If you’re reading this, it’s likely that you’ve just landed a new role as a Contract Manager. You might be joining an existing team or joining your new company to lead on all things contract management. Either way, we’ll cover your critical tasks as a Contract Manager in a new company.
For context, I’ve been there on two occasions since March 2020. I joined a small Defence Consultancy in March 2020 as a Commercial and Contracts Consultant to work with the Legal and Compliance Director. I had to build out the contract management capabilities of the business and the Commercial Team that would soon use them.
In October 2020, I joined a FinTech company based in London. They needed to bring their contract management capability in-house for several reasons. These included cost, audit readiness, stakeholder relationships, and to build out the expertise internally.
I was the lone professional in each of these two roles. Yes, I had the support of the Legal Director in the Defence Consultancy and the General Counsel in the FinTech company. However, they needed their attention to be elsewhere, hence hiring me to come in and focus on the contract management capability.
What are the challenges when joining a business as a Contract Manager?
There are many challenges but there tends to be more if you’re the first hire for the company, whether you’re a permanent hire or a contracted hire to get them moving.
Yet, if you’re joining an existing team, you have the nuance of joining a team that does things a certain way which might go against your vision. I’m hoping your interview process has established what you will undertake within the team, and it’s given you the mandate to get the work done.
Here’s my agenda for my first 30 days:
- Build relationships with senior business stakeholders
- Evaluate the end-to-end contract review process
- Evaluate contract assets (templates, playbooks, clause banks)
- Evaluate the Contract tech stack
Let’s start with relationships.
Building a relationship with the Senior Business Stakeholders
This is your number one priority. The reason is that you will likely need them to buy into the following:
- Your tech stack
- New ways of working
- External contracts/Legal support
Each of these could incur costs, initial disruption to the broader business, and a change in approach to risk management. You will need champions in your business who can support this.
For the purposes of this article, I am going to focus on two key roles:
- Chief Finance Officer
- General Counsel
The Chief Finance Officer
Think about what your Chief Finance Officer cares about:
- Reduction of spend
- Increase in revenue
- Reduction in risk
- Visibility across the entire business of spend, revenue, and risk
- Building out a scaleable, finance-savvy team and company
- Raising investment from Venture Capitalists and Private Investors
Chief Finance Officers have an unfathomable amount of pressure on them. Now think about your role as a Contract Manager - how can you help them? That’s the critical question to ask initially when considering building a relationship with the Chief Finance Officer.
A reduction in spend is within your control. Contract negotiations are typically centred around:
- Price and payment
- Risk allocation
- Regulation and compliance
Of course, there are exceptions to the above, but each of the three points noted is a point for negotiation that can reduce the financial burden on your company.
Work with your Chief Finance Officer (and the wider Finance team, if there is one) to understand what they care about. They might need to ensure all of your supplier contracts have a minimum of 30-day payment terms, with upfront payments being an exception that requires their approval, and all payments need to be in a specified currency.
That’s incredible information to get, which informs you of what you need to include in another critical activity: the creation or updating of a Contractual Playbook. More on this later.
Provide the upfront value to your Chief Finance Officer by taking a genuine interest in their concerns that keep them awake on a Sunday evening. By doing so, you’re earning their trust.
The critical element here is that you need to deliver now. In your first 30 days, once you’ve gained this knowledge, you need to build out processes and systems that ensure you deliver what the Chief Finance Officer needs.
You’re not building this relationship for pure fun. You’ll likely need financial support in this role. If you cannot get the support of the Chief Finance Officer to build out your tech stack and external support should you need it, you’re not going to have the success in the role you likely anticipated.
General Counsel/Senior Legal
Depending on the maturity of the business you’re joining, they’re likely to have at least a General Counsel or a senior Legal figurehead at the business. Whether there is a wider legal team is down to the direction of the senior Legal figurehead. We’ll call that person the General Counsel to keep it simple here.
