Overhauling Your Contract Process? Don’t Skimp on Contract Creation

Via this post by Tim Cummins, I learned of this article in the National Law Journal by Mark Harris, chief executive officer of Axiom, “a provider of technology-enabled legal services” (to quote the author note).

In the article, Mark describes the costs and risks of an improvised approach to managing the contract process. He then proposes an alternative, offering as an example steps taken by Allergan, the biopharmaceuticals and medical-device company:

Workflow variability was dramatic, so the team was either underutilized or too busy. In addition, there was limited visibility into team performance and no easy way to check contract status. Like at most companies, Allergan’s in-house counsel encountered some frustration from internal business stakeholders around responsiveness, communication, and variable service levels.

Arnold Pinkston, Allergan’s general counsel, saw process optimization and technology as key ways to create a higher-performing contracting operation. So Allergan partnered with an outside provider (OK, it was Axiom) to change the operating model for creation, negotiation and reporting of the company’s contracts. The result is a technology-enabled managed service that is now responsible for 90 percent of Allergan’s contracts.

Under the arrangement, Allergan is using Axiom’s cloud-based technology to enable the systematic capture of contract requests and information; distribute and execute work efficiently; and then track obligations, risks and performance. By applying process (including clear workflow rules based on contract risk and complexity, a dedicated contracts team designed to alleviate bottlenecks, custom playbooks) and technology innovation, Allergan is reducing risk, liberating valuable data, and capturing incremental revenue by bringing products to market faster.

All that sounds sensible, although the article necessarily doesn’t provide any real detail.

My interest, of course, lies in how an organization creates contracts, rather than how it keeps track of contract information. I wager that how Allergan goes about creating contracts is a bit different from how I’d tackle the task.

Language

First, as regards contract language, I expect that when it comes to Allergan’s contract language, it’s business as usual. That much is suggested by Allergan’s “invoicing terms and conditions” (here), which exhibit the usual shortcomings of traditional contract language.

If you’re looking to make your contract process more efficient, the obvious place to start is with what’s in your contract templates. If you go with clear and concise language and make sure that the terms are tailored to your needs (as opposed to reflexively hewing to the conventional wisdom), you’ll streamline your contract process. It’s like taking dead weight off of the moving parts of a bicycle—the gains can be dramatic.

How do you improve your contract language? First, you adopt a style guide. (Your only realistic option is to go with something like this.) You train your personnel in how to draft and review contracts consistent with the style guide. And you redo your templates consistent with the style guide.

You think that’s unnecessary? Well, then you’re lumbering your company with the inconsistency and dysfunction that come with having your lawyers and contract-management personnel rely on whatever contract-language conventional wisdom they happen to have picked up along the way, much of it lame.

Process

Based on the little I know about Axiom, I expect that Allergan doesn’t use state-of-the-art document assembly and so isn’t readily able to provide for extensive customization. (I might well be mistaken.) I have some experience with contract creation offered by contract-lifecycle-management software. The focus is on what happens after signature, so it seems as if they half-heartedly bolt at the front end a not-very-impressive contract-creation component.

The Bottom Line

I mention Allergan only to illustrate my more general points:

  • If you overhaul your contract process without retooling your contract language, you’re like a restaurant that revamps its food-preparation systems while continuing to use produce sourced from any old place. Your first priority should be getting your contracts as clear, concise, and relevant as can be.
  • And if you make do with contract creation as offered by contract-lifecycle-management software, you might well be missing out.

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.