CONTRACT LIFECYCLE MANAGMENT: An Introduction to Global-wide
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Impact of the Great Resignation on Legal Department Contract Workflows and Knowledge Management
Imagine this scenario: you are the General Counsel of a mid-sized public company. Today, immediately before your 2pm weekly meeting with the CEO, you receive an email from one of your senior lawyers with 15 years tenure at the company and another email from a more junior lawyer who only joined two years ago from a prestigious law firm – both announced that they are leaving the company for new opportunities. You are not overly surprised by these resignation notices, as you knew both lawyers were looking for salary increases to keep pace with the market, but are deeply disappointed that the company could not retain either of these individuals. The senior lawyer led all of the company’s commercial contracting and was the key point of contact for large revenue-generating negotiations. The senior lawyer, while terrific at her work, did not follow many standardised processes and relied primarily on instinct and experience. The junior lawyer was just starting to organise the legal department, including standardising contract templates and documenting the company’s risk profile and approach by producing its first contracts manual and playbooks. That is a lot of talent and institutional knowledge walking out the door! You know the CEO is going to ask you about these departures and now you are left scrambling trying to figure out how to replace these top performers.
Realisation quickly sets in that nearly all your focus as General Counsel over the past few years has been on reactively responding to the daily business needs and crisis after crisis. Your company has fortunately made it through a tumultuous two years yet you are consumed with the increased daily business demands and pressures your in-house legal team faces. You’ve spent the past few years scaling your team, hiring more senior lawyers and subject matter experts, but many of your lawyers seem overwhelmed with their workloads and, in addition, some are struggling with accepting returning to the office full-time and prefer the convenience of fully remote work.
You haven’t spent as much time as you had hoped proactively building your legal team's workflows and processes, creating backup repositories, centralising learnings and best practices, creating succession plans, and implementing effective technology solutions. Many of your colleagues have encouraged you to hire a legal operations professional to help the department with these initiatives but you were resistant until now. Perhaps a professional with such operational skill sets would help you put processes in place to help offset the loss of legal talent in an environment of rapid inflation and a hot job market causing increased pressure on wage levels.
There are a multitude of external solutions available that could help this General Counsel as well. One such solution is retaining a temporary replacement lawyer from a placement firm. While this solution could undoubtedly help direct immediate resources at a vacant position, thus freeing up some bandwidth across other department resources that might be more stretched, it’s a challenging long-term solution due to high costs and the impermanence of the staffing model used. Traditional law firms, while best adept at providing timely advice from subject matter experts, are also a challenging long-term solution given cost considerations for most companies that impede law firms’ abilities to truly embed their practitioners alongside business units. Lastly, technology solutions vendors, such as AI-enabled contract lifecycle management tools, can be a fantastic resource if your legal department has the bandwidth to manage implementation of new systems and ongoing administration. These solutions, however, are fragmented across different practice areas and oftentimes require already overburdened legal departments to find the time to train AIs or update playbooks in order for the AI to review against to be most effective.
Retaining an alternative legal services provider (ALSP) is another solution this General Counsel could employ to help document and standardise her company’s institutional knowledge thereby softening the blow of attrition. Implementing a sustainable solution to maintain and transfer a company’s institutional knowledge should have a combination of staffing experienced legal professionals, developing processes and workflow capabilities, and utilising best-in-class technology solutions. ALSPs are able to offer a ‘one-stop-shop’ approach to meet these requirements, and do so with significant cost efficiencies using a combined onshore and offshore model.
Enhancing Contracts Workflows
ALSPs that are technology agnostic have the ability to test and select from a wide array of technology solutions that focus on contract lifecycle management (CLM), which are increasingly coming into focus as companies realise the cost and time savings that are possible. Having the ability to choose from dozens of competing AI-enabled contract abstraction and review tools, as an example, allows for the customisation of service offerings to potential clients, integration of third-party technology within in-house proprietary solutions, and enables seamless connectivity with clients’ systems. ALSPs employ their own technologists, software engineers, and six sigma process experts that pair with legal professionals to deep-dive into a potential client’s needs to build out workflow solutions for them.
The General Counsel in this hypothetical leads a legal department staffed with accomplished lawyers and subject matter experts. The work they perform on a day-to-day basis surely is high-quality; however, unless this workflow has been analysed and captured, chances are what these lawyers do is highly manual in process. The ALSP business model is to take what is done manually and attempt to automate that workflow, thereby making knowledge less person-dependent. From setting escalation triggers for contract negotiations, or deploying an AI-enhanced technology solution for contract redlining and analysis, the model of embedding external legal professionals for several weeks or even months across client teams fosters a culture of learning and development that is hard to replicate. The end result is enhancing a legal department’s productivity and minimising disruption caused by staff attrition.
Today’s C-Suite executives treat legal departments with the same scrutiny as business units, and the advent of the legal operations role over the past decade has undoubtedly been as a result of senior management looking to drive greater efficiencies from their teams of lawyers and staff professionals. The use of data analytics and KPIs in a modern legal department only serves to drive a greater focus on improving contract workflows. General Counsels can no longer ignore this data-driven approach and should instead embrace it to help identify strengths and weaknesses and drive sustained performance of their teams.
Formalising Knowledge Management
Having a senior lawyer with 15 years of institutional knowledge walk out the door can be daunting for any organisation. It is virtually impossible to hire or train a resource to step right into that person’s shoes and have the same level of impact. Nevertheless, one way of mitigating the significant risk of knowledge loss is to formalise and document your legal department’s institutional knowledge that has been developed over hundreds if not thousands of contract negotiations spanning commercial areas, procurement, IT agreements, software licensing, sales/marketing and distribution agreements, etc.
The challenge with capturing knowledge management is that it takes a proactive approach to do so, hardly a luxury many overburdened legal departments can spare the time for. When you are dealing with crisis after crisis and dedicating all your time to reactive advice, finding the time to undertake effective knowledge management can seem like an impossible task. ALSPs are in a unique position to help companies with capturing their knowledge in the form of searchable contract repositories, standardised contract templates across geographical regions, contracting playbooks, checklists and manuals, company-approved clause banks and fallback positions, and documenting other key risk parameters. Once this documentation is finalised, it can be shared with new joiners who will be able to ramp up faster than if they could only rely on scheduling handover calls with exiting staff or searching through their predecessor’s email archive and files to get a sense of how things work. An obvious win-win for the company and the savvy forward-thinking General Counsel who took the decision to put it all in place.
Similar to the value add from enhancing contract workflows discussed earlier, formalising knowledge management helps automate the legal department’s activities, thus allowing for less person-dependent decision-making. The Great Resignation has served as a catalyst for legal departments to face this reality head on, and increase their reliance on service providers such as ALSPs to help them build a more sustainable model for the future. Employing seasoned lawyers and staff professionals is a great start, but taking the time to build out technology-enabled contract workflows and document institutional knowledge is no longer a 'nice-to-have' initiative. It’s a must-have for the modern legal department looking to thrive well beyond today’s challenges, and instead anticipating what tomorrow may bring.
By: Shanil Vitarana, QuisLex Executive Director, Global M&A and Corporate Solutions