This General Counsel wants to be top tier within Contract Management – we have been challenged!

By Martin Lonstrup & Magnus Steen

So we have been challenged. We have been engaged by a General Counsel stating:I want my company to do the best contracts we can, I want to be closer to the business, be an active part of strategic decisions. I want the legal department to be a valuable business enabler driving better performance on bottom line. Therefore, I want my team, my company and myself to become a leader in contract management.

The contract management challenge

Back to the challenge – we recently met up with a GC heading a quantifiable legal department at a technology forefront company. He told us that his company is innovative at the speed of the internet, taking size-able market shares and starting to trace profitability, but at the same time he had to admit that his company were “so eighties” when it comes to contracting.

“Marathon” Strategy – preparing the transformation of the In-house legal function

So I run marathons…

Running a marathon or doing a half or full Ironman requires a lot of preparation, weeks and months and for some even years. Getting the body ready for the such a big challenge require a lot of planning to take place, the first and more important being the alignment with the family at home or the closest friends in order to secure the right support even in the toughest times up until and one the race day. Running marathons or doing ironman competitions requires that you use lot of dedicated time. However rightfully such support goes both ways and the family or friends expect being prioritized despite any busy training schedules.

Part of the preparation for any race is to build up the body over the course of time for the big day, slowly increasing the miles.

Having an overall strategy and sticking to it – and I have to say sticking to the strategy is very hard once you feel in-front.

What Contract Management tool fit your organization – the Sandbox Session?

First step towards the sourcing of a new contract management tool is to discuss and set the organizational needs, technical requirements. Are we looking for a full Contract Life-cycle Management tool, integrating with the financial systems, ERP systems, CRM, systems etc., a simple Contract Management repository or something in-between? Do we source for a CM tool which is simple now but scale-able to more advanced needs in the medium and longer term and is that even possible?

Very important to set a realistic level of ambition in this stage of determining the current and medium term needs of the organization, and involve all relevant parties in this assessment.

Competitive tender           

Once the needs and the technical requirements have been determined by the organization, taking the Contract Management tool market into account, a competitive sourcing is worth considering. The market for CM tools is relative mature and the Contract Life-cycle Management products/modules currently in the market for the more mature vendors are very alike on the technical capabilities why sourcing a new CM tool in most cases come down to user experience and price – being commercialized. No matter the ambitions (I would say that your organization could probably in a competitive sourcing process gain the advantage of the Contract Life-cycle Management capabilities for the cost of a more standard and simple Contract Management repository – allowing you to scale as the organization matures) .

10 things to look for in a Contract Management solution

Here are 10 things worth considering when looking at a new contract management solution. Please still acknowledge the importance of doing the structured maturity assessment of your organization as well as assessment of current contracting process and governance in order to ensure that the contract management solution sourcing and implementation will fit the needs of the organization. However this is 10 things I have noticed across the contract management solution projects I have done and the list could probably be longer and more extensive but at least a few pointers which helps and feel free to add to the list in the comment field:

1. Is your organization ready for the implementation? It’s critical to the success of the project that the right level of sponsorship is given to the implementation and the maturity of the organization is known. That all relevant parties are involved here, Supply Chain/Procurement, Finance, Accounting, Legal etc.
2. Scope of legacy agreements and clean-up? Migrating or collecting all of the legacy contracts and building that into your project and use the initial stage to get the legacy contracts cleaned up is something that is often overlooked. Should the contract solution support any type of contract, including buy/sell and non-monetary agreements?

How a General Counsel and Legal creates value through Contract Management leadership

By Martin Lonstrup & Magnus Steen

The General Counsel (GC) and the Legal functions are today actively looking for new ways to contribute and bring value to the table in the organizations. Contracts are an area where the Legal Departments can become a game changer and contribute true value, but in the role many are currently having, as a stand-alone risk orientated function they are doomed to be the opposite. There is a great opportunity for the Legal Departments to claim their part of the Contract Management responsibility and use Contract Management to position the Legal function for a more dynamic future by acknowledging that the Legal function is part of the Contract Management process and thus a value contributor to the business. Here is our view on how the Legal Departments can finally get on-board and embark on the journey of the continuous search for process optimization and focus less on the traditional Legal way of doing things more isolated. This is a journey most other departments in our corporations embarked on years ago.

