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Getting better control of your legal contracts

15 June, 2022

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The legal department in a multinational organization often struggles to secure that it has control of their legal contracts.

In this respect, you can divide the legal contracts into two main origination categories;

  1. Contracts prepared in a standardized environment, i.e., in a sales process.
  2. Contracts prepared “ad hoc” in Word with or without standardized templates.

Contracts under point 1) are usually prepared in a standardized way with a process that implies control of at least the preparation stage.

Contracts under point 2) are often outside any control regarding both preparation and monitoring. However, many organizations have implemented e-signing tools that make it easier to have contracts signed but have not implemented a more holistic approach to contract control.

Below we share our insights from discussions with multinational companies regarding the control

of “ad hoc” contracts.

What do we mean by being in control of legal contracts?

To be in control of “ad hoc” contracts, we have identified the following areas of concern.

  • Have up to date data regarding parties involved in the contract – everyone uses the same data
  • A process for mandatory review of certain types of contracts by legal or other functions – raise the quality of the contracts prepared
  • Have up to date data of whom can sign in a contract sign off process – secure that you always have the correct signatories
  • E-signing tool – complete and document signing of contracts in an efficient way
  • Contract life cycle management – secure that you keep track of contracts in the right way. Read more about this in our article: Contract management – a process from drafting to monotoring and archiving
  • Contract claims management – secure that any claim related to a contract is documented and managed in the right way

 

What shall you think about when setting a solution for “ad-hoc” contracts control in place?

You want to find a solution that supports a flexible contract environment with integrations to different systems to bring the complete legal contract process into one seamless process.

It would help to consider the below areas when implementing such a solution.

  1. Consider making the solution available to as many stakeholders in the group as possible
  2. Any solution must be user friendly and easy to manage
  3. Master data, entity data, signatories, and similar information, should be automatically filled in by the solution
  4. Automatic transfer of contracts signed in an e-signing tool into a contract life-cycle tool, but with an option to add contracts
  5. Link contracts to a claim management (Tax risk) process

When creating an efficient process, the starting point is to integrate tools you already use in the group, such as Microsoft Word and your E-signing tool, with an Entity Management system, a contract life cycle tool, and a claims management solution. Doing this will ensure that the contract control process is accessible for everyone who drafts a contract in Word.

Integration with your E-signing tool enables the automation of the whole process. After drafting, you can send the contract for signing via e-signing and then have the document automatically transferred to the contract life cycle tool. By integrating, you secure that it is brought into your contract maintenance process, irrespective of where it was prepared.

Summary

Being in control of “ad hoc” contracts is a complex process. However, suppose you have a modern and flexible entity management system together with a contract life cycle solution and an E-signing tool. In that case, you should be in an excellent place to start building up a global contract control solution for your group.