Contract Management – Doing More With Less

Thursday, March 22, 2012 - 09:41

Let me begin with some background on Business Integrity. We are a 12-year-old legal technology company focused on contract management. Business Integrity grew out of pioneering work done by a London law firm with two of its clients, Logic Programming Associates and Standard Chartered Bank. From there, we quickly acquired two of the world’s largest law firms, Linklaters and Clifford Chance, as customers, and, shortly afterwards, the legal departments of Cisco in San Jose, California and Microsoft in Redmond, Washington. Since then, we have expanded our customer base to include six of the top seven Am Law 100 law firms and other leading  corporate legal departments including PepsiCo, Georgia Pacific, Christies, AXA Insurance, Life Technologies, PetSmart, SolarCity, Dignity Health, National Grid, Sodexo, LexisNexis, Jumeriah Hotels, Christie’s and Cadence. ContractExpress is a great example of the “build a better mousetrap” principle.

Addressing Key Issues

Let’s crystallize some key issues and then discuss how ContractExpress addresses them. Corporate counsel has challenging work to do relating to litigation, governance, complex contracts, consumer and employment policies, international negotiations and regulatory compliance, to name just a few. While much cannot be automated, some repetitive legal tasks can be, if appropriate compliance standards and controls are put in place.

An example of a viable area for automation is the generation and management of legal contracts such as confidentiality agreements and license agreements. For instance, Microsoft uses ContractExpress for the production of all its end-user license agreements (EULAs) for its software products. Anyone who accepts a Microsoft EULA – e.g., when installing Internet Explorer 9 – is an indirect user of ContractExpress. Microsoft’s business requires its Legal and Commercial Affairs department in Redmond to produce documents in all 35 languages that Microsoft Word supports. ContractExpress manages these multiple variations with its uniquely capable and trusted legal document assembly technology. ContractExpress reduces the time required to produce EULAs for new products, enabling Microsoft’s product managers to defer key licensing decisions until closer to a product’s launch date, improving consistency across the EULAs of different products, and freeing up Microsoft’s licensing attorneys to more rapidly address non-standard situations as they arise.

Solving Practical Problems

What other problems does ContractExpress contract management solve? Typically, generating contracts is a manual process that slows business operations. Attorneys don’t like doing it, and business people don’t like waiting for the attorneys to do it. Salespeople often comment that every contract feels like re-inventing the wheel. Without automation, drafting contracts can be a time-consuming process resulting in delays that may impact the outcome of a sale.

It is natural for variations to be introduced into contract language based on the style of the attorney drafting it. However, this can present a consistency issue, particularly when multiple attorneys get involved at different points in time, or when workloads are especially pressing. Furthermore, legal departments may seek outside counsel’s advice on specific agreements, introducing further variations.  But even slight variations in language between contracts can create problems in consistently managing obligations and establishing the value of a corporation’s portfolio of customer agreements.

A solution to these problems is an automated self-service contract creation and document management system such as ContractExpress. By having the subject matter specialist attorney create appropriate ContractExpress templates, perhaps with the assistance of outside counsel, the speed, cost, consistency and compliancy of creating individual transactional agreements are all much improved.

The Role Of The Questionnaire

To request a contract, business users answer a questionnaire running on a web browser. If the answers provided by the user are compliant as defined by the legal department, the contract is immediately generated. Otherwise, the request is routed to Legal for review and approval. The questionnaire is dynamic, so that only relevant questions, based on the user’s earlier answers, are asked. Taking into account the business user’s role, the attorney responsible for the template phrases the questions. For example, rather than directly asking a question about governing law that the business user probably wouldn’t understand, the attorney might ask the question in appropriate business language as if he were interviewing the user over the phone, as in, “Which division or region is responsible for the agreement?”

The questionnaire can also ask questions that may not directly change the generated contract but are material in determining whether the contract requires approval by Legal and/or management. Any combination of questions can trigger the need for approval and, if appropriate, the level of that approval. As such, not only does the automated template determine appropriate and compliant language in the generated document, but also, as Sarbanes-Oxley requires, it enforces compliant behavior by the business users.

Reporting And Alerts

Answers provided by business users not only control the language in the generated contract and the need for approval but are also stored for downstream management, reporting, audit and analysis to determine future improvements in the template and contract process. Information about the circumstances of individual requests is stored – such as the date and time that an approval is sent to Legal – to improve transparency between business users and Legal.  To make the management of contracts a proactive process, alerts can be emailed on a particular date to the business user and Legal if a contract hasn’t been returned by the counterparty, or when a contract is coming up for renewal.

Wide Range Of Agreements Can Be Automated

One of the most common agreements clients want to automate are confidentiality agreements (CDAs) or non-disclosure agreements (NDAs), which given their sheer volume can place an enormous burden on legal departments. With ContractExpress, Legal can empower the business units to create agreements while reserving the option - sometimes imposing mandatory review requirements - to route a subset of complicated or non-standard situations back to Legal.  Other common agreements clients automate include sales contracts, license agreements, procurement agreements, real estate agreements and human resource documentation. Really, any type of rule-based legal document can be automated using ContractExpress.

