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Is technology destroying contract performance?

December 3, 2019

We have all witnessed it. Whether it’s our kids and their obsession with computer games and mobile phones, or the way that email has come to dominate our working day, or the extent to which physical meetings have been replaced by conference calls and webinars … technology continues to transform communications and the nature of human interactions. And that has very real consequences for the quality of life and the value that is generated from relationships.

Economic research shows that, as advanced technologies become more  prevalent, relational skills and competence decline.

In the world of contracting, perhaps the most obvious example of this decline is in the area of negotiation. Something that was once almost exclusively conducted face to face is now primarily a remote activity. New research by IACCM reveals that in approximately 75% of contract negotiations, the parties never physically meet. This results in a far more formulaic approach to negotiation and constrains understanding and investigation of options and alternatives. Too often, it creates a rigid, compliance-driven framework that demonstrates little concern for the interests or aspirations of the counter-party. This must in part explain why we often find that transactions finish up with the wrong form of agreement, or with misunderstandings over requirements and scope, or with inappropriate allocations of risk.

The same is true when it comes to other areas of the contracting process – for example, multi-stakeholder contract review meetings are increasingly replaced by individual stakeholders undertaking review and issuing redlines in isolation. Post-award, events such as performance reviews are also largely conducted using technology.

Of course the impact of technology is not all bad. It allows better and faster data flows. It enables greater inclusiveness. It assists in managing across time zones. But when it comes to fundamental human traits such as empathy and judgment, or establishing deeper and more collaborative relationships, technology is actually a barrier. It has become the silent destroyer of loyalty and ethics because it supports a transactional, commodity-based view of the world, where trade easily becomes a matter of self-interest rather than mutual interest.

There can be little question that technology has raised efficiency and created new opportunities for many people, but this comes at a cost – and perhaps it is time for us to reflect and question what is the right balance between technology and human relationships? While virtual meetings and electronic communications may cut costs, do they also undermine the value achieved from certain types of contract? Increasingly, I suspect the answer is yes.
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