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Structured Intake For Commercial Contract Review

January 2, 2022

Legal Talent Outsourcing

Intake is Critical to Commercial Contract Lifecycle Management

Commercial contracts are the lifeblood of business but historically have created huge headaches (and workloads) for corporate legal departments. In-house lawyers get bombarded with requests to review, negotiate, and approve commercial contracts and often struggle to keep up with the immensity of the challenge. Sending contracts out for review by a law firm is not always feasible or advisable due to budget and time constraints. But attempting to do all the work internally can grind business to a halt. It’s a big problem.

The solution does not lie in merely throwing more resources at the problem. It involves having better systems in place to streamline the process. With better systems, which lead to better allocation of resources and improved results, in-house lawyers can extract themselves from perpetual contract review busywork and immerse themselves in more sophisticated, value-added legal work.

Of utmost importance is contract intake. In our experience—and probably yours, too—a contract review request that doesn’t start out well, rarely ends well.
 

The Problems with an Ad Hoc Intake Process

Earlier this year, Deloitte and World Commerce & Contracting released a report called “When Technology Meets Humanity: The Future of Contract Management.” The report notes that, “Among the many impacts of the COVID-19 pandemic, organizations discovered the frailty of their contract management systems and processes.”

It went on to observe, “As markets and supply chains were thrown into confusion, contracts proved difficult to find, hard to analyze and often provided little or no useful support in managing unfolding events. With customer and supplier data scattered across multiple applications, the absence of reliable contract lifecycle management systems exposed the fragmentation of critical business information.”

These are classic symptoms (i.e., difficult to find, data scattered, etc.) of an ad-hoc contract review process—and more particularly an ad-hoc contract intake process.

In an ad hoc environment, contract review requests flow to corporate legal environments through many channels and from many sources. There is little discernment between what types of contracts get submitted to which in-house lawyers (or outside law firms). Often, that decision comes down to past practices and personal relationships rather than thoughtful, strategic consideration. Without systems and checklists in place, it’s common for contract submitters to make requests without including all of the information that lawyers need to do their jobs.

All of these ad hoc symptoms can lead to negative consequences, namely a commercial contract review process that is slow, inefficient, costly, and that leads in-house lawyers to become frustrated because they are unable to operate at their highest potential. Moreover, blame is cast upon corporate legal departments by businesspeople who perceive lawyers, who may not have the information they need to do their jobs, as the bottleneck that is slowing down contracting processes within the company. When business slows down because contracts can’t get approved at the pace business units desire, the refrain “it’s stuck in legal,” although often unwarranted, becomes increasingly common.

Working with Lexitas to design and implement a structured intake process can alleviate these problems, generate more value for the company, and allow in-house teams to allocate their time and resources more effectively.
 

The Promise of Structured Intake

To understand the benefits of a more structured intake process, consider an example from our experience working with a Fortune 500 telecommunications company. Its contract review practices had all of the typical hallmarks of an ad hoc process:
 
  • Legal work was distributed one-off rather than through a centralized intake system
  • Information accompanying requests was incomplete or inaccurate
  • Submitters were not trained regarding what was needed and what to expect
  • Legal work slowed down because lawyers did not have what they needed to do their jobs
  • As a result, everyone was frustrated and the business couldn’t operate up to its full potential
By viewing the situation with a fresh perspective, we quickly determined that what was needed, first and foremost, was a structured intake process. Just as a defect or error at the start of a manufacturing assembly line will derail the entire production process, ad hoc intake instigates and exacerbates inefficiencies throughout the entire contract review process.

We worked with the client to craft an intake solution that allowed for contract submissions to be gathered in a structured, organized fashion, which then enabled the client to allocate, review, and analyze work in a much more effective manner.

While every client situation is unique, and each intake system we design addresses the context and circumstances of the situation, intake is always based on certain fundamental principles, including:
 
  • The assessment of current practices in order to identify problems and opportunities for improvement.
  • The creation of a centralized, technology-enabled portal (a website or designated inbox) through which all contract review requests must be submitted, and that require submitters to include all information necessary to complete review.
  • The formal training of submitters so they understand the process requirements, and the distribution of standardized checklists that reiterate processes for future reference.
  • Ongoing review and refinement of intake to ensure that contract review evolves along with the business.
As our client experienced after refining its own intake processes, there are great benefits to be realized from more structured intake. For one, it allows lawyers to be elevated to their highest and best use. Internal and external lawyers are among most businesses’ highest-cost resources. Those resources are misallocated when lawyers are forced to chase down information that’s needed for them to do their jobs. With an effective intake system, lawyers have all of the information they need from the start. They can do what they do best—grapple with complex problems—rather than scrounging for details.

In addition, when better intake systems are in place, legal work moves through the contract review process more quickly. Business units and businesspeople get what they need when they need it in order to keep customer and supplier/vendor relationships on-track and cash flowing.

Finally, structured intake enables the entire process of contract review to improve over time. When requests come into a centralized portal, the process of allocating work to the appropriate in-house or external resource becomes easier. When requests are made with all necessary information included, the process of legal review becomes more efficient. And when data is aggregated from the start, the process of management information—which is the way legal departments organize and communicate regarding the information it generates—is more effective.

Bottom-line: For companies big and small, structured intake for commercial contract review creates a virtuous cycle that leads to better business results, as opposed to the vicious cycle that flows from an ad hoc approach.

To learn more, and for assistance designing contract review systems and processes for your company, please contact us. At Lexitas, our Commercial Contracts Outsourcing team specializes in designing and implementing contract lifecycle management systems that help corporate legal departments optimize every aspect of their contract management processes.
 
Author Image

Meron Hewis

President of the Legal Talent Outsourcing

Meron Hewis is the President of the Legal Talent Outsourcing Division of Lexitas. Ms. Hewis has over 20 years of experience in legal consulting, project management, and alternative legal talent outsourcing solutions. She is a thought leader in the industry, providing unique legal solutions and designing the operations of various legal programs internationally.

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