Contracts have a tendancy to be drafted for the drawer or the filing cabinet. One of the reasons is that the lawyer sometimes stops to produce when the agreement is finalised. It does not have to be that way – here is how the lawyer can add – maybe even greater – value once the contract is signed.
Use agreement as the play for the underlying business
If you draft the agreement as the playbook for the underlying business you will realize that the old-fashioned style of contract drafting is simply not enough – you need also to document how you run the relationship and the processes of decisionmaking. There is a difference between long term relationship based contracts and the more one off transaction based.
The signed contract is a normally word document, however the systems of a company need data to function. There are basically two ways of turning the words into data – using manual processes or using software. The software solutions can be either tied to document creation or to ”reading the contracts”. The first option requires that your companies sits on the drafting side but the second one can be applied both on your own and the counterparty’s draft.
Lawyers and legal professionals can enhance the value of the contract as well as their own role by mining all relevant data. I would advise a risk management philosophy – some contracts require less some more. Some may even be of the risk and size requiring extensive training.
Qualifying the legal risks
If you have followed my blogs you see that I am a great fan of legal risk management and, at my surprise, the lack of use of it. In all aspects of a business and in all aspects of running a legal department or a contract management process, legal risk (and contract risk) management must be applied. Most things will not happen, shall not be covered by a contract and the risk can be contained by other means than contract language.
Use the context of the contract
There are several dimensions to consider in relation to the context
- Which country / jurisdiction is being targeted?
- What is the business environment?
- Is the contract part of a greater conractual scheme (a chain of contracts, a pattern of contracts?)
Many lawyers tend to deal with contracts as standalone pieces and not as a portfolio.
Educate the business on key legal terms
Tell the business what things the must do, what they are not allowed to do and what they may do. Legal risks are best contained before they occur. And legal risk are seldom created during the consultation phase with a lawyer.
Advising on how to load data into Contract Management tools
There is one major issue with contract data – too much data will simply not be maintained. So even if contract words becomes contract data, lawyers must be aware that automated communication may not work properly. I am cautious to say that less may be enough.
Contract Business Intelligence