The General Counsel is going to have the following concerns and priorities:
- Ensuring all supplier contracts have some form of contract review
- Risk positions are pushed with suppliers where appropriate
- Utilising internal templates (if there are any) to expedite contract reviews and maintain risk positions
- The business is meeting its obligations under the law
- Shareholder interests flow through the business
- Client/customer contract flow downs are being met within the supply chain
Of course, there are more but for you as the new Contract Manager, these are likely sources of discomfort for your General Counsel.
You need to work closely with your General Counsel to ensure that you know what they need to achieve in each of these areas.
You might encounter any of the following issues which I have over my last years across Defence, Aerospace, Estates and FinTech:
- Contracts are being reviewed but mostly externally and without internal validation.
- Risk positions are being covered but need to be updated as the business scales.
- Templates are not used yet, so the company needs to use supplier paper every time.
- The business needs to meet its legal obligations.
- Shareholder interests in what the business is doing are being met - you need to ensure you’re on top of supplier contracts for future investment rounds as this will come up in the due diligence.
- Client flow downs aren’t clear cut through the supply chain and need work.
Then you need to consider how you use this information.
This should be all you need to plan out a programme of work to improve all of these elements.
The end-to-end Contract Review Process
The Contract review process is an essential process that can make or break your role. If you have an inefficient process, it is going to take you longer to get contracts reviewed. Time is of the essence in this area, and if you’re in a high-volume environment, you need to be able to:
- Review contracts quickly
- Cover all required positions likely utilising a playbook
- Track version history
- Track the progress of the negotiation
- Have a wider team available to consult on positions (e.g. InfoSec Team on points that affect their world)
There’s a lot to balance and get right in the high-volume environment.
Here’s my simple view of a Contract review process:
- Contract review request
- Read the contract with a few of the standard positions set out in a playbook
- Redline the contract if needed
- Issue redlined contract to your supplier
- Receive their redline/thoughts on your review
- One more round of this to complete by the end of round two
- If there are outstanding points, arrange a call to focus on the key 1-5 points (likely to be the same on each side) Address their points, compromise if possible and closeout
- Internal approvals
- Store contract
- Extract key contract metadata
There’s a lot to the end-to-end contract review process when you methodically list each stage.
If any of these phases is inefficient, you will struggle to complete your reviews promptly, and thereby you will struggle to support the business in achieving its aspirations."
You cannot solve an inefficient contract review process in your first 30 days. You’re likely to have to get on with the job and get those contracts reviewed. You might not even have a process (if you don’t, the points raised above will help you).
But you can focus on some key parts of the process. The first phase to focus on is the start of the contract review request part of the process. If you aren’t getting the information from the business that you need to do a review, then that’s a problem.
I discovered this quickly and would have to constantly follow up on the following:
- What exactly is the supplier doing?’
- Is there any transfer/processing of personal data?
- Is this supplier accessing any of our assets or code?
- What exactly is it the supplier will deliver to us?
- How much are we spending with the supplier?
- I think we’ve all experienced the above problem.
It usually materialises in email requests for contract reviews that go something like this:
“Hi Daniel, please review the contract attached. It’s with Supplier A, and we need this on contract in two days”. We then usually find a quote document, with no contract terms appended, with no connection to the supplier and frankly…
No idea what this contract was for.
Your initial focus must be on this and “how can we do this better”. That’s what you need to do in those first 30 days. Evaluate how the business requests contract reviews and then build a better way of doing it. And that sets us up nicely for this next point.
Visibility of the Contract Review Process
I believe you should be able to give your business complete visibility of all of your contract reviews. How can you do this when working from email, Word, Excel and SharePoint?
The more straightforward answer is tech. Contract and Vendor Management solutions are ideal for this, and that’s why I eventually sourced and implemented Gatekeeper. But I couldn’t get that done in my first 30 days."
But I had access to Trello.
And I had access to SharePoint.
And here’s what I did.
I created a Trello Kanban Board.
On this board, I had a few phases:
- Contract Request
- Contract Review
- In Negotiation (Internal)
- In Negotiation (Supplier)
The entire Supplier Management team had access to this, and I could grant access to anyone who wanted visibility. Trello is a remarkable piece of software because you can add messages to each card on the board.
