In companies, we often forget that almost everything we do is connected with contracts. If we communicate internally with employees, we execute employment contracts. If we want to get into relationship with new client we have to initiate, author, negotiate, and conclude (approve) the contract and later execute, revise, audit, renew or exit from it. These are all contract management stages. If we do it properly our company is more efficient and more customer (stakeholder)-friendly.
Contract Management – authoring the contract
After we initiate the proper contract, we should prepare its draft. You can write in by hand from scratch. But it is highly time-consuming and ineffective. You may look for a template either in the Internet or on your law firm’s servers and modify it within your client’s instructions or needs. However, what works in a small individual legal company, is not a solution for a larger one or a more demanding client.
Without a proper contract base, you risk:
(1) high responsibility – there are mistakes or omissions that either you or your less experienced colleague may not always notice what may bring problems,
(2) reputation – your work is inconsistent – your comments on similar documents may differ and, as a consequence, your client may lose confidence that receives a good product,
(3) your best knowledge and experience – when all the data and templates are in head of your best lawyer – losing him means you loose an important part of knowledge you were paying for,
(4) huge loss of time you cannot log on your clients – onboarding of new lawyers, internal discussions about the templates to choose etc.
The solution is to have a good contract management system, which will help you in choosing not only the best contract template, but its variants, suitable clauses and negotiations process.
Contract Management – negotiating the contract
Upon completion of contract drafting, you should be able to negotiate it. It is often a bottleneck of the whole contract management process. The more complicated contract, the less parties know each other, the more difficult this stage is.
If you use “traditional” methods of negotiations, you lose plenty of time. During the pandemic it takes weeks to meet people in person to negotiate the contract.
A lot of lawyers exchange e-mails with different versions of an agreement. It is ineffective if you have more than one person involved in negotiations and drafting (amending draft) on one side. When few people draft one project, each working on his own version, you can get lost in your own version and miss changes or remarks drafted by important stakeholders. You may confuse also versions exchanged with the other party. And there is another problem – working with e-mailed versions makes parallel work impossible. You must await when the other party sends you an amended draft and later on you insert your own changes. Most of time you wait instead of working. You lose your time and business opportunity.
Only when you use a contract management system, that allows parallel drafting, comparing contract versions and noting discrepancies, the process can be quite streamlined.
If you want to learn more about authoring the contract in automated way, join our Legal Project Management On-line Conference on 22-23 October 2020.