Contracts : Aligning Legal and Business?
Contracts serve as a bridge between the legal and business functions. What is often the biggest issue from the perspective of in-house counsel in terms of contracting serves as an illustrative example. That issue is getting and keeping internal business stakeholders and legal aligned. This is something that no law school course can teach. However, it is a major aspect of the contracting process. It can often define the contours of a negotiation and/or dramatically redefine them.
Yet, it may sometimes appear, particularly to a new or inexperienced lawyer, that your job and the job of your internal client, often someone in sales, are diametrically opposed. You want to protect and defend against legal risk. Your client wants to get the deal done and by doing so generate greater revenue.
So, how does one resolve this seemingly intractable issue? There is no one size fits all solution. There are some concepts to keep in mind as you work your way through the contract management process that can make the process both easier and more efficient as well as ensuring that the deal gets done and done the right way.
At the outset of any potential deal-making process, one needs to keep in mind that each contract requires a balance to be struck between the needs of the business and the risk profile of the company. Finding a balance is not nor should ever be a zero-sum game. What is required is to truly understand your company’s business and understand what legal risks come into play vis-à-vis the company’s business.
One effective way to do this is investing time in getting to know the business that you represent. Obtain a firm grasp of what products your company makes and the markets that the products seek to serve. Talk to the sales team including both sales team leaders as well as lower-level team members. Get to know their personalities, what drives them, and why they like doing what they do. Ask them about the customers that they sell to. What are these customers looking for? Which customers are easier to deal with and why than others? In addition, ask them in an ideal world, what are they expecting from you as the company lawyer? How can you best help them?
By getting to know your sales teams on a personal level, you will be better able to interact with them by knowing their expectations of you. Based on those expectations you can then tailor your responses to suit their needs.
Moreover, by asking about the company’s customers, you can gain a clearer understanding of what the customers are looking for and why certain types of customers might be more likely to push back on some provisions while others may be more amenable to them. In asking questions about the products that your company makes, you can better evaluate risks by knowing what the products do, how they work, and the markets that the products seek to serve.
However, it is also important to be reminded that asking these questions of your sales teams and getting to know your company’s products and customers is only part of the groundwork that you should be doing. You need to also ensure that your legal toolkit is robust and adaptive. This starts by creating, if you do not already have one, a template library of agreements that your sales teams can use as they seek to do deals and playbooks of legal positions and rationales for them as well as potential compromise positions. For those who may not be aware, a legal playbook is essentially a document that outlines a range of possible tactics. That is to say, if a customer pushes back on a certain provision, the playbook can provide you with a way to respond and/or some compromise language that you can offer. Having templates and a playbook allows your sales teams to do two things. First, they are given the ability to provide the customer with a draft agreement favorable to your side. Second, it facilitates the deal-making process by allowing your sales people to engage in some initial negotiation rather than you are allowing you to focus on other, more strategic matters. Having a legal playbook also helps ensure the promotion of key business objectives and helps you manage risk by establishing clear legal positions aligned to your company’s risk positions.
Another component of the strategic goal of keeping all parties on the same page is effective communication. In practical terms, this means being responsive, even if that means simply sending an email acknowledging receipt of a request if you cannot provide a proper response at that moment. This also means keeping all relevant parties informed as to the status of a matter, any issues that have arisen, and constantly seeking their input on how to proceed through such issues. In addition, you want to be able to tailor your message appropriately. No matter if it is an email, a text, or a voicemail, you want to ensure that your message is tailored to its audience. By knowing the salespeople and their expectations of you, this task should be easier than it would appear to be. You also want your message to be clear and concise. People don’t have a lot of time, so your message needs to convey important information in a clear way, free of jargon and, unless you are communicating with a fellow lawyer, so-called legalese as well.
Lastly, another step you can take to keep all parties aligned, if you can afford to do so, is to have in place an effective and a transparent contract management process that allow stakeholders to track all contracts from start to finish. This means allowing not just lawyers being able to access the system and use the system to push through deals. Another whole article could easily be written on the multitude of contract management tools that exist in the market and that do this quite well. There are many great resources out there to help you determine what type of system is best for you. Ultimately, the real key here is to a) do your research on these systems since so may exist and b) ensure that the process allows all necessary stakeholders to provide input in a clear and consistent way. This not only will promote better efficiency and cooperation among all key parties, but also, but more trusting and closer relationships going forward.
By working to ensure that all key individuals, regardless of whether they are fellow attorneys or business people, you are at an immediate advantage not just in the contract management process, but also in terms of being a highly trusted member of your company’s business team. At the end of the day, as in-house counsel you want to be an equal and trusted member of the team dedicated to keeping the business protected and growing.
About the Author Colin Levy currently serves as Corporate Counsel for Salary.com. Prior joining Salary.com, he was Manager, Contract Negotiations for Pearson Education, the leading global learning company where he negotiated and drafted domestic and global agreements with customers and helped develop contract management processes and procedures. Colin is a big advocate of legal technology and legal innovation. In his free time, he writes a blog fea- turing interviews with leaders in the legal technology and legal innovation space and has also been featured on the LAWsome podcast.