Who is best placed to make decisions about a company’s contracts? I don’t know; I guess it depends.
How about the general counsel? After all, they should have the broadest perspective, and they should be able to think long-term: How much longer does each deal take because our contracts are wordy and confusing? What’s the risk of our exposing ourselves to risk of contract disputes over confusing contracts? How many deals do we lose because our contracts are too risk-averse? But if the GC has a background in contracts, traditional contract language might be all they know. And if they don’t have a background in contracts, they might be inclined to leave to others all decisions about contracts.
How about the lawyers responsible for contracts? After all, they’re the ones who know the contracts best, and they’re the ones who are lumbered with more work because of templates that are bloated, confusing, and don’t address the company’s needs. But they might be heavily invested in the current system. They might lose face if someone were to come along and demonstrates that the templates they’ve curated leave a lot to be desired.
How about the business department that relies on a given set of templates? After all, they’re the ones who have most at stake. If they’re able to get deals done faster using templates that are shorter, clearer, and more effective, they make more money. But they might regard contracts as lawyer stuff, so they defer to the legal department. And they might be allergic to change.
So it all depends on the individuals involved. Are they ambitious? Do they have imagination? Are they willing to try something new? If so, the company might be able to overcome the black-hole forces of inertia and actually do something about their templates.
Mind you, you can’t assume that you necessarily have to do something. First you assess what’s in your contracts, then you decide. (See this post for more about that.) It might be appropriate for you to do nothing. But given what I’ve seen …
2 thoughts on “Who Is Best Placed to Make Decisions About a Company’s Contracts?”
The transactional attorneys, hands down. They work with the contracts every day. They know what provisions get fought over. They know what the other side is likely to accept when it comes to drafting new provisions. And they’re probably the only people in the company who actually know, or care to know, the first thing about contracts and good drafting (even if most of them are still not very good at it),
GCs, in my experience, are usually culled from the corporate/M&A world and generally don’t have much background in contracts. Even if they do, they’re typically just not all that interested in the sales/transactional side of things. In a lot of companies, the transactional attorneys don’t even report to them but rather to the CFO or SVP Sales.
Business folks are a definite no because a) virtually every one I’ve ever met is severely allergic to anything remotely legal/contractual, and b) there’s a serious conflict of interest in that they are strongly incentivized to get deals done, while having no real accountability if the contracts lack adequate protection for the company. An unwritten but well-known part of every in-house transactional attorney’s job description is protecting the company from its own salespeople. Putting the business folks in charge of the company’s templates would be something like having the fox design the henhouse’s security system.
As for the inertia concern, there are always going to be people who are set in their ways, but I think the transactional attorneys would typically most open to change because they have the most to gain, personally, from good drafting. Good drafting means shorter and less contentious negotiations, which makes their jobs easier and more enjoyable–not to mention makes them look good to their business colleagues and executives. And I don’t think they would be all that worries about losing face, because they know no one outside their department is likely going to spend any time studying either the old or new contract terms. They’ll just see it reads better, looks better, and gets deals done faster, which, again, makes the transactional attorneys look great.
I’m not so sure about that. I think it’s often the litigators. I learned most about drafting by listening to litigators curse the language used by the transactional attorneys, who are sometimes concerned with form over substance. This is especially the case with government contracts, where they often cite entire paragraphs of regulations or statutes.
Ultimately the person best-positioned is an experienced person with a clear set of goals who cares and who decides to take on the tasks of learning, reviewing, and revising. That person’s work can then be reviewed by business people, transactional attorneys, and litigators.