4 Important Reasons Contract Standards Fail and 10 Practical Solutions
Contracts – for example Master Services Agreements, Customer Agreement or Terms & Conditions – are the backbone of virtually every business transaction. The best way to have the signing process run smoothly is by using contract templates.
For example, for all these professionals, contracts are an essential part of their work:
- a sales professional sealing a new deal;
- an entrepreneur looking for funding;
- a procurement specialist involved in the negotiation of vendor contracts; or
- a legal professional tasked with protecting company interests
By clearly outlining terms, responsibilities, and expectations, great contracts build trust, mitigate risks and keep business relationships running smoothly.
However, contracts can also become a source of complexity. Many companies desire that a new product, service, or partnership requires its own unique contract language. This can quickly turn into an administrative and legal bottleneck if not managed properly. This is why smart organizations turn to contract templates. When thoughtfully designed and regularly updated, these templates streamline contract creation and negotiation, saving both time and resources.
Contract templates are only as good as the process behind them. If they’re too long, packed with dense legal jargon, or buried in a repository that nobody can find, even the most well-written templates won’t make a difference. That’s where this article series comes in. It will help you craft contract templates that really accelerate deals while protecting your organization’s interests. We will first start with the ‘Most Important Reasons Contract Standards Fail and Practical Solutions’.
What We Will Cover
In this introductory article, we will explore the value of using contract templates and highlight key pitfalls that can undermine them. We will then examine the potential consequences of poorly managed templates and, finally, demonstrate the benefits your business can gain by developing modern, easy-to-use contract templates.
Here’s a quick overview of what you can expect:
- Why We Need (Better) Contract Templates
We’ll discuss why organizations of all sizes and industries should focus on improving their templates. Examples will range from standard Non-Disclosure Agreements (NDAs) to specialized industry contracts like AI software licensing or wind turbine supply agreements. - Common Issues with Contract Templates
We’ll identify the biggest challenges that derail template usage, from outdated clauses to complicated language that sales teams struggle to understand. - Consequences of Contract Template Issues
We’ll look at how these problems can delay deals, increase risk, and strain business relationships. - Results of Having State-of-the-Art Templates
We’ll highlight the positive impact of streamlined, clearly written, and easily accessible templates—such as faster negotiations and reduced legal bottlenecks. - Real Life Examples of Contract Optimization
- How to Improve Your Contract Standards & Templates
We’ll draw on two decades of professional insights into how companies achieve the best outcomes and keep improving their contracts over time.
This article sets the stage. The upcoming series of articles, called “10 Tips You Need to Know to Improve Your Contract Templates,” will dive deeper into each tip – see below the full list of tips. This will offer you practical steps to help you develop contract templates that truly serve your business. Before we get there, let’s start by laying out why a solid set of templates is indispensable—and where most organizations go wrong.
Why We Need (Better) Contract Templates
Organizations often juggle a wide range of agreements, from the simplest Non-Disclosure Agreement (NDA) to the most complexTerms & Conditions or Master Services Agreement (MSA). Companies, for instance, often deal with Software as a Service (SaaS) contracts (Salesforce, ServiceNow, HubSpot). Each contract type can be drastically different, but they all share one objective: to clearly outline obligations, manage expectations and mitigate risk.
Balancing Clarity and Complexity
One of the main reasons companies need better contract templates is the tension between clarity and complexity. A good contract should be thorough enough to protect the business while still being concise and straightforward. For example, a wind turbine manufacturer might need clauses that cover equipment specifications, maintenance, installation timelines, and environmental compliance. Adding too many layers of complex legal text, however, can slow negotiations or make the contract inaccessible for non-legal stakeholders.
By creating well-structured, user-friendly templates, you ensure that each new contract iteration doesn’t require a complete rewrite. Instead, your teams can modify or append specific clauses to tailor the template to each deal, project, or relationship. This level of uniformity can dramatically cut down on drafting time, reduce back-and-forth with legal counsel, and speed up the signature process.
Enhancing Workflows
Well-designed templates also improve workflows by establishing a clear starting point. If you are repeatedly negotiating Master Services Agreements or Terms & Conditions (T&Cs), for instance, you want your sales or procurement colleagues to know exactly which clauses are standard and which ones might need special approval. This clarity keeps deals moving quickly and prevents confusion.
In a tech environment, especially one dealing with SaaS or AI solutions, the speed of execution can be a competitive advantage. Having strong, approved templates means your product or service can get to market faster, since you won’t have to battle the same legal issues repeatedly.
