publication of the International Legal Technology Association
Issue link: https://epubs.iltanet.org/i/395170
These risks include: 1. Corporate risk resulting from the company lacking a strong understanding of the scope of its contract portfolio and the risks associated with its contractually negotiated positions 2. The company being in breach or otherwise non- compliant with the terms of its contracts due to inadequate contract process controls 3. Loss of revenue due to inadequate enforcement by the company of its contractual rights with third parties 4. Regulatory and compliance risk due to the company's contracts having inadequate provisions to deal with compliance risks Establishing best practices for contract management will significantly reduce these risks while significantly reducing costs and improving internal controls. INTERNAL DUE DILIGENCE In many respects, as a company works to improve its contracting processes, it is in fact re-engineering these processes. The first step is for the company to conduct internal due diligence to document its existing processes and workflows. Then it can conduct a thorough analysis toward improving the efficiency of those processes. Any company with a robust contracting process will attest to the fact that performing internal due diligence is key to the success of such a project. There are a number of issues to consider when documenting existing workflows, including: • Who in each business unit is responsible for requesting that a contract be sent to a potential counterparty? • Who determines which person in the legal or procurement department will handle the request? • How does the company determine which form of contract to use? • Who is responsible for negotiating each contract and for maintaining communication with the appropriate parties? • Who is responsible for or has approval authority to make necessary changes in each contract? • Who is responsible for executing each contract? • In what type of contract repository are the contracts being maintained? • Who is responsible for uploading each executed contract into the contract repository? Once the company has answers to these questions, it can begin re-engineering its internal processes and determine the most appropriate allocation of resources. When employing a contract management system, implementation is only the first step. In order to measure the system's effectiveness, it is necessary to continually re-evaluate how the system is being used ILTA WHITE PAPER: OCTOBER 2014 WWW.ILTANET.ORG 38 About the Author Sailaja Meesaraganda is the Associate Vice President of Client Solutions at QuisLex, Inc. She designs and builds workflows and project plans for QuisLex's clients and is responsible for ensuring project delivery in line with client requirements. Sailaja actively manages projects in a variety of areas, including contracts negotiation, contracts review and analysis, M&A due diligence, post-merger integration and legal research, and she works with clients from a wide array of industries. Contact her at sailaja@quislex.com. About the Author David M. Klein is the Vice President of Legal Services at QuisLex, Inc. He works with clients to design unique, efficient and cost-effective solutions for their contracting and compliance-related challenges. David has over 20 years of law firm experience, including as a partner at Shearman & Sterling and Paul Hastings, where his practice focused on negotiating and structuring complex technology transactions. He has continually been recognized for his expertise in the field of technology and outsourcing transactions by Chambers USA and Legal 500. Contact him at david@quislex.com.