role of contracts

Make the Most of What You’ve Got: An Interview with Sarah Ouis, In-House Legal Counsel and Legal Content Creator

In this interview with Sarah Ouis, in-house legal counsel and legal content creator, in partnership with ContractWorks, Sarah shares the important role of contracts in the work of in-house legal teams

“Contracts are what puts the money on the table. If there are no contracts, there is no business.”

Contract activity is usually pretty heavy for in-house legal teams and represents a significant portion of an in-house legal team’s workload. It could be commercial agreements, ranging from the most trivial and low-risk type of agreements, such as confidentiality agreements, all the way through master services agreements and more project-related agreements, such as work orders and change orders. In-house legal teams can also get involved with procurement-related needs, such as supplier-related contracts, says Sarah.

For most organisations, the biggest risk if the contract management process fails is non-compliance. If that happens, the main consequence would be a financial one – a lost contract or a disaffected client. But there is also a significant reputational impact to consider. If a business were to non-deliver on a contractual obligation and it turned into a formal commercial dispute, it could potentially have a much wider impact among the client base – or even the industry – as a whole. So how can in-house legal teams improve their contract management processes to reduce these risks? The answer for Sarah starts with leveraging what you already have in-house. She gives a few examples:

Customising the CRM

“To the extent the company uses a CRM such as Salesforce, it would be worth exploring the capabilities that could be relevant for contract management purposes. For example, you might find that the CRM can allow you to set your own notification and reporting capabilities which could be leveraged to monitor expiration and notify the relevant stakeholders,” explains Sarah.

She adds, “While there will always be room for improvements, this already places in-house legal teams in a position where they can start leveraging technology to serve contract management needs.”

“The majority of what legal teams do is usually manual. There is a lot of redlining. It requires manual human input. And of course, humans can make mistakes, so there are always efficiency issues that most legal teams experience due to the manual nature of their work,” says Sarah.

The difficulty, she says, is identifying precisely which CLM products, out of the many on the market, ticks all the boxes they need ticking, in the way they need them to be ticked. Not a straightforward task. Even if there was a ‘bells and whistles’ CLM system available, it could potentially create as many resource issues as it resolves.

“A contract management system is an asset because it enables you to do certain tasks you couldn’t do so efficiently if you didn’t have it, like creating reports and extracting data without taking hours and hours of manual toil. On the flip side, somebody needs to ‘feed’ the contracts into the system in the first place, so there is an admin burden that also needs to be considered,” she says.

One of the most challenging parts of the contract process, when everything is manual, can also be the collaboration part. Particularly in the current circumstances, where in-house legal teams and stakeholders are working remotely, tasks like getting an approval can sometimes be more time consuming than they should be, hence the need for in-house legal teams to also consider the importance of collaboration.

Engage the wider business and building ownership

building ownership Another aspect she believes could be beneficial for in-house legal teams is the engagement of the wider business in the contract process. She refers to contracts as ‘legally-binding business instruments’ as opposed to legal tools, to try and get across to nonlegal internal colleagues the vital role of contracts.

She suggests greater education and cross-functional collaboration could be one way to help address this. The more legal teams reach out to other business functions for their input and action on contracts, the more the awareness grows that there are obligations and responsibilities that stretch far beyond the legal team.

In addition, organisation-wide measures such as incident management and risks management can also support further educating the business about the importance of contracts. After all, if contracts related risks and incidents are tracked across the organisation, this should serve as a red flag for any organisation to work on.

Three Key Takeaways

  1. View contracts not just as legal documents for the legal team, but as business-critical tools for which everyone should take some responsibility.
  2. Build trust and collaboration with other business units and functions to foster their understanding of, and engagement with, contracts. Leverage other organisation-wide processes to better build ownership of contracts across functions.
  3. Be creative! You don’t necessarily need a shiny CLM system to manage contracts effectively or at least get started with the use of technology. Leverage the tools you already have in-house, like a CRM or Office365.

Read more perspectives on this topic in our report with ContractWorks.

ContractWorks

ContractWorks

ContractWorks
ContractWorks solves a simple but surprisingly commonplace problem for in-house lawyers everywhere: “We don’t know where our contracts are and we don’t know what’s in them.” We work with in-house legal teams all over the world, helping them take control of their contracts – by moving them away from spreadsheets and shared drives and giving them visibility of key obligations, costs and dates. With low, transparent pricing, ContractWorks is simple to use, easy to adopt and fast to implement. Every package comes with unlimited users, 24/7 support and a suite of helpful tools, including built-in electronic signature, to help you do more with your contracts, using few people, less time and a smaller budget.