When paralegals are looking at alternative paralegal careers outside the popular litigation paralegal field, contract management does not usually come to mind. However, there seems to be an increase in paralegal job opportunities in the field of contract management. But what exactly is contract management?
Introduction and Concept
According to a reference quoted by Wikipedia: “Contract management or contract administration is the management of contracts made with [other entities] customers, vendors, partners or employees. Contract management includes negotiating the terms and conditions in contracts and ensuring compliance with the terms and conditions, as well as documenting and agreeing on any changes or amendments that may arise during its implementation or execution. It can be summarized as the process of systematically and efficiently managing contract creation, execution, and analysis for the purpose of maximizing financial and operational performance and minimizing risk. [Wikipedia took this reference from “Best Practices in Contract Management: Strategies for Optimizing Business Relationships.” Aberdeen Group. Retrieved 2008-07-10].
It has been my experience that contract management has been regarded by many companies as a highly underrated overhead expense that is “a nice to have” but “not a must-have.”
Hopefully, our business decision-makers have had a change of heart since the impact of COVID-19 left them vulnerable, businesses were/are scrambling, they are reacting to a number of risks because of many compliance issues, sizeable profit losses, and struggling from going out of business.
A majority of the problems and issues businesses are facing can stem from:
(i) the lack of a contingency plan to handle this kind of anomaly;
(ii) an insufficient, unreliable, and/or lack of an electronic database that tracked the history of contractual matters and its contracts, lack of a contract management system or just a hard copy filing system; and
(iii) minimal policies and procedures governing contract management (and sometimes none!).
So, how do I take this concept of “contract management” and make it a full functioning living, breathing organism that’ll ebb and flow? I will tell you that there are many different methodologies and concepts that are used and relied upon to meet the end goal. This is dependent upon many variables such as the size of the organization, budget, industry sector, business purpose, current and future needs, wants, and so forth.
HERE ARE A FEW THINGS YOU WILL NEED FOR A VIRTUAL CONTRACT MANAGEMENT SYSTEM
1. A Knowledgeable Team of Subject Matter Experts
The most important part of having a successful contract management database system is to set in place a knowledgeable team of subject matter experts from the beginning who have done this before. They have seen the pitfalls and issues. Each business is unique; therefore, it requires a different type of expertise. Businesses will need a knowledgeable team comprised of a consultant, attorney, IT team, project manager, contract specialist, and/or a paralegal well versed in contract law and a knowledgeable in-house team lead.
It is recommended that all of the business stakeholders must keep an open mind and be truly vested in this project. Egos and politics must be parked at the front door.
2. An Understanding of the Business Needs
The contract management database should take into account business needs such as tracking dates, the information needed for audits, and reportables. Project ahead. Stay nimble. Be ready to pivot.
This is a way to actively keep a pulse on navigating and keeping accountability for all contracts in flight, active contracts, expiring contracts, problem contracts, and expired contracts. If you combine the contract management process with accounts payable, you’ll have more important bases covered.
3. A Plan for the Repository
A well-designed, accurate, and thought-out repository for a contract management database is one of the cornerstones for a successful business!
Accuracy and superior attention to detail are imperative for this project. Thinking of all of the angles while thinking of the past, present and future will help in laying down the foundation.
It is important to remember that data fields (a/k/a metadata) must be inputted only from one source not manually populated in different places within the contract management database system.
Remember garbage in, garbage out!
4. A Plan for Handling Issues
There are many businesses that have and will take a shortcut or two like changing philosophies, cutting corners, making management changes, changing business plans, changing the process mid-stream.
Then inevitably you will be blindsided by kinks in the system, what-ifs that weren’t accounted for, poor management, and communication. While you are trying to figure that out, your business acquires another business and then you have to map it over to your database if that is the case. This is why you want a good system and a good team in place.
As soon as conflicting information is found, get to the bottom of it ASAP. Hopefully, it gets nipped in the bud. Follow the problem to the root cause. If not, this is the beginning of the failure of the system. You must keep reliable, knowledgeable experts to manage the contract management database after the system has been put in place.
If the contract management database system becomes compromised, your colleagues will lose faith in it and everyone will be back to square one. When this happens, game over.
I have seen my share of failed systems. It causes a lot of confusion, finger-pointing, strained relations between departments…never mind the cost invested in implementing a contract management database system. It IS NOT pretty
It will take a lot of convincing in order for them to be able to rely on the contract management database as they once did. Communicate with all departments about what went wrong, ask for their business unit’s help in identifying issues and any contracts not in the database, talk about expectations, exceptions (there is always “one” exception to the rule), milestones, deliverables timeline, updates on progress … you get the picture. One too many band-aids will only make it worse. You will find yourself in a quagmire of quicksand.
Bear in mind, that you won’t catch everything nor will you be ready for an anomaly. There are a lot of moving parts. The more departments that use the database the more complex the database will become. Ensure you keep track of projects left undone, date, what the purpose was and where did you leave off.
It takes careful planning. Learning how the business works. How departments work with each other including, but not limited to putting the following into place in your contract management plan:
1. Introduction & Concept
2. Purpose, Goals & Benefits
4. Hard Copy Process & Shared Internal Database
5. Electronic Contract Management Database
6. Best Practices & Policies / Procedures
7. Working with Business Owners & Stake Holders
8. Utilizing Database for Complete Record of Engagement of each Contract
9. Long Term Strategy to Help Facilitate and Streamline Business Model
I will delve a little deeper into each section above in my future contract management articles.
Until my next blog, be well and healthy!
Meet the Author – Alice Kuo
Alice Kuo has over 15 years of experience as a Sr. Paralegal, Sr. Contract Paralegal and Contract Specialist. She has worked in ivy league law firms, in-house, and for a non-profit.
Her experience covers many business sectors and fields of law which has given her a wide breadth of experience in contract management. Including, but not limited to, expertise in research with a keen eye on authoring and reviewing contracts. Establishing/migrating/maintaining contract management databases with a trained eye to streamlining and improving processes and procedures providing guidance across cross-functional teams