The contract is a legal document that defines the terms and conditions of service for your employees, vendors, or partners. Contracts have a time limit and expire at some point in time.
When this happens, you need to look for ways on how to renew them. A better approach would be to include changes from the onset, which will make it easier when renewal occurs. Some companies do not have an updated contract management process which leads to disputes with their business partners later on. The law department is a role that can either be considered very rewarding or exceedingly frustrating. While many legal departments are responsible for generating revenue and thus adding value to their companies, they are often bogged down by too many routine tasks.
The following suggestions will help you identify ways of adding value to your department by streamlining policies surrounding contracts in some ways:
Update Contracts Periodically
One strategy is to update contracts periodically like once every year or two years so that all contract management parties involved would always be aware of the most recent changes in policies and laws.
Review Contracts for Renewal
When the contract is about to expire, review it and look at the possibility of renewing it or coming up with a new one. The client has the option to choose through contract management whether they would want an early renewal or a new contract altogether.
Who is authorized to sign off on contract terms? Who is in charge of contract management? Who is responsible for the retrieval of stored contract documents? The answers to these questions will help you determine who should be involved in the process.
What are all the steps that need to contract management take place, such as approvals and notifications? Mapping processes is a great way to ensure that nothing falls through the cracks. Since there are often multiple people involved in any given task (e.g., billing department, contracts team), establishing clear communication channels will make sure everyone knows their role and deadlines.
Involve Your Legal Department in Key Business Decisions
If you are planning an important business move that requires contract management such as mergers and acquisitions, outsourcing and offshoring initiatives, joint ventures, and more, it is best for your legal team to be involved from the very start of these plans so that all necessary changes can be included during negotiations with your business partners. This will make sure there will not be any disputes along the way later on.
Request for the Revision of Existing Contracts
If you have been doing business with your partners for quite some time, there is a big possibility that you might need to revise some parts of the contract. Do not hesitate to contact your legal team and request the revision. This way, it will eliminate disputes later on because all details in existing contracts will always be up-to-date.
If your company uses automated tools like Adobe Sign or HelloSign, make use of them! You can significantly minimize errors if signatures are electronic rather than on paper. Using technology will also help you store contracts more easily and retrieve them at a later time.
Contracts contain all kinds of sensitive information, so it is important to keep them organized in a way that makes sense to your company. Some departments separate out their records by client or customer; others organize records by year. Think about the different ways of sorting contract documents and set up a system accordingly.
Seek Legal Guidance
Sometimes changes in laws and policies might affect your existing contracts and contract management. There are also instances when changes involve only issues between two parties or more that can be resolved through direct negotiation. In this case, seek help from a lawyer so that you would know what the best move is based on these circumstances.
Enforce Legal Action
If your business partners are not keen on following the changes that you have been requesting, then it is best to enforce legal action. This way, it will protect your interests as well as prevent any liabilities down the road.
If certain terms are used frequently across contracts (e.g., indemnity), consider including an explanatory footnote to make sure all parties understand what this term means (but don’t overdo it – too many footnotes may be just as bad as none). If there is no official language, use the common language spoken in your company instead.
It should go without saying that a law department will benefit from technology, but it may not be immediately clear how to make use of this tool. One way is by taking advantage of contract analytics, such as Clear Law or Law Geex, that check for overused legal terms and suggest alternatives. However, if you choose to take advantage of technology in your law firm, remember there are always ways to do more!
The benefits of adding value depend upon what it means to each company. For example, having fully digitized contracts with no paper copies would save space, especially in an office where space is at a premium while allowing for immediate access to any contract or contract clause. However, if adding value is to bring in more money then working with the correct client and finding ways of solving their legal problems which will save them time, effort and stress will add maximum value.
If a company wants more profitable contracts with fewer clauses that need high-level interpretation by lawyers, then they should ensure all negotiations are done at the right level using language and terminology understandable to the client. This means that if a company sells international goods or works for international clients then they must use ‘plain English’ rather than legalese so that everyone involved knows what is expected from each stage of the agreement.
Adding more value to your Legal Department through Contract Management would ensure all parties involved will always have accurate and complete information about a contract. In this way, they can take necessary action when it expires or needs revisions based on changes in laws and policies.