Don't Go It Alone: Contract Management is an Enterprise Task
Corporate legal departments are protectors of the business. They have the knowledge and experience to strategically lead the company’s growth in a safe, responsible manner. And they are looked to as expert advisors on everything from legal and compliance matters to contract negotiations and due diligence.
But all of those things take time.
Legal has a lot on their plate, but that doesn’t mean they should be doing all of that work on their own. With the right guidance and a shift in mindset, Legal should be able to incorporate cross-functional groups into many business processes that have often fallen to the legal team by default. This will result in more time for senior legal leaders to focus on higher value work, but will also improve communication, collaboration, and trust between Legal and the rest of the enterprise.
This blog explores why in-house legal teams should work with colleagues across the business for help managing corporate agreements more accurately and efficiently.
Contract Management: An Enterprise Task
Most companies rely on hundreds or thousands (or more) of contracts to operate. Those agreements come from every department ranging from Sales and Procurement to Marketing and HR, so Legal has a lot to gain by working across the enterprise to manage contracts in collaboration with the subject matter experts.
With so much at stake, it's not surprising that contract management has typically fallen to the legal team, but this reliance on in-house counsel may not be the best use of an organization’s resources.
Delegating contract management activities to non-lawyer professionals has a variety of advantages, but it needs to be planned deliberately and strategically.
Giving up control over any legal responsibility can be a difficult task for some senior legal decision-makers. Senior members of the legal team know they need to maintain a level of final ownership and responsibility for every task. However, sharing the work allows the entire legal department and employees outside of it to collaborate. This approach lets everyone bring their expertise and knowledge to the table, while senior counsel can sign off on the work once it’s completed.
An article from McKinsey & Company reads, “Since coordinating the efforts of procurement and legal, among other stakeholders, is often a struggle, the contracting process can be used as a catalyst to define the collaborative relationship across all stakeholders.”
Having such systems in place becomes critical as legal departments grow and face increased expectations for completing work. Considering how much time contract review can take — especially when it accounts for only a small amount of the overall work a legal department is responsible for — delegating this duty has to be a priority.
What the Process Looks Like
Consider a standard, relatively simple contract that can be capably reviewed and handled by a contract manager, legal assistant, or even someone from the department that contract is related to (Sales, Procurement, Marketing, etc.). Senior legal counsel must maintain ultimate control over these documents, but they also need to have the option to relinquish specific pre-approval tasks.
Here are some examples:
Giving standard contracts to paralegals and junior team members to review, bypassing the senior counsel unless an exception or issue is discovered.
Allowing sales teams to initially examine financial figures, term lengths, and similar specifics related to a customer contract, before passing the document back to the legal team for a final review and approval.
Having information technology staff assess the technological aspects of a digital service provider or hardware vendor contract before returning it to the legal department.
By establishing guardrails, you can get cross-functional teams involved without adding risk. For example, if you create standard templates or share examples of commonly-used terms and clauses from existing agreements, your sales team will know what to look for during their initial contract review. But even with a selection of approved templates, there’s room for error if Sales accesses outdated documents or language that has recently been revised based on updated regulations, for example. This is one area where having the right legal technology solutions can simplify the process, ensuring that your teams always have access to current, accurate information.
How You Can Simplify the Process with Software
Dedicated contract management software can help simplify the process of collaborating with other departments, and ensure the process is carried out safely and securely. Here’s how:
Centralized data: For Legal and other departments to effectively manage and collaborate throughout the contracting process, all of those documents must be stored and organized in a single location. Contract management software provides a single source of truth for an organization, so anyone that has a hand in managing, reviewing, or reporting on agreements knows exactly where to go to find the needed information. Now, stakeholders outside of the legal team can find the contract details they need without having to rely on Legal to answer every basic question that comes up.
Granular roles and permissions: Many contracts include sensitive information only intended for a limited audience. Contract management software can ensure that only authorized individuals can access this sensitive information, and provides flexibility so different groups of people can only see the documents relevant to their job function. That means Sales can find and review customer contracts without the ability to see HR’s employee agreements stored in the same system.
Templates and guardrails: When other departments are brought in to help review and manage contracts, it’s helpful to standardize the process. Many contract management solutions include the ability to tag key information or metadata in agreements, like dates and milestones, terms, agreement type, contract value, and parties involved. By establishing templates of information that need to be tracked in every document, Legal can drive consistency and be sure that anyone reviewing contracts has identified and reviewed the most important details. This will also help with accuracy when it comes to contract reporting.
Custom reporting: Contract reporting is an important way to keep everyone on the same page, especially when multiple teams are collaborating and sharing contract responsibilities. Users can set up, share, and automatically schedule reports to keep stakeholders across the organization informed without adding more manual work.
To read more about finding a contract management solution to help you accomplish your legal team's strategic vision, download The Buyer's Guide to Contract Management Software.