For any company that handles a high volume of contracts—which covers just about every company—streamlining contract management processes is crucial for efficiency. Unlike some corporate restructuring projects, however, contract management isn’t a process that can ever just be “fixed.”
“We are constantly revising it,” says Susan Ross, associate general counsel and chief legal officer of the Americas for Gilbarco Veeder-Root, a fuel dispenser manufacturer. “Our company is growing. The more efficient we can be in getting contracts drafted, revised, negotiated, and signed, the more we can do to standardize our process and the more efficient we’ll be as a legal team.”
Ross’s legal team handles contracts on what she calls the “money coming in” contracts used to generate revenue, as well as the “money going out” contracts, which pay vendors, suppliers, and others who work on Gilbarco projects. These contracts look different, but they’re all part of her team’s emphasis on efficiency.
The first step Ross’ team took to make the contract process more efficient was to create a contract intake form. The one-page document gives basic legal information regarding a contract request, including who is making the request, the type of request, the type of relationship the company has with the other party, the dollar amounts involved, and the request date for review completion.
“The intake form is very routine now, particularly for our North American deals,” Ross says. “It is great when we have multiple contract requests coming in at the same time, or from the same person, or from different departments regarding different contracts for the same party. It also makes it simple when determining who in legal, whether internal or external counsel, will review the contract.”
Another critical part of the emphasis on efficiency is Gilbarco’s global legal policy, which outlines when legal should be consulted on an issue. The policy uses specific terms—when a contract is over a certain dollar amount, lasts more than a year, or handles an issue such as intellectual property rights, real estate, and indemnification, among others—to help people understand when they should call legal. Contracts with provisions that address any of these criteria must be reviewed by the legal department.
The global legal policy, which was already in place when Ross joined Gilbarco, also covers who is on the legal team and what their roles are so employees know who to approach if they have different issues or questions.
“Our job is to help provide service, advise on potential risks, and make sure we are helping the company move forward in business in the manner that minimizes the risk to the company. We cannot eliminate all risk. If you want to eliminate all risk, don’t do business. Our role is to help minimize the risk.”
Although Ross says the global legal policy helps the rest of the company work with legal effectively, she notes that it will need to change as the company changes and grows.
“The policy is a living, breathing document, so we update it as needed, and we keep it available to everyone in the company,” she says.
That’s not to say that Ross and her team don’t update any other policies. The legal team also works to continuously update model agreements and templates for contracts that can be updated with the other party’s name, pricing, dates, and other business terms. The team tries to develop model agreements that are fair to both parties by asking itself whether Gilbarco would sign the agreement if another party presented it to them.
Otherwise, the legal team spends much of its time negotiating what should be standard in agreements. If the person creating a contract is only plugging in those values and not changing other wording, the team doesn’t need to be involved in a contract, as it has already approved the form—which saves time in the contract’s life cycle.
“Sometimes new model agreements need to be developed because of new business,” Ross says. For example, a new company that is acquired might have a business model that doesn’t necessarily align with Gilbarco’s existing business models, so it would require developing a new model agreement.
This process works well unless the other party in a contract negotiation also has a model agreement, and its terms and language are different from Gilbarco’s. That’s why Ross’ team is creating a “playbook” that lists terms the legal team and other departments (such as finance, service, and sales) have approved for any deal, terms the company is willing to accept, and terms that will need to be escalated and possibly renegotiated. Having the playbook, Ross says, minimizes the need to seek approval from every department involved with the contract. Implementing the playbook also made business easier since the company already has a playbook for certain procurement agreements.
Another step is tracking where all of these contracts are in their life cycles. Ross handles much more than contracts, as does the rest of the department, so an attorney isn’t always available as soon as a contract comes in. Ross works to stay informed about the contracts that come in and when they should be prioritized.
Ross says it’s important for her to align legal’s expectations with people in other parts of the company that are affected by contracts. For example, a salesperson may send legal a contract and expect it to be reviewed and completed on the same day, which usually is not realistic. On the other hand, legal may need to prioritize a contract over other matters for commercial reasons.
“Aligning expectations is part of the education process,” Ross says.
This is especially crucial since Ross sends some contracts to outside counsel, as Gilbarco’s legal team isn’t large.
What’s important to remember, Ross says, is that the legal department doesn’t have total control over the life cycle of a contract. Other departments and parties affect the life cycle as much as Ross’s team. It’s important to her to improve as much as possible within those constraints.