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Organization is not the point

January 23, 2014

I spent yesterday chairing a conference on Advanced Contract Risk Management.

There were some excellent presentations and much lively discussion – but many of the exchanges involved heated discussion over the organizational reporting line and whether contract managers should be lawyers.

These days, it seems many lawyers are becoming more assertive about not only the ‘right of ownership’ they have over anything contractual, but also suggesting that legal skills are somehow uniquely suited to the role.

But what role? Here is where we have the problem. Such debates between the lawyer and non-lawyer fundamentally miss the point over the role of contract managers, the purpose of a contract and the value contribution from a contracting process. These questions must be answered in advance of a decision on the necessary skills or the best organizational reporting line. What value can be achieved from contracts and what value do executives want to achieve? I find that those who claim ownership rarely have answers to these fundamental points.

For those who wish to own contract management, my question is whether they are ready to accept accountability for the quality and outcomes of the overall contracting process. If they are not, then they are not a suitable owner.

  1. Many lawyers and other contract professionals would welcome the opportunity to spend more of their time on activities of higher business value, rather than on sweating the details of legal wording. I think part of the problem arises from the fact that every contract draft must be reviewed, because the reviewer doesn’t know what land mines the drafter might have hidden in the draft, accidentally or otherwise. Lawyers, not wanting to be blamed by their business colleagues for having missed a land mine that exploded (perhaps years later), are incentivized to strive for perfectionism, which can come across to their business colleagues as obstructionism.

    Part of the long-term solution might be for businesses to agree on standardized contract language for doing certain things in certain ways — in essence, the INCOTERMS on steroids. To use another analogy, if you want a certain egg dish for breakfast at a hotel restaurant, in most cases you won’t propose a draft recipe to the waiter, you’ll just ask for Eggs Benedict.) That’s the goal of the embryonic IACCM Commercial Contract Protocols project.

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  1. The In-house Lawyer: Enabler or Impediment? | Commitment Matters

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