April 10 by Prashant Dubey

Top Contract Management KPIs to master CLM

“Mastering Contract Lifecycle Management” is a 15 part, bi-weekly series writen by Prashant Dubey, CEO of The Sumati Group, dedicated to expanding your mastery of Contract Lifecycle Management (CLM). The series is divided into 5 parts and encompasses the entire lifecycle of purchasing a CLM solution, including: the research phase, launching your CLM project, implementing the key building blocks, strategies for driving user adoption, and continuing down the road to success. Enjoy!

I’m pretty sure the UConn Huskies had a playbook when playing The Mississippi State Bulldogs to determine which one of them would appear in the National Finals for College Women’s Basketball. As the world now knows, the playbook did not yield a win for the Huskies. Should the playbook be thrown out? Hardly. It did yield over 100 straight wins for the UConn women. Not a bad set of outcomes.

What is a Contract Negotiation Playbook

Negotiation playbooks for contract management are similar. They contain a series of decisions that can be made at certain ‘crossroads’ with an expectation of a particular outcome, based on the decision. The outcome may not always be achieved, but history indicates that the likelihood of the outcome is pretty high. The similarity ends when considering a situation where the outcome is not achieved. In these situations, there is an escalation path in a contracting playbook to determine how to get to an outcome that may be acceptable. I suspect there is no such pathway in the playbook the UConn Huskies used in the semi-final game. There is no other acceptable outcome other than a win. Once the win was not achieved, the game playbook was set aside. The season was over.

Why Negotiation Playbook Are Critical For Contract Success

Should a company abandon the idea of a contract negotiation playbook because it may sometimes yield a suboptimal outcome? Hardly. Negotiation playbooks are critical for a number of reasons including:

  1. Translating “Tribal” knowledge into institutional knowledge – Knowledge solely in peoples heads makes it difficult for it to be used more broadly by the company
  2. Enabling “work” in a negotiation to be distributed to teams or technology best suited to conduct the work most efficiently – Should a 1st pass review of an NDA go to a senior lawyer in the legal department? Probably not.
  3. Creating an audit trail for decisions – In the world of increasing governance, compliance and the need for demonstrating good faith behavior, a playbook can be the difference between a single event sanction and a wide-ranging penalty:  “Look Judge, I know we didn’t do things right, but this playbook shows that we tried to do the right thing.”
  4. Outlining opportunities for standardization – Some lawyers believe that all their decisions and output are bespoke. They are artisans where every world they type (or write) is a work of art and needs to be treated as a one-off. Fortunately, these lawyers are in the minority these days.

A negotiation playbook allows their brilliance to be empirically documented through a set of instructions that represent past decisions and the achieved outcomes. It “industrializes” brilliance.

Ask Questions Because History Does Repeat Itself

A negotiation playbook is simple in construction. It is a document specific to a contract type that contains the most negotiated provisions in a contract and outlines the decisions, or alternate provisions, that can be made if a provision is redlined by a counter-party. These decisions can be ranked by risk, efficiency of contracting, legal requirement or even frequency of occurrence, which is least likely. Teams or tools can use negotiation playbooks as a reference guide when a contract negotiation crossroad is reached.

The best way to create a playbook is to use history. Redlines have been adjudicated in the past and contracts have been signed. Identify the most negotiated provisions by identifying those most redlined. Outline the delta between the starting template and the ending executed contract. Ask questions of the contract creators and negotiators as to their rationale behind a particular provision. Once you review 5-10 of these, per contract type, you likely have the “guts” of a playbook. This history is the best way to create a playbook that will be actually used the day it is put into production.

 

Creating negotiation playbooks is not a difficult exercise. However, maintaining the organizational discipline to use the playbook and iterate it based on actual experience takes a lot more effort. Being able to do this however, will yield benefits. I suspect the Lady Huskies of UConn will not throw out a playbook that yielded the longest winning streak in college basketball, simply because of a last second, unexpected bucket.

Be sure to check back on April 20th for the next edition of “Mastering Contract Lifecycle Management” to learn strategies for driving user adoption.

To learn more about creating a nondisclosure agreement clearinghouse, visit the previous post – HERE.

The “Mastering Contract Lifecycle Management” series is written by Prashant Dubey, bestselling author of The Generalist Counsel and CEO of The Sumati Group, which is the Apttus premier contract migration partner.

Download the Forrester Wave Contract Management Report for Free (a $2495 value) to see a full analysis on the top CLM vendors.

Trending Blogs