Intro
Any organization, regardless of its size or industry, enters into a larger number of contracts in the daily course of business. These contracts can come in the form of a property lease agreement for the new office space, vendor services agreements from local restaurants, or confidentiality agreements to keep discussions out of the public eye.
Contracts are as varied as the businesses which enter into them. These different types of agreements require distinct degrees of negotiations and review. A confidentiality agreement may not require as much negotiation as a Master Services Agreement (MSA) might, and just because the same type of agreement has been negotiated repeatedly does not mean new issues won’t arise.
With various levels of complexity for a large volume of contracts, in-house teams can face the brunt of large-volume, low-value work, creating resource inefficiencies and retention scares. Addressing these issues, however, means more than simply outsourcing the work.
When large volumes of contracts create numerous ranges of complexity, one style simply does not fit all.
Contract complexity
In looking at the amount of time a business will spend negotiating an agreement, the contract’s complexity is important. Nondisclosure Agreement (NDA) or Confidential Agreement (CDA) are typically considered as low complexity, albeit not unimportant, types of agreements. Most of the language is the acceptable industry standard, so negotiations are usually surrounding clauses that discuss how long the agreement is in effect, what the definition of “Representative” is or the purpose of the agreement.
However, just because the terms may not be complex does not mean the overall process to get an NDA or CDA in place isn’t complex. Most companies will put this type of agreement in place before having any discussion with potential partners, which means there is a very high volume of such agreements, and many are time sensitive. This translates to the legal team spending hours negotiating and redlining an agreement that, while vital to business, is not as complex.
While there are certain type of NDAs/CDAs that require a more detailed review, and an additional layer of negotiation, such as the ones used in Private Equity and Mergers and Acquisitions matters, others can be pretty straightforward, whereas an MSA is more nuanced. Companies enter into an MSA with counterparties usually when there is expectation of reoccurring work. The type of negotiations that happen with an MSA range from changing the business address, to redrafting an entire agreement, which would include the redrafting clauses including but not limited to the definition of “Services”, Deliverables, Limitation of Liability, Indemnity, Insurance, and Key Performance Indicators. Companies may have an MSA with vendors they use repeatedly (Vendor Agreement, or Professional Services Agreement), consultants they bring on repeatedly (Consulting Agreement), or vendors providing software as a service (SaaS), to name a few.
Each type of service requires different terms in the agreement, and each term may be heavily negotiated, or not at all. While the complexity of an NDA/CDA may be driven by how soon it needs to be signed and the number of such agreements, the complexity of the various types of services agreements is determined not only by how quickly and efficiently the agreement must be negotiated and executed, but also by amount of redlining each clause requires, all of which is very time consuming for legal departments.
The Value of Time and Process
One of the issues most in-house legal departments face is lack of proper management tools to help prioritize low, medium and high value contracts. Most legal departments have a large volume of extremely high priority contracts that, while important to operations, are not directly impacting the business. For example, a business partner may have requested the negotiation of an NDA/CDA with a vendor while MSA negotiations are pending.
It is difficult for in-house lawyers to strike that balance between supporting internal business partners with routine contract matters and being partners in negotiating strategic deals. Allotting resources to negotiate a large volume of less-complex agreements is not the best use of resources either. Further, in-house legal departments often do not have a fully developed process to help alleviate some of the “bandwidth” issues many lawyers face.
The result: a bottlenecked contracting process, overworked lawyers and inefficient use of resources.
Contract+
Fixing these issues requires evaluation of processes and thinking outside the box.
Contract+ adds process to proficiency to create a fully managed service. We provide a team of lawyers and subject matter experts who have experience negotiating and redlining various types of commercial agreements. Armed with a “playbook” developed in collaboration with our client, we lighten the burden of negotiating contracts by performing this task on our end, and only reaching out to the client with “deal breakers” or “institutional approval requests” as they arise. This playbook details escalation matrices for all kinds of contracts a business may hold and - no matter the complexity - the negotiations can be conducted by a member of Mindcrest’s team.
This allows for the in-house team to focus on the strategic matters along with their business partners and know that all the other contracts are being negotiated and executed in a timely manner with the appropriate expertise, without the investment of their legal department.
No matter what industry your business is in or how many contracts you have, Mindcrest can help you find a solution to bottlenecked processes and get your important agreements in place when you want them, not just when they affect your bottom line.
