Better contracting for in-house teams

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3 months ago

Recently, LOD hosted a Peer Chat with several UK-based GCs that focused on the topic of in-house contracting. The conversation covered the challenges, the strategies and some tips on how to improve your contracting function. The focus clustered around six central issues for leaders to consider.

(1) Rationalise your contracts estate

How many contract templates do you think your organisation uses? For many, this number runs well into the hundreds. This is a difficult state of affairs to manage and a consensus from the GCs was to first look at reducing that number. By reviewing, pruning and consolidating your total contracts estate – many can be adequately captured by a Master Services Agreement – you will simplify the work of your team. While it can be hard to dedicate the time to do this, amongst all the BAU work demanded of your team, it will quickly pay time dividends.

(2) Map it out

A clear point of agreement from the Peer Chat group was the importance and insight gained from properly mapping out your processes. “Mapping” will help you uncover all the different touchpoints, double-handling and bottlenecks that exist in your current contracting operations. You may be surprised what this might uncover. One GC spoke highly of hiring an independent expert to lead the mapping exercise – this helped to ensure both an unbiased lens and more reliable quality control.

(3) Getting on your terms

Negotiating on your own terms can have real efficiency gains. As one GC said: “your life is significantly easier if the bulk of your contracts are on your terms”. To do this, you may consider incorporating more balanced and “friendlier” terms. This will reduce unnecessary negotiation time and remove some of the friction for your organisation’s key functions, like sales, partnerships and procurement. You’ll also need to think about the process before the agreement reaches legal, to make sure the business pushes your terms as the starting point.

(4) Hearts & minds

A number of leaders reflected that much of contracting improvement is not a technology question – it’s a process and people question. When bringing a change to a process, you need to win the battle of ‘hearts and minds’ of your people. This is a challenge worth preparing for and taking advice on; it’s not something you can do on a wing and a prayer. LOD prepared a toolkit on how to manage change which might offer you some helpful insights and tips (link at the bottom).

(5) Risk calibration

One of the thornier questions is how to determine appropriate risk levels when calibrating which pieces of legal work can be self-served by your organisation. Unfortunately, this question is not one amenable to an easy answer. A class of contract you may determine “low-value” can sometimes possess high-value to the organisation if it relates, for example, to a key client. Creating a playbook for the business can really help here, as it will help the key stakeholders understand what they can deal with themselves and what they need to escalate.

(6) Horses for courses

Lawyers are not swiss-army knives; they can’t do everything. They are not typically trained in the areas of project and change management – both sets of skills are vital for the effective roll-out of a more streamlined contracting function. This means in-house leaders should consider dedicated and specialised help from people who are formally trained and deeply experienced in these areas. As the famous management adage by Red Adair goes: “if you think it’s expensive to hire a professional to do the job, wait until you hire an amateur.” This isn’t meant as any disrespect to your lawyers, but rather a call to take the discipline of legal operations seriously.

What’s next?

There was an acknowledgement that the UK was not leading from the front in this area. The legal operations and lean contracting scenes in the US are more mature. But this does have a silver lining, namely, the UK and Europe can draw from a deep well of experience and benefit from lessons learned by their US counterparts. Forums such as CLOC are helpful places to glean insights and recommendations.

If you’re interested in exploring legal operations further, we’d love to hear from you. You can explore LOD’s offerings in more depth here.