Tip 1: 80% Template – 20% No-template

Introduction

In our previous article where we launched an introduction to the series ‘How to Improve Contract Templates – 6 Tips’, which is available here: https://amstlegal.com/how-to-improve-your-business-contracts-contract-templates-part-1-the-basics/. In that part, we highlighted some common issues companies face when it comes to effective contract template usage, especially in the tech industry. These issues include:

• limited resources to dedicate time to create great templates – understandably, business always goes first; 
• the contract templates are outdated, hard to find or difficult to use; 
• the legal department / lawyer still needs to review and negotiate too many contracts because contract templates are incorrect, too difficult or can be amended too easily; and 
• there are multiple versions of a contract template in use that are not aligned with Legal or the management. 

This causes delays in the creation of contracts, increases risk for the company and raises the workload of your commercial and legal team to try to solve issues with your clients due to the use of incorrect templates.  

To address these challenges, we introduce Tip 1 in our ongoing series on ‘How to Improve Contract Templates – 6 Tips’: The ‘80% template – 20% no-template’ Rule (80-20 % Rule).

Tip 1: 80 % template – 20 % no-template

Why use the 80 % template – 20 % no-template rule?

One tip that we at AMST Legal always recommend for improving the overall structure of contract processes is the ’80-20 %’ rule. What does this mean you may ask. To put it simply, the rule concerns how you can strategize your contract processes. Doing this ensures faster contract processes while making work peaks less significant.

How does the 80 % template – 20 % no-template rule work?

As mentioned, our advice is to opt for working towards a contract process structure in line with this rule whenever possible. This rule is easy to apply, so we encourage you to start using this to make your contract processes smoother.

The idea of the 80-20 % Rule is that:

• you have templates for 80 % of your contracts, and
• that there is no involvement of templates for the other 20 %.

In practice, 80 % of your contracts stems from templates, while you have 20 % made from scratch.

Why is this beneficial?

Ensuring that 80 % of your contracts have templates might sound like a lot of work. Indeed, it does require time, structure and work to fulfil this. However, when you all contract templates in place, processes for those specific contracts will move quicker. At the same time you can save money, and time in the long run. I.e. from legal costs, costs due to minor errors in certain contracts etc.

The time you save from working with the more standardized contracts, that might only need minor changes, will release precious time and resources for your larger and more complex setups/clients. In other words the contracts which require you to draft and negotiate custom contracts.

If you structure your contract processes in line with the 80-20 % Rule and overall in a well organized manner, the contract process can bring all these benefits.

Conclusion

Finally, the advice on what you should do stands – incorporate the 80-20 % rule now to enchance your company. It will improve your everyday work life since you have better control, as well as the company’s financial status and ability to get solid contracts in place. We hope that this has been an eye-opener for use of contract templates. If this subject is something you want to delve into more, go ahead and read our next article in the series ‘How to Improve your Contract Templates’, here: https://amstlegal.com/tip-2-legal-in-the-lead/.

If you need specialized advice on improving contract processes, or how to implement the 80-20 % Rule, reach out to us at AMST Legal. We look forward to helping you.