Keeping Pace with Evolving Business Needs
Business models evolve rapidly. Just think about how quickly AI technology is reshaping industries or how sustainability concerns are driving new contract requirements for wind turbine manufacturers. If your contracts don’t keep up with these changes, you could end up with agreements that fail to address emerging risks or market demands. For example, an AI contract might need robust clauses related to data privacy, algorithmic bias, or intellectual property ownership.
Templates need regular updates to accommodate new legal requirements, shifts in company strategy, and lessons learned from recent deals. Far too often, companies let their templates gather dust, failing to reflect current regulations, technology changes, or internal processes. This is why dedicating resources to regularly refining and updating templates isn’t a luxury—it’s a necessity for any forward-thinking enterprise.
Common Issues with Contract Templates
Despite their obvious advantages, contract templates can become more of a hindrance than a help if they aren’t properly managed. Below are four issues that commonly arise.
1. Complexity
Overly long, technical, or legalistic language can deter people from using templates. A contract for a wind turbine supply project, for example, might run dozens of pages, filled with specialized engineering terms. If the language is too arcane, the sales or operations team might avoid the template altogether, reverting to manual drafting or older versions. This reduces consistency and can create legal blind spots.
2. Accessibility
Just having great templates on file doesn’t help anyone if they can’t be found. Many organizations store templates in multiple folders or on different file-sharing platforms without clear naming conventions. This leads to confusion, version control issues, and the risk of using outdated documents.
3. Limited Resources
Template management can fall by the wayside when legal teams are stretched thin. With pressing demands like regulatory compliance, litigation, or high-stakes contract negotiations, dedicating time to reviewing and updating templates can seem like a low priority. As a result, templates quickly become outdated or overlooked.
4. Excessive Legal Review
One main benefit of templates is the reduction of legal review times—yet this only works if the templates are well-structured and widely trusted. If internal stakeholders distrust a template’s accuracy, they’ll still funnel contracts to Legal for a deep dive. When every single deal, even small ones, becomes a bottleneck, it defeats the entire purpose of having a standardized approach.
Consequences of Contract Template Issues
Neglecting contract templates or managing them poorly can trigger a cascade of problems:
Delays in Contract Creation, Negotiation and Signing
If a template is unwieldy or unclear, it can’t speed up much of anything. Negotiations might stall as both parties parse through unnecessary terms or loop in legal counsel for clarifications. In fast-paced markets like AI or SaaS solutions, a few weeks’ delay can mean lost opportunities.
Increased Risk Exposure
Templates are supposed to protect the company from legal pitfalls, but if they’re outdated or inconsistent, they can introduce more risk. For instance, imagine you’re finalizing a wind turbine maintenance contract and your template lacks a recent clause covering environmental regulations. You could face unforeseen liabilities or compliance issues if something goes wrong.
Higher Workloads
Legal, procurement, and sales teams spend far more time dealing with avoidable contract snags when templates aren’t user-friendly. Instead of focusing on strategic deals or high-risk situations, experienced counsel and managers waste hours revising the same clauses because the existing template is missing critical updates.
Strained Business Relationships
Contracts serve as touchpoints of trust and efficiency. Clients or partners who encounter errors, inconsistencies, or long delays may question your professionalism. This can harm relationships, with ripple effects on future collaborations and your reputation in the market.
Results of Having State-of-the-Art Templates
When companies invest in robust, well-maintained contract templates, the benefits are felt across every stage of the deal cycle. Below are nine advantages you can expect when you get it right:
1. Shorter Contract Negotiation Times
With standard terms already approved, you avoid renegotiating common clauses for each new agreement. Whether you’re drawing up a SaaS user agreement, an AI licensing contract, or an extensive MSA for wind turbine installations, both sides can focus on the unique aspects of the deal instead of wading through boilerplate clauses.
2. Increased Efficiency and Simplified Contract Handling
Well-organized templates reduce repetitive drafting. This frees up your legal, sales, and procurement teams to concentrate on more strategic tasks—like market expansion, major partnerships, or regulatory shifts that impact your industry. In tech, efficiency gains can translate directly into faster product launches or new feature rollouts.
3. Reduced Workload
By cutting down on the number of contracts that need an in-depth legal review, you open up bandwidth for high-value activities. This not only alleviates bottlenecks, it also makes the best use of specialized legal expertise. Instead of reviewing basic NDAs or T&Cs, your legal team can focus on, say, negotiating a complex AI data-sharing agreement or advising on regulations for renewable energy installations.
4. Enhanced Consistency and Contract Quality
A consistent, predictable approach builds trust with stakeholders. For instance, if you’re partnering with multiple wind farms, each contract will look and feel similar, providing confidence to partners that you know how to handle regulatory requirements, risk allocations, and maintenance responsibilities.
