Business as usual – much as life as usual – would be a welcome homecoming right now. Instead, life at six feet of separation and business disruption are the new normal. Law departments face legal and business challenges that have no precedent, or at least no relevant precedent in the last 100 years (for those digging up force majeure rulings from the early 1900s). Key resources are being asked to manage new initiatives to address customer and supply chain issues amid new and often inconsistent national, state and local regulations. They are being asked to develop strategies to bring some level of certainty to an uncertain future.
Yet, there is still a flow of “business as usual” work needing legal support and attention, while law departments face budget tightening, hiring freezes and furloughs. Thinly staffed law departments that have already been trying to do more with less may find it nearly impossible to keep up now.
Right sourcing and right structuring contract support is one way to meet the challenge to move routine work off the plate of an in-house team. The question is how to do that cost-effectively without significant disruption during a time when there are already enough big issues to handle. This article examines different implementation approaches, which embrace a combination of people, processes, technology and analytics. Alternative legal service providers (ALSPs) are uniquely qualified to help implement a model that works for legal departments, whether it wants to tackle the low-hanging fruit or venture higher up the tree. And while there are assurances that day-to-day work is being handled efficiently and cost-effectively, the most valuable internal team members can focus on a company’s most critical needs.
Contracting Focused on Operational Efficiency and Data
The Basics
Does top legal talent still spend time managing a company’s routine contracts? Many companies have moved support of the routine, lower-risk contracts to lower-cost internal resources or to ALSPs. But, if a law department has not already outsourced less complex agreement review, such as NDAs, evaluations, event and sponsorship agreements, amendments or renewals, ALSPs have the blueprints and tools to assume support quickly. For example, an automated tool can create an NDA playbook by answering a series of questions on preferences and risk tolerance . In addition, ALSPs have become more and more adept at supporting these common business contracts with an assured degree of efficiency, consistency and cost rigor.
Legal department operations need to know if its contracts repository is up to date. Are amendments, assignments and related agreements organized so the legal team can tell what is current and what may have been superseded? What contracts are active or have already expired? Can lawyers easily find what they’re looking for? For many companies, the answer is “no, no, no and not really.” However, in a few short weeks, a project team can digitize and organize contracts into a repository, tagging keywords and populating information fields with key operational and business information that is reliable.
The More Complex
Have legal operations departments already tackled the low-hanging fruit but are still looking to drive efficiencies as it adjusts to the new normal by dedicating internal resources to the most pressing strategic issues and business opportunities?
One approach is to expand on the success found by outsourcing routine agreements and mirror those processes to support a wider range of contracts. Many companies have successfully outsourced procurement agreements and common sales contracts. Agreements like MSAs, EULAs, marketing, search firm agreements, equipment purchases and data privacy addenda are some of the more commonly transitioned types. If playbooks or processes need to be developed or enhanced, ALSPs have senior commercial attorneys available to support those efforts. Simple sales and supply chain transactions can be readily playbooked and effectively transferred to an ALSP or a shared team of internal and external resources.
Another approach is to segment pieces of the contracting life cycle and source each segment to an appropriate resource level, commonly referred to as “right-sourcing.” For example, legal teams can have paralegals or offshore resources draft contracts from templates and complete first-pass reviews of comments from a counterparty. Lawyers can also transfer responsibility to lower-cost resources for tracking down approvals and filling in content on exception approval forms so approvers have the information needed to give or deny approval or creating contract summaries upon deal closure to be filed with the signed contract. Segmenting workflows in this way means savings across all contract types, even the lower-volume and the most complex agreements.
A third approach is to develop a triage system that assigns a rating to each contract based on factors such as dollar value, strategic significance, contract subject matter, company or third-party paper, prior relationships, etc. Based on that rating, the contract can be right-sourced to the appropriate legal resource level, which would include both senior and junior internal legal resources and senior and junior offshore or onshore external resources. This approach can be combined with other approaches to deliver cost-effective support across an entire contracting function.
Using Data More Effectively
Do legal departments want to develop a more usable set of tools and content to enable more right-sourcing and drive consistency in risk management across its company? During this time when companies are attending to employee wellness, customer service, strategic business execution, supply chain disruption and a changing legal landscape, other projects, activities and initiatives may have taken a back seat. These may include projects aimed at improving tools and resources to support internal business clients, such as:
- streamlining and harmonizing contract templates
- adding more alternatives and guidance for negotiation playbooks
- cleansing contracts database so it can fully serve as a knowledge management tool
- integrating, testing and training artificial intelligence capability within workflows
- developing automated, self-help contracts. Projects like these drive savings and allow companies to shoot up the contracting maturity scale. If internal resources are too stretched to prioritize these important but less urgent projects, ALSPs have experienced project managers and capable staff to move these projects to completion.
Finding the Right Solution
Crises are unfortunate wake-up calls to address overdue structural weaknesses and rethink operating models. But they also provide a more open mindset and level of urgency to push forward ideas that were previously dismissed as too controversial or disruptive. Now may be just the right time to explore more flexible, cost-conscious and tech-enabled legal support for common commercial contracts to help internal team prioritize today’s biggest challenges.
Different Levels of Right-Sourcing and Right-Structuring Contract Support
