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And may good will infect our contracts ….

January 1, 2015

The start of a new year is always a time for reflection and a moment to commit to improvement. The opportunities for improvement in our contracts and contracting processes are many – and the benefits are substantial.

In trying to clear my in-box (one of those inevitable new year actions), I came across a book chapter sent to me by Mark Prebble, an IACCM member in the UK. It offered thoughts on that oft-debated topic of ‘the business’ versus ‘the lawyers’ and where responsibility for contracts should reside. Mark rightly observes that far too often the business tends to abdicate to the law department, or the law department seeks to ‘confiscate’ issues that really should be decided by the business. He then advocates the need for Contract Managers who can help bridge this gap, so long as they understand the bounds of their authority (because they may tend act as surrogate lawyers and create another source of confusion or conflict).

I think the broad point that Mark makes about abdication / confiscation is right and certainly many organizations still struggle to establish clarity over roles and responsibilities. But focusing on an organizational debate over who does what is rarely productive. I think the message we need to deliver is the that ‘fit for purpose’ contracts and effective contract management are inevitably a team sport – that unless the component parts work collaboratively, results will be damaged. And the only way to build collaboration is to have a well-defined process, which adjusts depending on the type of contract relationship being established.

In my experience, good contracts are those that emerge from inclusive and collaborative working practices. Certainly the organizations that appear to me to be getting consistently superior results from their contracts have generally adopted an approach. And they have recognized that what they must focus on is a clear and well worked process, not the document (contract) that the process produces. Argument over who owns the documents or the individual terms within it is generally a fruitless exercise.

Certainly the organizations that appear to me to be getting good results from their contracts have generally adopted this more collaborative approach that takes away the contention over who owns what and focuses more on objective analysis of what goes wrong and how to put it right. Their approach is never based on blame or accusations – it is a collective effort to generate improved business results.

These organizations have recognized that what they must focus on is a clear and well worked process, not the document (contract) that the process produces. Argument over who owns the documents or the individual terms within it is generally a fruitless exercise. So is it time to establish a working group to explore what improvements your organization can achieve through collective effort? Let us indeed bring some good will to our contract management!

2 Comments
  1. Tim, I endorse this encouragement to improve the process of entering into commitments which work for all parties concerned. I think that there is much which in-house lawyers (the population I primarily work with) and contract managers can do to stimulate this. The IACCM London meeting in November brought home to me the need for the in-house legal community and contract managers to collaborate on such improvements.
    In a contract awareness session I run for business people, I put up the proposition ‘Contracts are for lawyers to worry about’ which is popular in many organisations. I then declare it to be false and propose instead ‘ Every commercial manager has a vested interest in contracts being clear and workable and even more importantly understood by both parties’. Mark

  2. Ian Heptinstall permalink

    Well said Tim – and Mark. And it is not just in contracting where businesses are harmed by a narrow functional/who-does-what view of the world. You often highlight the damaging impact of local performance measures on the procurement function, and I would guess the lawyers v commercial fight is driven by a similar root cause.

    Business-wide processes that focus on what more than who, and global performance measures, are needed to underpin and change in practice.

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