How are companies doing on Contract Management today?

The general picture and state of mind on Contract Management is that some companies have initiated their Contract Management journey but that a lot of companies still fail to know where the contracts are and which obligations and rights are hidden in them. Contract Management has become an obvious problem and a risk so clear to everyone, yet something only very few organizations dare to address or manage to capture. One of the reasons is that ownership of the process itself and here is a real game changer opportunity for the GC and Legal Department but they have to step up, assign the ownership and responsibility of the Contract Management process – even if it lies outside the general comfort zone of Legal and involve more focus on administration, processes and business related – to times non-legal activities – it will pay off in the end.

The Contract Management Puzzle – setting the baseline (Part 2)

The next step after having mapped out all the possible areas of Contract Management via the Contract Management Mind Map, is to develop the process map for Contract Management initiatives in your organisation. The Contract Management Puzzle (“The Puzzle”) was developed based on my experience having worked with the implementation of Contract Management projects in several medium and large size companies globally.

It is a new and improved way to think about Contract Management, allowing any organization to work with Contract Management without having to prepare an extensive business case to begin with. This process model gets Contract Management out of the shade of theory and ensures that it’s tangible to everyone, step by step enabling the organization to visualize the process for management in a concise and clear way. The puzzle pieces and their size determine the business priorities and provide an opportunity to focus on one area at a time without having to be top-down.

Each piece of the puzzle further defines a second layer of puzzles for further mapping of the underlying processes and

The Contract Management Brainstorm Excise (Part 1)

See this (Click) mind map on Contract Management – outlining the aspects to consider when starting the Contract Management journey. This is a brainstorm map so the intended to develop over time – and everybody are welcome to contribute by adding suggestions to additional aspects, tasks etc. in the comment field below and I will make sure to update as we move along or download and use it in your organisation as well.

Time to improve our Contracting Process – The Initial step (Maturity Assessment)

This is the first article on a series of articles on the journey towards Contract Management excellence and will cover various aspects of Contract life-cycle Management – the first one being getting started.

The initial steps in any Contract Management project should be to measure the Contract Management Maturity of the organization. Measuring the maturity will create a baseline for how contracts are currently managed in the organization and provide the organization with the initial roadmap for optimizations. To be able to award and successfully manage effective contracts, organizations must have disciplined, capable, and mature contract management processes in place. But what are disciplined, capable, and mature contract management processes? How can an organization measure the capability and maturity of its contract management processes? The Contract Management Maturity Model (CMMM©) is a tool for measuring an organization’s contract management process capability. It recognizes the value in periodically assessing an organization’s contract management process maturity and using the results of that assessment as a road map for continuously improving organizational contract management process capability.

Life without Contract Management – short story

Funny short story about the life of a Contract Manager, or could be Category Manager or anyone commercially involved in contracting – showcasing the trouble of not having the contract management approach 🙂

Good or Great Compliance Program – US Department of Justice take-aways

Increased focus from the US Department of Justice on third parties and the implementation of third parties into your company compliance program

The Contract Puzzle Blog

Interesting article from Deloitte on Good Enough vs. Great compliance programs – highlighting five key differentiators between a Good and a Great compliance program. (See article from Deloitte here)

I had the opportunity to participate in a FCPA compliance conference in Houston back in January this year and had a talk with the representative from the U.S Department of Justice (“USDOJ”) about key items which the USDOJ will focus on in the coming years. All the five key areas highlighted by Deloitte are in the list, especially the testing and monitoring of the company’s compliance program however here are a few other elements of great importance outside the top five list from Deloitte are:

• Third Parties and Agents – Probably the most important take-away is the increased focus by USDOJ on third parties and agents – especially in medium and high risk countries. The take-away here is that USDOJ will look at third parties…

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