The Legal and Procurement departments are vital in any organisation, each playing a crucial role in vendor and contract management. However, as highlighted in a recent interview on the Procurement Reimagined podcast with Rachelle Hare, these two teams sometimes struggle to work together.
I’ve seen this first-hand as I’ve straddled both teams in the last eight years.
Both teams want to work together but usually struggle due to their differing priorities, methodologies, and work styles.
This is where a Vendor and Contract Lifecycle Management (VCLM) platform can come into play and improve collaboration between the teams.
A VCLM platform, such as Gatekeeper, can improve the relationship between procurement and legal teams by offering a unified view of contracts, streamlining processes, and enhancing compliance and risk management.
1. Assign responsibility for vendor contract ownership
I’ve worked in organisations where Procurement deals 100% with vendor contracts and others where Legal must review everything. Both are usually ineffective and a hybrid approach is undoubtedly the best way to do this.
If you can categorise your vendor contracts via segmentation of their importance, as well as spend category and value, you can build a simple RACI that sets out who needs to review the contract terms depending on these factors.
Usually, lower-risk and high-volume contracts can be dealt with by Procurement if you have a contract playbook.
If you have a highly skilled Contract Manager in your procurement team, then procurement can take the reins for all contract reviews.
However, you need to build in that review and approval stage by Legal.
2. Build in a contract review
Legal doesn’t have the time or resources to be involved in every vendor contract. However, legal will prioritise risk and compliance within the organisation - something procurement teams are slowly incorporating. Legal needs to ensure that the final contract is fit for purpose, so giving them a point of approval could help.
But this isn't easy to do when all you have is an Excel spreadsheet that tracks your contracts and emails to ask for reviews and approvals. I’ve dealt with this pain point for many years.
Emails get missed by busy legal counsel team members, but not on purpose. However, this tends to cause friction and Procurement will look to do it independently if they cannot get legal support.
Rachelle Hare emphasised the importance of clear communication and the development of standard operating procedures between procurement and legal teams. She suggested implementing technology to streamline workflows and encouraged fostering a culture of trust and respect.
Rachel told me during our podcast that she needed “legal to understand what procurement does. So there's that training and upskilling and that working with them session and part of the process. Once they're at that certain level, that's where we can put in place the systems and the processes and the procedures then to allow them to work better together. I'm a massive fan of enabling procurement to do its own job”.
And of course, Procurement needs to understand what Legal does.
With a VCLM platform, both teams can access the same data and monitor the contract's status in real-time, fostering improved communication and teamwork.
That’s why I deployed Gatekeeper in my last role, to bridge the gap between Procurement and Legal.
3. Enhance Compliance and Risk Management
One of the primary responsibilities of the legal team is risk management, ensuring that contracts comply with relevant laws and regulations.
Rachelle Hare emphasised the importance of maintaining compliance and risk when managing vendors and contracts. She stated that managing these aspects effectively is impossible when information is fragmented, and risks are not fully understood.
A lack of visibility around your vendors, the contracts you have in place, and their obligations is an all too common issue. Not to mention knowing where your vendor contracts are in your contracting process.
One way to visually improve this is to ensure all vendor contracts go through a contract review process.
With this process, you can see in our VCLM platform every single “card”, which represents a contract, and which stage of the process it’s at. In point one, I stressed the need for a RACI because you must assign owners in this workflow to route your contracts to the correct people.
By doing this, we can bring Procurement, Legal, and whoever else is needed at various gates to ensure the correct reviews are undertaken. Thereby staying abreast of any risks and compliance issues.
My bonus tip is to keep a risk register where you can store risks identified during the contract review phase so that Procurement and Legal can proactively monitor and address these.
4. Use Pre-approved templates and Clauses
One question I was asked more than any other during my Contract Management days was, “What contract can I use with X?”.
Or “Where can I find our vendor NDA?”.
At times, these requests were passed on from legal to me directly. We all wanted an easy way to have this information on hand, but a combination of forms and SharePoint was not the answer.
My previous GC and Director of Supplier Management were thrilled when I showed them that we could build pre-approved contract templates in Gatekeeper and automate issuing these.
On this point, James Ince, Gatekeeper’s Learning Experience Developer, and I recently covered this during our Contract Review webinar, where we used our Contract Review Best Practice Workflow, which perfectly combines the relationships in Procurement and Legal.
The good thing here is that when someone needs to interact with a vendor, they only need to raise the request and provide some information. Because we’ve locked down points one and two, the VCLM platform will issue the correct contracts and show them to the people who need to see them.
The ability to provide Procurement with pre-approved contract templates and clauses means Legal feels in control of vendor contracting from afar. Legal knows Procurement will operate within the bounds of these templates, and if there are any deviations, these will be routed to legal via the digital workflows.
All of this is designed to reduce friction and get Procurement and Legal working better together.
Closing Thoughts
I’ve used VCLM successfully across procurement and Legal to reduce costs in the vendor base and improve contract compliance. Not to mention reducing contractual risks and having my GC be more aware than ever before of what’s happening on the vendor side.
If you’re dealing with a poor procurement and legal relationship, you usually find that at its core is a lack of trust, responsibility and accountability. Start with the RACI. Bring people together to talk this through and address it in bite-size chunks.
If what I’ve discussed here sounds familiar, book a call with one of our vendor and contract experts, who can show you how our VCLM platform can help you resolve this issue.
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