Yesterday Tim Cummins of the International Association for Contract & Commercial Management posted this item on his blog. It’s on the need for change in contracts, a subject Tim writes about regularly. Tim is used to my nagging, so I permit myself the following thoughts.
Tim’s post was prompted by a recent IACCM webinar on the new ASC606 revenue recognition standard. He begins his post as follows:
“We must think about contracts as the foundation for business operations”, observed Steve Harmon, Deputy General Counsel at Cisco. “We’ve reached the end for strategic ambiguity in contracts – there is a need for far more clarity”.
At various points in his post, Tim echoes this notion:
This requirement simply reinforces the existing pressures for better designed contracts and for robust processes supporting data extraction, dissemination and monitoring.
…
Contracts have been obscure, yet now they must be increasingly transparent and designed for active use.
…
Over the next two years, we will see a fundamental reappraisal of contract design and wording, challenging the way that traditional legal drafting has occurred.
To which I say, change doesn’t happen because we want it to happen. It happens when we make it happen.
More specifically, contracts don’t become clearer and more relevant just because we say that’s what has to happen. On what basis does Tim predict fundamental change?
I too am willing to predict change. That’s because I know exactly what that change consists of, and I’ve provided detailed guidelines for achieving that change.
As it happens, one tiny example of what change looks like can be found in my analysis of a core Cisco template, which I posted on my blog in September 2014 (here).
That analysis addresses just one topic, what I call “the categories of contract language.” It’s part of a broader analysis I did last year after hearing Mark Chandler, Cisco’s general counsel, say during a public interview at the ReInvent Law NYC conference that if you think you can help Cisco’s law department, your best bet would be to provide details. (In the end I didn’t succeed in getting Mark’s attention.) My analysis demonstrated, at least to me, that the sensible thing to do with Cisco’s template would be to start over.
So I would ask Steve Harmon how this Cisco template relates to his statement that there’s a need for far more clarity.
Furthermore, change doesn’t happen just by having a set of guidelines out there. It doesn’t even happen by training your contracts professionals, as giving people contract-language survival skills doesn’t ensure the sort of consistency and efficiency that you need if you’re to have a demonstrable impact on your contract process. Instead, you need centralized initiatives of the sort I described in this recent post at Contract-Automation Clearinghouse.
The sort of grand change Tim discusses simply won’t happen with contracts cobbled together using dysfunctional traditional language, just as you can’t expect a semiliterate to write the great American novel.
