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The Role Of Lawyers In Contract Management – Part II

January 8, 2010

Recently I wrote about ‘The Role Of Lawyers In Contract Management’. The post elicited a number of interesting comments, including one from Gill Felton, which I have re-produced below.

Gill makes a number of important points – but in the end, perhaps the key observation is about the extent to which greater cooperation and understanding between functions and specialists assists us all to achieve better results – and less frustration!

“I speak from the perspective of having worked as contracts manager and later qualified as a lawyer. I mainly work in high tech areas (I also spent 8 year on the coal face as a computing techie.)

The problem with many lawyers is two fold, especially with junior lawyers:

  1.  it’s the training –  most lawyers are trained to  see a contract from a litigation/risk reduction perspective with little differentiation of the risks for the business, and not as a practical commercial  document  in the same way that a pragmatic commercial  contracting person does (and let’s not forget how few hours most lawyers receive on contracting during their legal training),  
  2. there’s an ‘if I have not done it then I don’t trust it’ attitude, combined with “ if anything goes wrong it’s me who will carry the can and it could affect my professional career, so I won’t risk it being done by anyone not legally trained’ as a follow up. It’s a particular problem for traditional in house departments or   private practice lawyers.

If a contracts/commercial person is professionally trained then they should be able to handle most legal issues in the contract too. In one oil company I worked at we, the contracts managers, trained the junior lawyers in contracting and the commercial process allied to the business needs in house. We wrote most of our own contracts with the legal department checking them and inputting a few standard clauses such as insurance and handling international VAT issues.

As a lawyer, once I know that the contract/commercial or procurement people are properly trained and have an appreciation of the legal issues, then I leave them to manage the contracting legal process within boundaries, particularly on the standard/low risk contracts (note: not financial value) and according to the company process.  If they don’t know what is needed I train them in the necessary so they know when to shout for help. They can use me as a consultant or involve me in the process according to the contract/project requirements or internal process as required.  This is done on the understanding that they keep me in the loop and I get involved in pre-contracting reviews, project reviews,  pre-contract sign off and with minimal briefing can seamlessly pick up any  issues required in negotiations when requested. Preferably, I also get involved sufficiently with the business to understand their needs in respect of the contract’s aims. A further luxury is involvement with post contract reviews on the bigger/more complex projects and contracts too, so as to improve the contracting process by making use of lessons learned feedback.

On the other hand, I have also seen non-legal staff not call in the lawyer until too late, seeing it as a failure on their part, and then calling me is as the ‘rottweiler’ to  sort out the issues when by then it’s difficult if not impossible to do so with a good resolution. I’d much rather be seen as an enabler from day one than as a rottweiler, and participating in the contracting  process.

Each professional can learn from the other. In Walter’s case (see comment on original post): if the lawyer didn’t know the procurement process – why didn’t he think to ask? Why didn’t the Procurement department offer an orientation to the lawyer on their department/processes? It works both ways. Appropriate training is necessary for all parties involved in the contracting process.

Unfortunately, for many General Counsel, commercial contracting is way down their priorities and resources. It also has to be said that contract lawyers have a low status perception among the ‘proper lawyers’.  Continental lawyers often see in house lawyers as lesser beings anyway (it’s their systems and training again). All parties need to work together in house to achieve a good contracting process. It can and does have a major effect on the business bottom line and operational capability but also requires investment in standards, processes and systems. Whose budget does it come from?

Basically what I’m saying is that a good contracting process requires all departments, not just legal, contract and procurement departments but also finance and the business to use their skills and work together to achieve the aim of a good contract for the business.  After all, to use a soccer analogy: you would not expect the goalkeeper to shoot goals would you? But … he may have many useful observations on the performance of the rest of the team which they can learn from (and I’m not saying who is in the goalkeeper role)!

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