P2P

20 P E E R T O P E E R : I L T A ' S Q U A R T E R L Y M A G A Z I N E | W I N T E R 2 0 2 0 issues that are not in your template but may be common in the counterparty's template. The playbook should provide standard or acceptable language for a provision, along with a clear explanation for why it is required. This explanation can be used when commenting on the other side's template. The playbook should also provide fallbacks in case the other side will not accept your original response. Finally, the playbook should provide names of subject matter experts (SMEs) and escalation points for resolving difficult negotiations. Maximize use of preapproved clauses. Clause libraries with standardized fallbacks can be built into many CLM tools so they can easily be found and inserted into agreements when required. This saves the time often required to comb through precedent documents and enhances consistency by avoiding redrafting language. New fallback provisions should be added based on a review of closed agreements so that more issues can be handled without escalation in the future. Prioritizing fallbacks or developing conditions for usage will also facilitate responses to counterparty paper. AI tools can apply conditional logic to provide the best response for the particular transaction. For example, accounts can be organized into risk categories, with the highest-risk accounts receiving the alternative clause that most closely resembles the original language, while the lowest-risk accounts receive the most permissive alternative. Automate version control. Maintaining accurate version control enables the parties to focus on open issues and see relevant history. It avoids the need to keep rechecking that earlier changes have been incorporated. If you don't have a suitable CLM solution that automates version control, try standard tools such as SharePoint and Microsoft Word's Compare feature. ESCALATIONS TO LEGAL, SMES OR BUSINESS STAKEHOLDERS Put decision-makers in a position to resolve escalations. Ensure decision-makers have all relevant contextual and historical information so they can more quickly resolve open issues. A workflow tool can facilitate resolution through use of required information fields and routing capabilities. CLM systems that maintain negotiation records can also put needed information at decision-makers' fingertips and enable speedier resolution. Track escalation status. Escalations are one of the biggest causes of extended deal cycle times. Tracking escalation status, making that status visible to business stakeholders and sending reminders to decision-makers enable quicker resolution. Technology can partially automate this process by sending reminders and escalating tasks as needed, though good communication naturally remains vital. Establish clear governance and decision- making authority. Often, more than one decision- maker is identified as the escalation point for a topic or provision. A best practice is to establish the person or organization responsible for the ultimate decision that should be consulted or informed. This will speed decision-making and remove the likelihood of forum shopping among multiple decision-makers. If organizations rather than people are designated as decision- makers, it's also best practice to maintain a list of specific persons within the organization who are currently responsible. RECORDING THE CONTRACT AND KEY INFORMATION Record the fully executed agreement. CLM systems and workflow tools enable signed contracts to be stored in the designated repository. Stored contracts can be OCRed to enable easy searching across executed agreements held in the repository. Many CLM systems require a contract activation step after storage to complete and close the record that was created upon initial request. In addition to storing the signed contract, it is best practice to create contract summaries, extract key data and add tags to facilitate better searching and filtering to find agreements and provisions. Use the stored information to manage the contract. Stored, standardized information gives contract managers instant access to important data such as contract renewal triggers, potential revenue leakage, obligation tracking and management and SLA compliance. AI tools enable deeper analysis of risk, compliance, financials and other information across accounts, agreement types, geographies or other filters. A Virtuous Circle Once you start to standardize and automate contract management as described above, creating new contracts gets easier each time. After you've defined your organization's risk tolerance and the terms and conditions that can be accepted, business stakeholders can safely 4 5 F E A T U R E S

• Cover