This gave me a tracker outside of Excel (which I loathe using) and gave us the means to track the status of every contract immediately.
I also created two folder areas in SharePoint, and I’d suggest you create a home for all of your contracts. One was for work in progress. The other was for completed contracts, which is where they were stored when they were fully signed by both parties.
Not quite a central source of truth or 100% visibility for all, but we will get there in the coming months. This is purely about being in the weeds, getting the process up and running and then getting those senior stakeholders to buy into the idea that we’re going to need Contract and Vendor Software to be the best in class.
And I bet you’ve got similar software in your business with licences yet to be used.
Think about how you can bring clarity to the contract process in your first 30 days. Demonstrate it with an early build and highlight how this will work even better once you get some Contract and Vendor Lifecycle Management Software."
If your business sees the value you bring around this in the first 30 days, they will be thinking of what is possible when they give you the time and budget to go out and do this across the entire business.
We’ve exhausted your time on the end-to-end process so let’s look at what you are working with now.
Contract Assets (templates, playbooks, clause banks)
I’m an advocate for having clear documentation around the contract process. I’ve heard people lambast playbooks and clause banks as it promotes a copy and paste approach to managing contract reviews. This can prove to be a short-sighted approach as the individuals using these documents will be sufficiently skilled to adapt them, given the situation.
They are there as a guide to assist with your reviews, and yes, you need to be able to draft contracts as you may move away from the language used in your documents to match the style of the supplier contract.
Now that we’ve got that point out let’s look at templates.
Here’s what I would review as part of my contract template evaluation:
- Do we have templates for high-volume, low-value work? (NDAs, Basic PO terms)
- Do we have a solid Master Services Agreement that we can use modularly with a Statement of Works and schedules such as a Data Processing Agreement?
- Do these contract templates mutually allocate risk?
- Are these contract templates easy to read and use to encourage non-contracts professionals to use them?
- Are these templates easy to find?
- Are these templates easy to edit?
By reviewing the existing templates in this manner, you’re prioritising the following in the short-medium term:
- Reducing the need to review supplier terms as you can send your terms out to them (where you’ve got leverage to do this - don’t try and do this with SaaS terms etc.).
- You uncover weak points around compliance, such as not having a Data Processing Agreement Template (only needed when
- there is a data flow between you and the supplier).
- You will understand the risk positions, which will be helpful when reviewing/building your contract playbook.
- You’re analysing the language to ensure that all parts of the business who touch contracts can do so and don’t have to get bogged down in legalese.
- You make it clear where the templates are and how they should be used moving forwards.
This will set you up with a lot of improvement work over the next 12 months. I mean, you might not have anything in place, which can sometimes be better as you get to build it your way. Just consider these points throughout, and you’ll end up creating a suite of contract templates that:
- Make it easier to contract
- Speeds up time-to-contract
- Reduces costs through time spent on reviews and balanced risk positions
- Gives you a competitive advantage in the market (more agile, saving money, revenue generator).
Here’s my view of what a Contract Playbook is.
It’s a document that sets out:
- The contract positions you favour
- Your fall back positions
- Who owns that position in the business and, therefore, who the owner is that will approve non-compliant positions Around this, you might build extra data points and categorisations of positions but let’s keep this simple here.
If you have a playbook, that’s an incredible start. This is a valuable way to safeguard your business from contractual risks. What you need to do in the scenario is analyse contracts that you review in your first 30 days and find out where the pain points are:
- Did the playbook positions cause this?
- Is the playbook promoting mutuality of risk, or is it pushing one-sided positions?
- Is the playbook pushing for unreasonable demands around liabilities and indemnities (always a sore point in negotiation)
- Do our fallback positions work and protect our business?
- Could our starting point be our fallback position?
- Is there ownership across the business for these points, e.g. does the Data Protection Officer own the point around data privacy? If not, go get it and get the business brought into these positions.
You won’t be able to complete this task in your first 30 days, but you will be able to start documenting your thoughts, working on a new draft, and signalling your intent to your key business stakeholders that this is what you will be doing.
