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Contract Management & Legal: A Match Made In Heaven?

May 15, 2013

Several IACCM members forwarded the most recent newsletter from legal placement firm Kerwin Associates. The reason for interest is that it states ‘the value of the Contract Manager is steadily rising’ and it highlights their growing role in development of company policies, not only their oversight. The article describes today’s Contract Manager as ‘the hub in the wheel’, overseeing numerous contracts and maintaining relationships with all relevant parties.

While welcoming these general observations – which are borne out by IACCM research – many Contracts practitioners will have rather more mixed feelings about the ‘supporting quotes’ from a number of senior in-house counsel. While these confirm that Contract Managers have a growing role, they also reflect a common view among lawyers that this is largely to support the legal department. They are lower-cost resources; they provide ‘eyes and ears’ for the lawyers; some even have talents that may be distinct from those of the attorney and hence offer helpful ideas or insights.

There is plenty of evidence that high quality contract management teams can deliver considerable value to the business – and this goes far beyond the specific role of the Law Department because it impacts financial returns and overall trading relationships and practices. Ironically, this value is frequently (but not always) eliminated when contract management resources are made part of in-house legal, simply because they are viewed as a low-cost alternative to ‘the real thing’. Lawyers don’t think about process and life-cycles; they think about transactions and precedents. Good contract management often demands that the specialist legal view is challenged to ensure that it does not constrain the wider business opportunity or needs. Lawyers are a stakeholder in contracts, not their owners. There are enlightened General Counsel who appreciate this point and a number are showing leadership in raising the credentials and status of their contract management teams, in no way viewing them as subservient or inferior to the in-house lawyer.

So if the value of good contract management is so clear, why do we still face such frequent confusion over its organizational role and reporting line? Why is it that some of the best Contract Managers feel a need to become qualified attorneys? I think quite simply because the demand for a high performing process is not matched by the supply of suitably qualified candidates – and hence the role lacks status. Most Contract (or Commercial) Managers do not have a specific professional qualification related to contract management, or they have been trained in the context of public sector acquisition rules. Hence they do not perform to common standards of value and there are wide variations in their underlying skills and knowledge. Indeed, in some geographies, there is still a broad perception that the function is largely administrative; this is especially true in the US, perhaps influenced by rules–driven Government Procurement and the army of Contracts Officers overseeing FARS and DFARS.

As a function and as a career path, Contract Management can come into its own only by demonstrating its professional standards. Every individual carrying this title must be able to describe the unique value that they – and their colleagues – deliver to the organization. At IACCM, we have been tackling this challenge and more than 10,000 contracting staff have now entered our skills assessment and development programs. These are designed to ensure underlying competency and consistency in the approaches and methods that are applied in the workplace. But of equal importance is the growing body of research that we undertake because this offers the source of our distinctive ideas, knowledge and statements of specific value.

With more than 30,000 members worldwide, IACCM is working hard to ensure that there is a new breed of Contract Manager, clear about their purpose, the methods they deploy and able to demonstrate the unique contribution of their role – a contribution that is truly distinct from that of the in-house lawyer.

2 Comments
  1. Steve Schwarz permalink

    Perhaps I’m uniquely placed … but I have had the opportunity to work in commercial roles, contract management roles, alongside in-house counsel and as in-house counsel. I can truly state that the function of the contracts manager is quite different to that of the commercial manager and in-house counsel: In effect, the contract manager fills the void between the two. A simple example, but one that I believe is quite poignant: Obligation (or delivery) management. Obligation management (or, if you prefer, the avoidance of ‘termination for cause’) requires a depth of knowledge surrounding the corporation’s operations that is normally not inherent in counsel but is essential to meeting the terms of the contract. To illustrate this, as a contract manager I had the fortune to work in the ICT industry. My employer had, as one of its obligations, the responsibility of providing communications infrastructure for automatic teller machines (“ATMs”). The company had agreed to a service level of 99.9% availability. However, the network designers only allocated two lines into the router; one for broadband and the other for the backup line. What had been neglected was the telephone connection required by the staff replensihing the cash (usually daily): Although the telephone was available it required the backup line to be switched to voice from data (and there was no auto-connection capability when the handset was replaced). As a contract manager, I was required to validate the design as meeting the requirements of the contract. As you can see here, it didn’t. I had the designers re-do the solution which, eventually, required a new type of router (more ports were required) and this had a significant impact on the sell price of the service. It also demanded a change to the network design as more IP addresses were required per ATM. I suspect that many in-house counsel would be unable to delve into this level of detail, yet it was a requirement of the contract manager. No, the role of the contract manager is quite different (but complimentary) to that of the in-house counsel.

    • Steve
      Thanks for this thoughtful response and your insights from the various roles you have filled.

      I agree with much of your analysis – certainly the point that there are distinctions in the scope of the contract / commercial job role. However, it is problematic to depict in this way because the job title contracts or commercial is so inconsistent. I appreciate the divide you are trying to make, but it does not reflect universal practice.

      It would in many ways be easier if we could decide to adopt one term – either contract or commercial. Just like with lawyers or finance professionals, the scope and depth of individual job roles will vary, but topprofessionals should always be capableof performing the sort of added-value taks that you would associate with the ‘commercial manager’. I think it would be helpful if we could recognize that the overall professional field is a continuum, rather than seeking to sub-divide and hence weaken the overall framework.

      Tim

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