5. Risk Mitigation
Well-crafted templates function as a built-in risk management tool. By integrating updated clauses on liability, data protection, intellectual property, and compliance, you create a safety net that reduces the likelihood of legal disputes. This is particularly crucial in cutting-edge fields like AI, where regulations are still evolving and clarity is paramount.
6. Decreased Legal Costs & Improved Cost Efficiency
When legal teams spend less time reviewing common contracts, your organization saves money. Those resources can then be reallocated to essential areas—like exploring new tech partnerships or investing in research and development for AI or wind turbine efficiency upgrades.
7. Stronger Business Relationships
A smooth, transparent contracting process fosters goodwill. Clients, suppliers, and partners appreciate clarity and efficiency, and they’re more likely to remain loyal or expand the relationship. In specialized industries, like renewable energy, a reputation for easy, fair contracts can be a powerful competitive edge.
8. Optimized Resources
When contract workflows are streamlined, companies can allocate financial and human capital more effectively. This may mean investing in better contract management software, training employees on best practices, or diverting saved resources into innovation initiatives—such as new AI features or advanced turbine technology.
9. Empowered Commercial Teams
Finally, modern contract templates give sales and procurement teams greater autonomy. They can handle routine deals themselves, thanks to pre-approved language. This sense of empowerment boosts morale and allows these teams to focus on building relationships rather than waiting on legal reviews.
Examples: Experienced Results of Contract Optimization
Drawing on two decades of experience in contract optimization, I’ve seen firsthand how transformative good templates can be.
Technology Company
In one instance, a tech company changed its entire suite of legal documents—ranging from SaaS agreements to T&Cs and NDAs—to align them with new data protection laws. By involving key stakeholders (Legal, Sales, and IT Security) from the start, they created a user-friendly, legally robust set of templates. The outcome was a dramatic reduction in contract negotiation times and fewer escalations to senior management.
Renewable Energy
In another example, a renewable energy firm specializing in wind turbine installation tackled their inconsistent and overly complex MSAs. Their previous templates had caused frequent renegotiations and confusion over maintenance responsibilities. After revamping the templates to remove outdated clauses and clarify roles, the average contract closing time dropped by nearly 40%. Clients noted the improved clarity, leading to stronger partnerships and a significant boost in the firm’s industry reputation.
Bringing It All Together
These examples underscore the value of a collaborative approach to contract optimization. It’s not just a legal project; it’s an organizational endeavor that benefits every department involved in contract-related workflows. Regular feedback loops, where Sales or Procurement teams highlight real-world issues they face during negotiations, can pinpoint areas that need refinement. Legal teams, in turn, can incorporate new regulatory updates or risk mitigation strategies. This cycle of continuous improvement keeps your templates relevant, user-friendly, and aligned with evolving business goals.
How to Avoid These Issues and Reach Better Results?
But how can you avoid these issues and reach the advantages & results we discussed above? Stay tuned for our upcoming posts and articles, where we will dive deeper into practical tactics and step-by-step guidance on developing contract templates that truly work for your business.
Best Practices to Roll Out New Contract Templates
If you’re ready to transform your contracts from a necessary evil into a strategic asset, we’re here to help. Whether your primary focus is tech, AI, or renewable energy, every organization can benefit from more streamlined, flexible, and secure contracts. For further guidance on improving contract templates, managing negotiations, and optimizing related processes, reach out via lowa@amstlegal.com or book an appointment with Robby Reggers here.
Follow Robby Reggers and AMST Legal on LinkedIn to read the updates and long form versions of the following posts & articles on these essential topics:
Ultimate Beneficial Ownership (UBO) Explained – What is it and How to Create a Process That Works
The concept of the Ultimate Beneficial Owner (UBO) has moved from a niche concern to a central element of contracts, compliance and due diligence. Whether you’re advising clients on onboarding new customers, hiring a new law firm, negotiating international contracts, or setting up a new corporate entity, understanding UBO requirements is no longer optional – it’s essential.
Failing to understand and address UBO requirements not only leads to significant financial penalties, reputational damage and even legal action. I have also seen that it can slow down many commercial, financial and legal processes. This article ‘Ultimate Beneficial Ownership (UBO) Explained – What is it and How to Create a Process That Works’ provides practical strategies for navigating UBO disclosure – both when requesting information from others and when providing it yourself.
What We Will Cover
This guide addresses five critical aspects of UBO management that business professionals need to understand:
- UBO fundamentals – What is a UBO and why does it matter in modern business relationships
- Industry and contract-specific requirements – Which industries need to think about UBO requests and what kind of contracts are involved?
