loss of Trust and Collaboration:

Overly restrictive or ambiguous contract terms can erode trust and collaboration between the client and the service provider. Lawyers should strive to create contracts that support and facilitate a collaborative working relationship, rather than impeding it.


While lawyers play a critical role in ensuring legal compliance and risk mitigation during contract negotiation, it’s essential for them to understand and support the project’s goals and objectives fully. By adopting a collaborative and holistic approach, lawyers can help create contracts that not only protect their clients but also foster transparency, trust, and successful project outcomes. Clients and service providers should work closely with their legal teams to develop contracts that balance legal requirements with the practical realities of agile software development.

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