This may be an odd take on the topic of innovation in a legal services context but there is still an awful lot to be done in the Middle East in the area of contract templating for in-house use. The fit for an in-house legal team looking to drive efficiency and innovation for its contracting activities should be clear. However, there is a lot that still can and need to be done. As legal departments expand technological capabilities, an emphasis of course remains on increasing efficiency while providing value but often the volume of work and contracting being handled by those in-house legal teams can be a real challenge.
Contract templating, the appropriate use of a centralized library of pre-approved contract language and contract formats, is an area I have worked in for many years and it can make a real difference if implemented successfully in a way that is tailored to the organization. However, I remain surprised at how few organizations within this region either have no or an inadequate system for the use of automated and appropriate contract templates across its full range of activities.
With advantages of course come challenges, however, and that is where any contract templating project must get the process management right also. Just a few of the advantages and challenges are:
1. Reduced Time to Draft Contracts
By creating and centralizing the storage of tailored contract templates, your contract documents become accessible to all members of the legal and contract management teams. Having an available template is however only part of the story.
2. Creating an Appropriate Set of Standard Contracts (Contracting Activities)
3. Creating an Appropriate Set of Standard Contracts (Trading Activities)
However, then we must also look at the trading activities that exist within an organization across its various divisions and business streams, for example divisions for real estate, development activities, F&B, retailing, event management and conferences, training, technology products and solutions, manufacturing, and on and on. The list can be a lengthy one. Which brings with it a major issue. Should an organization attempt to genericize or tailor all contracting to its range of activities (which will likely mean a much longer list of templates to create)? To give an example, a minor works project may be able to follow a particular contracting model but that will not work in a technology build or for the creation of a temporary venue or stand build for an event or exhibition.
4. Key Decisions Before the Templating Project Begins
At a process management level, some key decisions must be taken before the templating work begins:
- What is the range of templates that will be prepared? This is key to determine the project timeline, who will need to be involved in the internal review process and of course the budget and time resource allocation.
- Is there any existing view that certain contracting or trading activities and their respective contracting approach carry higher levels of risk?
- Do any required internal or organizational policies already exist or do any need to be created as part of the templating process?
- Is there a preferred organizational approach on key terms such as intellectual property, data protection, law and jurisdiction, boiler plate provisions and others?
5. Increase Enforcement of Business Rules
A templating project is an opportunity to revisit preferred policies across various key areas. However, any lack of or deficiency in business rules is a challenge. Without a standardized approach on certain key areas, team members will not be able to identify business rules, keep track of those rules and any changes, and follow those rules. Contract templating allows your organization to overcome those challenges by making sure that staff have access to the latest versions of pre-approved templates and pre-approved language. The list of rules and policies are key and an important process step. Many organizations are developing rules both for internal use and requiring supplier compliance e.g. health and safety, equal opportunity and inclusion, modern slavery, sustainability, data protection and many more. The starting point is determining which policies are required.
6. Facilitate Faster Contract Revision
One of the key points of templating is to have an appropriate range of organization and activity-specific contract templates so that a bespoke or part bespoke contract drafting approach is not required every time a project arises.
The very broad range of contracting approaches within an organization can lead to a considerable and unacceptable level of corporate and project risk. The cut-and-paste approach to contract development should by now be a thing of the past.
8. Localization Requirements
Standard contract language isn’t applicable in all instances. For example, the geographic location of a particular company’s operating division or client and decisions on law and jurisdiction will require contract managers to produce a contract with localized conditions. This adds an extra layer of drafting and options.
9. Improve Tracking of Deviations from Approved Contract Language
From the perspective of being able to check on the end position on any agreed contract, being able to track deviations from approved contract language is a must. By leveraging the pre-defined information and contract management approach, the organization can effectively reduce the time to spot differences and management reporting becomes easier. A contract management solution that can compare a drafted contract against a previously executed contract or pre-approved template and determine differences between the two is a considerable support.
10. Storage Platform
Many legal departments still use self-built or basic systems for their intranet, which stores files on local servers and offer little to no collaboration functionality. Essentially, a series of static sites that store information but offer no dynamic capabilities. Technology of can deliver the difference. Legal technology solutions can provide the ability to quickly share information, track contract developments and perhaps most importantly provide a key file-sharing solution to give members of the team better access and the ability to communicate effectively on contract issues.
Another key element of any templating solution is a range of templates that can be exported or imported to ensure consistency and proper records, but with key automation functionality. By automating and standardizing what would otherwise be a repetitive, manual process for contract managers or support team, a primary burden is removed from legal teams, contract managers and administrators.
12. Contract and Terms Play Book
Another key part of the process is to overlay any contract template with a general and/or contract specific set of guidance for all contact managers. This is a considerable additional task but the advantages are clear – guidance for the team and the ability to create contract options on particular provisions if pushback arises on a contract negotiation, including a layered approach with various fallback positions.
13. Phasing the Work
Any contract templating project represents a considerable effort in terms of internal and, through the use of capable and regionally experienced commercial law firm support, external resources and through the appropriate allocation of budget or resource allocation. It also involves important decisions as to project timeline and priorities and should focus in a phased roll-out on the most urgent areas of business risk first.
14. Internal Resource
However, a project is to be rolled-out and even where an external legal consultancy resource will be used for the bulk of the heavy lifting, there will still be a core requirement for the engagement of legal, contract management, procurement, financial and other divisions within the organization. Any law firm engaging on the contract templating roll-out should be asked to factor this into its project plan, approach and timeline.
15. Site Structure
The ability to efficiently set up sites that replicate desired structure and display is important also. Any technology solution should ideally be able to accommodate key functionality including:
- Document automation configuration
- Folder structure
- Homepages and site navigation and links
- User groups and permissions (including control over the change of any template in the system).
As a last thought please always bear in mind that any contract templating project involves a core blend of innovation, process management and technology. This kind of a project requires effort and an appropriate budget or resource allocation. Of course, an automated range of accessible and appropriate pre-approved contract clauses, contract templates, contract and clause guidance and contract negotiation playbook is worth it for most organizations. And any templating project can be phased, for urgency, timing and budgetary reasons. At the end of the day, it is all about enabling the in-house legal team to further take control of its processes and streamline contract lifecycles and project management.
Mark Hill is a partner and head of commercial,
*This article is the IHC Magazine’s off-shore update for July 2021 issue. Click here to read the full magazine