Rethink “Enterprise as Regular” contract help
Business as usual – just like normal life – would be a welcome homecoming right now. Instead, life two meters away and breakdowns is the new normal. Legal departments face legal and business challenges that have had no precedent, or at least no relevant precedent, in the last 100 years (for those digging up force majeure judgments from the early 1900s). Critical resources are asked to manage new initiatives to address customer and supply chain issues in the face of new and often inconsistent national, state, and local regulations. You will be asked to develop strategies to bring some level of security into an uncertain future.
However, there is still a flow of “business as usual” work that requires legal support and attention while the legal departments face budget cuts, hiring freezes and vacations. Sparse legal departments that have tried to do more with less may find it almost impossible to keep up now.
Proper sourcing and structuring of contract support are one way to overcome the challenge of removing routine work from an internal team’s plate. The question is how this can be done inexpensively and without significant disruption at a time when there are already sufficiently large problems. This article examines different implementation approaches that involve a combination of people, processes, technology, and analysis. Alternative Legal Services Providers (ALSPs) are uniquely qualified to help implement a model that works for legal departments, whether they want to tackle the low hanging fruit or venture higher in the tree. While ensuring that day-to-day work is carried out efficiently and cost-effectively, the most valuable internal team members can focus on the most important needs of a company.
Procurement with an emphasis on operational efficiency and data
Do top lawyers still spend time managing a company’s routine contracts? Many organizations have shifted the support of routine, lower risk contracts to lower cost in-house resources or to ALSPs. However, unless a legal department has already outsourced less complex contract reviews such as NDAs, evaluations, event and sponsorship agreements, changes or renewals, ALSPs have the blueprints and tools to take on assistance quickly. For example, an automated tool can create an NDA playbook by answering a series of questions about preferences and risk tolerance. In addition, ALSPs have become increasingly adept at supporting these joint business contracts with an assured level of efficiency, consistency and cost accuracy.
The legal department operations need to know that the contract repository is up to date. Are changes, tasks, and related agreements organized so that the legal team can determine what is current and what may have been replaced? Which contracts are active or have already expired? Can lawyers find what they are looking for easily? For many companies the answer is “no, no, no and not really”. In a few weeks, however, a project team can digitize contracts and organize them in a repository, mark keywords and fill information fields with reliable operational and business information.
The more complex
Have the legal departments already tackled the low hanging fruits but are still trying to be more efficient as they adjust to the new normal by allocating in-house resources to address the most pressing strategic issues and business opportunities?
One approach is to expand the success of outsourcing routine agreements and mirror these processes to support a wider range of contracts. Many companies have successfully outsourced procurement agreements and joint purchase agreements. Agreements like MSAs, EULAs, marketing, search company agreements, device purchases, and privacy addenda are some of the most common types of conversion. When playbooks or processes need to be developed or improved, the ALSPs have high-level business lawyers on hand to assist in these efforts. Simple sales and supply chain transactions can easily be booked via playbook and effectively transferred to an ALSP or a joint team of internal and external resources.
Another approach is to segment parts of the contract lifecycle and relate each segment to an appropriate level of resources, commonly referred to as “right-sourcing”. For example, legal teams can get paralegals or offshore resources to draft contracts from templates and perform first-pass reviews of comments from a counterparty. Lawyers can also shift responsibility to lower-cost resources to track down approvals and fill out content on exception approval forms so approvers have the information they need to give or deny approval, or create contract summaries after the contract is signed that are submitted with the signed contract should be. The segmentation of workflows in this way means savings across all contract types, including the lower volume and the most complex agreements.
A third approach is to develop a triage system that assigns a rating to each contract based on factors such as dollar value, strategic importance, subject matter of contract, company or third party paper, past relationships, etc. Based on this rating, the contract is assessed and can be related to the appropriate level of legal resources, which would include both internal and junior internal legal resources as well as senior and junior offshore or onshore external resources. This approach can be combined with other approaches to provide low-cost support for an entire contract function.
Use data more effectively
Are legal departments looking to develop more user-friendly tools and content to enable better sourcing and improve risk management consistency across the organization? During this time when companies worry about employee wellbeing, customer service, strategic business execution, supply chain disruption, and a changing legal landscape, other projects, activities, and initiatives may have faded into the background. These can be projects to improve tools and resources to support internal business customers, e.g.
- Streamlining and harmonizing contract templates
- Adding more alternatives and instructions for negotiation game books
- Clean up the contract database so that it can fully serve as a knowledge management tool
- Integration, testing and training of the ability to use artificial intelligence in workflows
- Development of automated self-help contracts. Projects like this lead to savings and enable companies to increase the contract duration scale. When internal resources are too strained to prioritize these important but less urgent projects, ALSPs have experienced project managers and skilled staff to get those projects to a close.
Find the right solution
Crises are unfortunate wake-up calls to remedy overdue structural weaknesses and rethink operating models. But they also offer a more open mindset and urgency to advance ideas that were previously dismissed as too controversial or disruptive. Now may be the right time to consider more flexible, cost-conscious, and technology-driven legal support for joint trade agreements so that the internal team can prioritize today’s greatest challenges.