- Dual-sided strategies – Effective approaches for both requesting and providing UBO information
- Implementation framework – A five-point system for establishing efficient UBO processes
- Competitive advantages – How excellence in UBO management creates business opportunities
Understanding UBOs – What Is It Exactly and Why is it Important?
An Ultimate Beneficial Owner is the natural person who ultimately owns or controls a legal entity, even if their name doesn’t appear directly on ownership documents. Typically, this includes individuals who own more than 25% of shares or voting rights, though this threshold may be as low as 10% in some contexts. It also encompasses those who exercise control through other means, such as appointment rights or veto powers. When ownership is widely distributed with no individual meeting these criteria, a senior managing official may be designated as a “pseudo-UBO” for compliance purposes.
The prevalence of UBO requirements in business relationships stems from what can be described as a compliance chain. Initially confined to financial institutions under anti-money laundering regulations, these requirements now cascade through various industries. For example, a payment processor might require UBO information from an e-commerce company, which in turn requests this information from its suppliers, who then include UBO disclosure requirements in their contracts with manufacturers. This chain reaction explains why UBO clauses increasingly appear in contracts across sectors that previously had minimal regulatory oversight.
Legal Framework: Global, EU, and Dutch Requirements
Before we go into the key industries & contracts involved, let us shortly mention the legal framework where these burdensome UBO’s originate from. Many countries and global organizations have implemented a framework to know which measures should be implemented to combat money laundering and terrorist financing. As countries have diverse legal, administrative and operational frameworks and different financial systems, measures to counter these threats differ greatly per country and region.
Global UBO Standards
Globally, most countries have developed UBO standards in response to international initiatives against money laundering and financial crime. While approaches vary by jurisdiction, several organizations, initiatives and common principles have emerged:
- FATF Recommendations (see link): Recommendations (24 and 25) that require countries to ensure transparency regarding beneficial ownership of legal entities
- Varying Implementation: Globally, most countries have established beneficial ownership registries with different thresholds and accessibility levels.
- Accelerated Transparency: The Panama Papers and Paradise Papers revelations exposed how anonymous structures facilitate financial crimes
- Information Sharing: The OECD’s Common Reporting Standard (see link) enables automatic exchange of financial account information between tax authorities
- Compliance Complexity: Multinational companies face a patchwork of requirements necessitating country-specific approaches
European Union Regulatory Framework
The EU has established one of the world’s most comprehensive UBO disclosure regimes, especially under the Anti-Money Laundering Directives (AMLD):
- AMLD: The 4th AMLD required central UBO registries, the 5th mandated public access, and the 6th strengthened enforcement.
- Ownership Definition: A beneficial owner is any natural person who owns or controls at least 25% of shares/voting rights or exercises control via other means.
- Public Accessibility: The 5th AMLD mandated public access to beneficial ownership information for companies and commercial trusts. Due to an EU court ruling, several EU member states, including Luxembourg and the Netherlands, moved to restrict public access to their beneficial ownership registers until legislative adjustments are made.
- Criminal Penalties: The 6th AMLD enhanced criminal penalties for money laundering offenses and expanded corporate criminal liability.
- National Variations: Despite the common framework, implementation varies between member states, creating compliance challenges for cross-border businesses.
The Netherlands: Specific UBO Requirements
The Netherlands implemented the EU’s UBO requirements with specific national provisions:
- UBO Registration Act: Effective September 27, 2020, Dutch entities are required to register UBOs in the Dutch Commercial Register (Kamer van Koophandel)
- Public Information or restricted? It was the intention that the information would be public, but due to privacy (and security) concerns, as written in the previous paragraph, restrictions were set up as to the public availability, also see this link from the Dutch government on this subject: link.
- Verification Duty: Entities must take “reasonable measures” to identify and verify UBOs, maintaining internal records.
- Penalties: Administrative sanctions include fines up to €21,750, with criminal sanctions for intentional violations.
- Updating Requirement: Companies must update UBO information within seven days of becoming aware of any changes.
Key Industries and Contracts Where UBO Matters
The importance of UBO disclosure varies significantly across industries and contract types. While requirements can appear in almost any business relationship, six industries face particularly frequent and stringent UBO disclosure requirements:
List of Industries
- Financial Services: Banks, payment processors, investment firms, and insurance companies face the most comprehensive regulatory mandates
- Real Estate: Commercial property transactions, development projects, and property management services
- Technology: Software providers, cloud services, and cybersecurity companies, especially those handling sensitive data
- Healthcare & Pharmaceuticals: Medical device manufacturers, pharmaceutical distributors, and healthcare service providers
- Government Contractors: Companies in defense, infrastructure, public utilities, and other sectors serving government entities
- Professional Services: Law firms, accounting practices, consulting firms, and other advisors with fiduciary responsibilities
Financial services companies naturally face the most stringent requirements, with banks, payment processors, investment firms, and insurance companies all subject to explicit regulatory mandates. However, several other sectors now routinely encounter UBO requirements in their operations.
