Efficiency. It’s a beautiful word, but for a legal department juggling what can seem like a countless number of contracts, it can sometimes feel like a myth. However, nothing could be further from the truth. There are plenty of best practices that you can easily adopt that will help you develop process standards to boost your contracting efficiency. There are even technologies that will help you create easy-to-use contracting repositories that can empower business users to draft their own contracts! (More on that later...)
First, let’s examine some practical ways that you can drive more efficiency into the creation, negotiation and review of contracts across your legal team. With this information, you can fight the stereotype that legal is an impediment to closing deals and make yourself a star with the sales team.
Find a good balance between closing deals quickly and mitigating risk
Preventing risk and conducting efficient transactions are both vital components to ensuring a business’ long-term and short-term health, but it’s important to avoid erring too much on one side or the other. Finding that balance can be a difficult and sometimes stressful (and adversarial) process. One way to accomplish this is to standardize the contract terms and clauses that you use most frequently. By doing so, you can identify either contracts that don’t use standard clauses, or those that do use standard clauses that have been flagged as potential risks.
Define a contract creation and review request process
How many times does “contract request” end up meaning a few sentences exchanged while passing in the hallway, or quick emails that get lost in the shuffle of everyday operations? What about those single midafternoon phone calls that you forget about until you’re in your car on your way home? This kind of informal request process is wholly inappropriate for a successful business operation and opens the door to all kinds of inefficiencies — and the opportunity for miscommunication.
If you don’t have a good process for centralized contract requests, it will be hard to get the information that you need to process them efficiently quickly enough. It will also be impossible to track the status of requests. At a minimum, you should create a standard process and educate your business about it. One way to do this is to create a central email box for all requests. You can also implement a contract management system that will handle and track the requests.
Implement contract version control measures
It’s fair to say that contract negotiations are an art. When it comes to the nuances of negotiating a deal, technology can never replace a good lawyer (or legal department).
Where the human touch is less beneficial, however, is within the realm of revision logistics. The likelihood of differing versions of contracts simultaneously flying from inbox to inbox virtually guarantees miscommunication somewhere within the contract creation process. Sloppy, redlined documents can be hard to read, and at times self-contradictory. This uncertainty can make negotiating difficult and expose you to the risk of missing key changes. At the very least, individuals involved in contract negotiation should learn a standard method of controlling versions in an attempt to mitigate risk.
When these standards aren’t enough, technologies are available that enable side-by-side comparison of either whole documents or just specific data fields that have changed. These technologies look at every version of every clause and track the evolutions and the conversations regarding them. More advanced systems provide version controls and contract closeout checklists. These are elements of a system of smart business process rules that apply standards to the way each contract is managed by each attorney. This layer of control becomes even more important when you empower users from around the business (such as those in sales or procurement) to create contracts based on legal-defined clause libraries or templates.
These technologies represent the pinnacle of modern contracting efficiency, allowing legal to take a guiding role in driving contracting policy and clause specifics, while automating the grunt work and empowering other professionals to create their own contract drafts.
An efficient contracting process means a profitable legal department
With these tips in mind, you’re on your way to establishing an efficient contracting process that will enable you to help other departments close the deals that they need to close as quickly as possible. Create an easy path between creation, negotiation and review, and you’ll be a star across every department of your organization.