#contract process

Change. The mere mention of the word generates multiple emotions. As professionals, particularly in the tech and professional services sectors, we know we’re supposed to embrace it, sell it, and support it. But in the context of OUR internal organizations and operations, we flinch. In fact, some of us get downright petulant, almost reverting to holding our breath and stomping feet. And those responsible for implementing the change – whether it be a procedure, a policy, or a system/app – have to deal with that resistance, while somehow staying on schedule and ensuring broad user adoption. No wonder certain implementers can sound like esteemed Captain Bart Mancuso (played perfectly by veteran actor Scott Glenn in the greatest movie ever made, The Hunt for Red October) when he says “Now if that ___ so much as twitches, I’m going to blow him straight to Mars”.

Hopefully change-related tensions don’t rise to this level in your company or agency, and your implementation teams are a bit more friendly, mature and flexible. Every change manager should understand that the acceptance of change is challenging.

Some might argue that change is more difficult for certain functions. One of the most important processes in any business is the handling of quotes, proposals and contracts. After all, contracts date back to our old friend Justinian’s law of the 6th century CE/AD as cornerstones of a developed market economy, and have increased in significance, particularly as business increases in complexity. Entitlements, obligations, and value corresponding to each party continue to be captured in contracts, but with the advent of business intelligence tools and sophisticated databases, tactical and strategic advantages inure to those organizations that mine data from their contracts most efficiently. So every large, successful corporation must be embracing contract process transformation initiatives, right? Not even close. Perhaps more than others, contracts, legal, and compliance professionals generally LOATHE change. Go ahead and implement a new HR or finance system, but don’t touch the way we do our jobs! Any lost time, lost information, or even worse, lost document(s) could be fatal to the company (so we think). As Admiral Painter said in Red October, “This business will get out of control…it will get out of control and we’ll be lucky to live through it!” (That’s a bit of an understated response when someone proposes a contract transformation program in MY department, but you get the idea.)

Nevertheless, contract transformation must occur. We’ve established that the handling of proposals and contracts is critical to a successful organization. If that’s the case, it should logically follow that the contracting process must perform at peak operational efficiency and effectiveness, with the best tools currently available. Contracts, legal, and compliance practitioners should never be the “red-headed stepchildren”, using outdated apps and byzantine procedures solely because “that’s the way we’ve always done it”.

The COVID-19 pandemic has challenged every aspect of our society, and contracting processes are no exception. If your department hasn’t gone through a transformation recently, COVID has likely generated a host of reasons to consider changes. For starters, where your team will work is a daily consideration, and the subject of thousands of webinars, white papers, and advisories. Smashing silos between departments is now a necessity, not a luxury from a consultant’s wish list. And completing such a transformation in a timely manner must occur to keep the company afloat. But before any other change initiative is considered, there’s now a sine quo non of transformation in 2021: employee safety. Pressures to return to an office environment will mount as infection rates drop; however, the benefits of in-person collaboration and employee-company stickiness shouldn’t ever trump increased risk to your team’s physical and emotional health. Stay tuned as this dynamic evolves through the coming months of vaccine mandates and booster shots.

Environmental, Social and Corporate Governance (ESG) matters, as well as Diversity, Equity, and Inclusion (DEI) considerations, are now part and parcel of contracts teams, from the retention of consultants in these areas to the increased utilization of diverse suppliers, partners, and subcontractors within the business. Entire proposal sections on ESG issues may have to be drafted, and contracts professionals may be called upon to provide substantial input into these developing responses. With respect to DEI, our colleagues in the government contracts arena have been utilizing tools to discover, partner with, and monitor/report on the performance of diverse subcontractors for over four decades; the contract formation and management practices used in that market could jump start a team’s ineffective – or non-existent – diversity supplier program. Process and system transformation will need to accommodate these critical areas.

Much has also been written about cloud systems and apps that facilitate remote work, and our blog from earlier this year on Contracts Lifecycle Management (CLM) systems addresses the jewel in the crown of remote contracts work. Collaboration tools, packaged home office setups, and mobile applications should also be considered to replicate the pre-COVID ways of working as much as possible.

In terms of your team’s structure, changes may be required to your wiring diagram to improve efficiency and reflect the dramatically altered circumstances. Schematic adjustments alone don’t often yield tremendous results, but in the current environment, and under the aegis of process transformation, reporting structures should be examined, particularly involving coordination with Legal and Finance departments. The placement of the contracts team – as either a centralized shared service, within a business unit, or in a hybrid structure, is also an issue to be addressed. Substantively, real estate, insurance, supply chain, third party partners in the remediation/testing field, and bankruptcy issues will likely demand equal footing with the typical front-runner of customer contracts.