A Typical Implementation

ContractExpress implementations are always sponsored by the general counsel (GC), and typically managed by an assistant general counsel (AGC). The AGC is normally responsible for the language of the contract being automated and empowered to make changes to the language. Depending on the scope of the contract (for instance, to cover foreign jurisdictions), the AGC may call on expert advice from outside counsel.

The contract specialist also has to decide how to phrase the questions on the questionnaire. Rather than asking which state’s laws will govern the agreement, the question might ask which region will be responsible for the agreement.

Unlike all other document assembly and contract management products, ContractExpress does not require the assistance of IT programmers to automate the marked-up template. Instead, the ContractExpress Author Add-in for Word can automatically analyze the legal mark-up in the template and achieve in seconds what it would take a programmer days or weeks to accomplish -- all with the flexibility, speed and legal trust that transforms contract automation into an operationally feasible and sustainable legal process.

An automated ContractExpress template is still a single Word document that can be easily read and updated by an attorney.  At no stage is IT required to automate or maintain the template. This is important because the template will inevitably change with time to incorporate new provisions and reflect changes in the law. By eliminating IT and programmers from the process, lawyers can be confident about the legal language in the generated agreements and can make and approve changes to the template in a timely manner.

The AGC is easily able to include the approval criteria into the Word template. This can be any combination of answers on the questionnaire, including questions that might not otherwise be required to control the language in the generated document. The automated Word template is published by ContractExpress Author to ContractExpress for SharePoint for testing.

User roles are typically configured so that business users are able to request contracts, see only their requests and access only PDF versions of the agreements when approved. Lawyers can typically see all requests, access Word-editable versions of the agreements for non-standard situations and negotiations, and approve or reject contract requests. Contract admins are able to manage the contract process and, once signed, export the completed agreements to the contract repository, run reports, and serve as a contact point for business users. Site admins manage users’ roles and can set permissions to restrict access to specific groups or departments.

Intuitive And Responsive To Business Needs

ContractExpress is intuitive and responsive to specific business needs. ContractExpress can be configured so that business users are not even required to understand the different types of agreements. Clicking the “create a contract” button can ask questions to determine the type of contract – for instance a consulting agreement rather than a confidentiality agreement.

Sales representatives have the option to review all their contracts and can immediately see the status of each via indicators we call “traffic lights.” A green light signals that the document is complete and ready to go. A yellow light means that the document, having been sent to Legal, is pending approval and cannot be modified. Finally, a red light indicates that the document requires approval and must be forwarded to Legal.

ContractExpress displays the name of the reviewing attorney to the business user, even if the request is re-allocated within Legal. Attorneys are able to sort requests by business user and request date to prioritize their work. In addition to real-time capabilities relating to the questionnaire process, ContractExpress can track and manage contract history for each user. Original questionnaire responses are stored, and the system provides an automatic prompt if a contract is already on file. Thus, a sales representative who is discussing new business with an existing client can see if a current NDA exists and can easily generate a supplement to that agreement. For contracts that require lengthy negotiation, the system incorporates negotiated changes into the final version and flags the agreement as being non-standard.

Leveraging Microsoft Office and SharePoint

ContractExpress is seamlessly integrated with Microsoft Office and SharePoint to provide state-of-the-art contract automation within Microsoft’s familiar Word environment and proven content and document management application. This means comprehensive version tracking, reporting and secure document sharing for editing and analysis. Corporate legal and sales departments can track contract use by region, country, product, salesperson and timeframe, creating a powerful tool to analyze fundamental, corporate-wide activities, as well as to monitor compliance with legal and regulatory mandates.

Summing Up

In summary, ContractExpress greatly reduces manual contract processes for standard agreements and frees up corporate legal departments to focus on larger legal issues while still maintaining control of day-to-day processes. Its objective, questionnaire-driven technology allows deals to close more promptly. Integration with SharePoint provides critical document management and reporting functions within a familiar application.

ContractExpress allows our corporate clients to gain the advantage in the “battle of the paper” and prevail with preferred language. It presents a polished image that is backed up with sound legal input and a contract system that does the heavy lifting. In the words of our CTO, Andy Wishart, “Business Integrity has a singular, laser focus on contract automation. We lead the world in making this complex task quicker, simpler and above all safe. Our market focus drives our products, thinking and approach. We do nothing else.”

Tim Allen is the President of Business Integrity and has been working with the World’s leading law firms and legal departments since the company was founded 12 years ago. Business Integrity® develops and markets ContractExpress which is an enterprise-class software platform optimized for contract management. It provides compliant self-service contract creation, approval workflows, and the storage, management, and reporting of agreements and contracts – mapping onto and enhancing the legal business processes of an organization.

Mr. Allen manages the company's operations in North America and has extensive experience in selling high value technology solutions. The 100 percent reference-ability of our customer base is testament to his commitment to excellent service and a return on customer investment and he combines huge energy and stamina with precise attention to detail. Tim, a graduate of Oxford University, co-founded the company after a successful career in sales management with IBM and Sybase. He sits on the company’s board.

Please email the author at tim.allen@business-integrity.com with questions about this article.