The Clause Bank
A Clause Bank is a repository of ready-to-go clauses that align to your contract positions which can be:
- Interchanged with your templates
- Interchanged with your supplier contracts with minor stylistic changes
The more advanced use case for the Clause Bank is to use it as part of your Contract and Vendor Lifecycle Management software. You can build out contracts in there with ease, use it as part of your redlining in Office 365, in a native editor or to support self-serve contracts with auto-population.
What you need to do with the clause bank in your first 30 days is this:
- Review it to ensure you have, at a minimum, a clause linked to every standard position in your playbook and a clause for your fallback position.
- You have consistency in the language in your clause bank, e.g. it’s no got it referring to the supplier as a vendor in one clause and then a supplier in another. The commonality of language is essential to the plug-and-play nature of the clause bank.
The first point is a more extended task that will take you outside of your first 30 days. The second point is a quick task using replace words functionality in Microsoft Word or Google Sheets. Just come up with the common language you want to use and make the change.
If you don’t have a clause bank, you will be doing a lot of work to build it out. This can be done simultaneously as you build out your contract templates.
My advice to you here is to bring in external support, to have a legal design consultancy draft you:
- Easy to use and plain language contract templates
- A Playbook that works with these templates
- A Clause Bank that contains all fallback positions needed.
This will likely cost you in the region of £15000 - £30000, but it will save you time in the long run, and the return on investment will be:
- Hours saved negotiating contracts
- Hours saved from not creating all of this in-house
- Leaning on expertise from consultancies that do this every day
- Creating a core set of documents that anyone, even those outside of contracts, can use and understand
- Promoting the adoption of an easy-to-use contract process across the entire organisation (which goes hand-in-hand with my final area)
Now it’s going to be challenging to know the time-saved metric, but it will be genuine. Start manually documenting how long it takes you to review contracts. Build out an Excel Sheet or Trello board to start recording the start date and end dates of the contract process so you can get some data that way.Estimate how much time you think it would take you on top of everything else to build out the templates, playbook and clauses (and then double that time)."
This will be an excellent lever to show the need for this work and give you a basis for evaluating return on investment.
The contract tech stack
Evaluating your contract tech stack is a simple activity to undertake. You simply need to document every piece of software that will be used throughout the contract lifecycle, which includes pre-signature and post-signature.
For any business that you join that doesn’t yet have a Contract and Vendor Lifecycle Management solution, it’s likely going to look like this:
- Word/Google Docs
- Excel/Google Sheets
- Local File Storage
- Project Management Software - Trello/MS Planner
- Adobe Reader
- eSign - DocuSign/Adobe
- The Postal Service for signatures if you’re still a wet ink business
- Google Forms/Typeform for sending out questionnaires. Heck - this might be done through word/excel, which is more inefficient than this method.
- Finance Software - could be Xero, Netsuite, SAP.
As I’ve been writing these, thinking back to all of the solutions I’ve used just to get a contract from pre-signature into post-signature, it’s unbelievable that we have to do this.
You don’t see sales teams or HR teams doing this.
They typically use salesforce or workday or smaller solutions that do most of this for them.
And that’s how I like to think about this too.
We, as Contract Managers, need to be the catalysts for change in this area. So my most extensive advice to you is to build the support internally to move away from a multitude of apps that manage your contracts workflow to a solution that can do all of this for you in one space."
When I joined the FinTech company, they had a CLM system in place, but I still had to use all of the above to do anything. I was in disbelief and, in my first 30 days, started testing the waters to see if we could begin to assess the market. That solution was average for storing contracts, and that was it. It required code to change anything, which meant expensive consultancy hours.
I’ll jump to the end of the story, 9 months on when we signed the contract with Gatekeeper, which transformed the tech stack into this:
- Slack (minimal use)
- Zoom for negotiations
- Xero - integrated via Zapier to push contract spend data
Now that looks better.
It was easier to manage and gave me so many benefits.
But back to those first 30 days. Document your setup and determine if it will help or hinder your ability to do your role to the best of your abilities.
The best of luck to you in these first 30 days as a contract manager.
If you want to find out how Gatekeeper can help you once you’re past your first thirty days, please feel free to contact us.