This blog could go on for hundreds of pages on the topic of change management alone. Mandatory requirements include:

Ø Very public senior leadership support

Ø Transparency from start to finish

Ø Focus initially on managers – their buy-in is essential

Ø It’s all about relationships – don’t ever forget that, and use them within and outside of the process

Ø Develop and deliver training throughout the initiative

Specific transformation activities should focus on:

1. Contracts team performance, as measured against internal SLAs and KPIs

2. Skills of team members

3. Budget management

4. IT systems and apps

5. Terms and fallback position standardization (“playbook” creation, distribution and training)

6. Utilization of external resources and consultants

7. Common project management practices

Best practices in structuring the transformation exercise include the following steps:

Ø An initial diagnostic assessment of functions and then-current performance

Ø Survey of stakeholders and analysis of results against benchmarks

Ø Creation of a new contracting strategy

Ø Assessing IT tools that will facilitate the transformation for multiple years

Ø Messaging the urgent need and advantages of changes

Ø Creation of change agent allies and identification of specific team members for this role

Ø Measuring and monitoring progress

Merger and acquisition (M&A) integration activities must also be reflected in your contracts team transformation program. This includes both previously integrated entities/staff as well as future organizations. A packaged, M&A-centric version of your transformation program must be created as a major quick reaction process with your entity integration plan. This doesn’t have to be an immediate “break glass, pull alarm” response, but as discussed above, should be implemented sooner rather than later given the criticality of contracts to the overall business.

“Hey Ryan – be careful what you shoot at. Most things in here don’t react too well to bullets.”

Another aspect of change management (at least as taught to us at PwC) is to cajole and convince, but never go in with guns blazing. After all, facts and logic are in ample supply – you shouldn’t have to utilize a scorched earth approach. Does that mean every colleague will warmly embrace the changes? Absolutely not. But verbal bullets fired at your own team members shouldn’t be an option.

“When he reached the New World, Cortez burned his ships. As a result, his men were well motivated.”

While a Genghis Khan communication strategy shouldn’t be employed, weak, nostalgic messaging that undercuts the transformation and questions the need or approach for change will doom the program. Burn those ships sailing against the initiative. That doesn’t mean all of the prior procedures, approaches, systems, or contract terms were poor, or should be abandoned. But broader statements questioning the need or wisdom of the transformation must be torched.

Make your difference count.

My ego took a trip yesterday.

It wasn’t a long trip, but it was long enough for me to realize that no matter where I go, my ego comes with me.

You gotta pack the right ideas, thoughts, feelings, beliefs or your ego will attempt to step in and sidetrack your journey.

One of the foundational process of Choices Seminars is to find your contract word(s) that will remind you, in those tight or sticky…

Residential real estate closings are handled in several different ways among the various states. In some states title companies handle the process; escrow companies in others. In Georgia, most closings occur with the assistance of an attorney who specializes in real estate transactions.It is important that you understand home buying contract terminology during the closing process.

Representation- Regardless of whether a choice is permitted, the attorney represents only the lender. Because of ethical considerations due to a possible conflict of interest among the various parties to a closing, an attorney representing the lender should not represent any other party to the closing. Therefore, if the borrower desires representation, independent counsel should be obtained. Of course, if a lender is not involved in financing the transaction, the purchaser will select an attorney to represent his or her interest.

Functions of the Attorney- An attorney selected after the signing of the contract of sale to handle the closing with the potential buyer, customarily will examine the title to the property, prepare the sale and loan closing documents, conduct the closing, arrange for the recording of the closing documents, issue the lender’s and, if desired, owner’s title insurance, and disburse the lender’s and/or purchaser’s funds.

Owner’s Title Insurance- Owner’s title insurance is designed to insure the owner against loss suffered because of claims made against the title to the property. The policy typically insures against those matters, which were not or could not have been discovered by a proper title examination of the property, subject to specific exceptions to coverage detailed in the policy. As with all types of insurance, deciding to purchase is only part of the job; determining, for example, whether certain exceptions to coverage are acceptable or in accordance with the contract of sale, takes additional consideration, and an attorney’s advice may be helpful in such a decision. A new survey is highly recommended. Without a current survey, the homeowner’s title insurance policy contains an exception for all survey matters so that the risk of financial loss due to survey problems rests solely with the buyer who opts not to purchase a survey at closing.

If you choose not to purchase owner’s title insurance, if someone were to make a claim against your home, it would mean that you would have to withstand all expenses involved with the defense of your rights, and could even result in complete loss of your equity if your defense proved unsuccessful. When looking to select a company to insure your owner’s title, look for financial strength, experience in all phases of title insurance, efficiency, and dependable service to policy holders.