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Before we dive into the what and why of contract playbooks in the legal department, it’s important to explore contract lifecycle management, what that is, and why it is important to the legal team in a corporate enterprise environment.
In the legal department, contract lifecycle management software integrates with enterprise legal management software. A legal team can open the software and find matters integrated with their contracts from an accessible dashboard. Templates are provided with usable and approved clauses, and each phase of contract management occurs within the contract lifecycle management application. Essentially, this critical application creates efficiencies, improved collaboration, easier tracking, and streamlined workflow for both the legal and operations teams alike.
Contract drafting with redlining and version tracking occurs in Microsoft Word so that every party can respond to respective versions with tracked changes managed and recorded. The efficiencies created with such a system provide valuable benefits to lawyers in the law department who need to follow intricate contractual terms and conditions.Those enterprise legal departments that select a robust enterprise legal management system can expect to have the benefit of contract lifecycle management tools included in one platform.
Prior to the deployment of contract lifecycle management tools, a legal department needs a contract playbook for streamlining and standardizing the development of contracts per corporate guidelines. While the process of contract management may be the same in every organization, each company has its specialty practices, accepted clauses and terms that provide the guidebook for anyone managing the contract process.
Imagine a contract management process without such a contract playbook. The format, clauses and terms, for example, could be written against the company and cause greater risk for an organization and legal team. A contract playbook mitigates that risk and provides the starting reference for new members of the team and existing veterans to comply with the company.
The biggest users of a contract playbook are the legal department lawyers. In particular, as mentioned above, any new legal team member needs to use the contract playbook as the first line of compliance for contract development and management. Other members of a legal team appreciate a contract playbook as reference so they can ensure contract standardization.
A legal team often includes contract managers. They rely heavily on company standards detailed in a contract playbook so the contract development and management process is accurate, efficient and streamlined. At the same time, compliance officers also need a contract playbook and any other similar materials that are available. (Legal playbooks can be developed for various topics and provide valuable training materials for the law department and leadership.)
Outside counsel may be enlisted to use a client’s contract playbook. If a law firm partner manages every aspect of a contract or legal matter, the playbook helps with consistency, compliance and adherence to company standards. Supply chain managers need a contract playbook for vendor negotiations. Those who manage the procurement of supplies can easily benefit from a contract playbook. It has the terms and conditions for negotiation and compliance with company standards, policies and procedures.
A contract playbook complements the enterprise legal management platform and its contract lifecycle management application. When law departments select enterprise legal management software, various applications combine to create many benefits, efficiencies, productivity, and collaboration.
The contract lifecycle management function enables the population of approved templates with a company’s terms and conditions. Which comes first? In the chicken and egg saga, a contract playbook serves the purpose to guide the CLM tool with the company’s approved processes, clauses, terms and conditions, and much more. Until these are written and approved by legal leadership within the playbook, contract managers are unable to incorporate updated information into a contract lifecycle management system.
This type of standardization removes repetition and saves time so team members can launch directly into contract development.
In summary, a major benefit of a contract playbook is creating a cohesive environment for anyone touching a contract, whether it’s drafting, redlining, or negotiations. Capturing agreement in advance is a valuable advantage and time-saver for the entire legal department.
Faster turnaround of contracts is an advantage with a contract playbook. Because everyone is working from the same page, literally, questions are fewer, workflow is faster, and everyone knows the company’s standards. Once legal department leadership, perhaps the general counsel or chief legal officer, vet and approve the standard contractual terms, then legal risk is reduced. Everyone clearly understands how to proceed cohesively, and the risk of legal ramifications or non-compliance lessens.
Another benefit of a contract playbook, and this was mentioned before, is the collaboration between respective teams in the legal department. There may be procurement, operations, contracts, and legal teams referencing a playbook as their guide. Knowing the playbook has the same information for everyone creates that collaborative atmosphere.
And, finally, a contract playbook builds confidence. Those negotiating a contract know that a contract guidebook provides the facts, figures and company-approved terms and conditions. Lawyers on the frontline of contract negotiations can utilize this critical tool on behalf of the company.
Drafting a contract playbook requires standard elements. If you’re developing a series of playbooks on various topics, use a similar table of contents with sections familiar to users. Specifically in the contract arena, add many of the following elements and then make it specialized for your organization:
Upon review of the list of components to include in a contract guidebook, there are likely many more elements to include. For those writing an initial draft, begin with a basic list of parameters to include and then add specifics based on the industry, pulse of the leadership, volatility, publicly traded, or privately held, etc.
No one said a contract playbook is simple to develop. When done right, however, this guide becomes a critical resource for entire departments and business units. That’s why, during the initial phases of development, work with those various departments to earn consensus. Set goals for the project so everyone agrees and the product matches company guidelines across the board.
Ultimately, a playbook becomes a living and breathing tool that grows with the company's needs. It scales with that growth and can be revised, as needed, based on experiences. Contact us to learn more about contract lifestyle management, enterprise legal management and development of contract playbooks.
* The views expressed in externally authored materials linked or published on this site do not necessarily reflect the views of LexisNexis Legal & Professional.