Real estate transactions frequently involve UBO disclosure, particularly for commercial property acquisitions and development projects. A commercial real estate firm recently had to delay closing on a major property acquisition because their ownership structure involved multiple layers of holding companies, and the lender required complete UBO transparency before approving financing. Companies in this sector should prepare UBO documentation well before entering into purchase agreements or seeking financing.
Technology companies, particularly those handling sensitive data or providing critical infrastructure services, increasingly face UBO scrutiny. Government contracts almost universally require UBO disclosure, and many enterprise clients now include these requirements in their vendor security assessments. A cybersecurity provider lost a promising government contract because they couldn’t adequately document the beneficial ownership of one of their offshore investment partners within the required timeframe.
In healthcare and pharmaceuticals, UBO requirements appear in various contexts, from hospital system vendor agreements to pharmaceutical distribution contracts. Regulatory concerns about conflicts of interest and the integrity of the healthcare supply chain have intensified focus on ownership transparency. A medical device manufacturer was surprised when a hospital system required UBO disclosure before finalizing a procurement agreement, a requirement that stemmed from the hospital’s compliance policies rather than direct regulatory mandates.
Types of Contracts involved
The types of contracts where UBO disclosure commonly appears include:
- Financial agreements (loans, investment documents, banking relationships)
- Government and public sector contracts at all levels
- Long-term supply or service agreements, particularly in regulated industries
- Joint venture and partnership agreements
- Property purchase and lease agreements for commercial real estate
- Merger and acquisition documentation
- Distribution agreements, especially cross-border arrangements
- Software and technology licensing for enterprise solutions
A manufacturing company was caught off-guard when their standard distribution agreement with a European partner suddenly included UBO requirements, delaying their expansion plans by several months. Had they anticipated this increasingly common contractual element, they could have prepared the necessary documentation in advance rather than scrambling to compile it under time pressure.
Managing UBO Requests: The Dual Challenge
Requesting UBO Information Effectively
Many businesses find themselves needing to request UBO information from counterparties. Even a software company we recently advised includes UBO disclosure requirements in their enterprise contracts because their payment processor requires them to identify the UBOs of clients generating significant annual revenue. While the clause appears in their standard contracts, they actively enforce it only for larger clients, creating a tiered approach that balances compliance with practical business considerations.
When requesting UBO information, clarity is crucial. Rather than simply demanding “beneficial ownership information,” specify the ownership threshold that triggers disclosure, the documentation required for verification, how ownership changes should be reported, and the consequences of providing false information. A manufacturing client improved their compliance process by creating a detailed UBO information request form that clearly outlined these requirements, reducing back-and-forth communications and accelerating their onboarding process by nearly 40%.
Providing UBO Information Efficiently
Most businesses will also find themselves needing to provide UBO information to partners, financial institutions, or customers. A technology services provider we work with recently secured a major contract partly because they could provide comprehensive UBO information within 24 hours, while competitors took days or weeks. The client, under pressure to implement a new system quickly, viewed this efficiency as a demonstration of operational excellence and organizational reliability.
The key to responding quickly to UBO requests lies in preparation. Companies that maintain current UBO documentation and have streamlined processes for responding to requests gain a distinct advantage. A distribution company that previously scrambled to gather UBO information when requested implemented a quarterly review process that ensures their documentation remains current, reducing their response time from weeks to hours and eliminating the frantic search for information that previously disrupted operations.
Building an Effective UBO Management Framework
Implementing a structured approach to UBO management can transform a potential compliance headache into a streamlined process. Consider these five essential elements that successful companies have implemented:
- Centralized ownership intelligence: Maintain a single source of truth for all ownership information, including complex group structures. A multinational technology company created significant efficiencies by consolidating ownership data previously scattered across legal entities into a single database accessible to authorized employees.
- Proactive disclosure templates: Develop standardized formats for different disclosure requirements. A software company we advised created three different UBO disclosure templates—basic (10% threshold), standard (25% threshold), and comprehensive (includes indirect control)—allowing them to quickly respond to requests with varying requirements.
- Clear escalation pathways: Establish procedures for handling complex or unusual UBO requests. We helped a retail chain that implemented a tiered approach. Routine requests are handled by their dedicated back office & paralegal team handling UBO requests, while requests involving sensitive jurisdictions or unusual thresholds are escalated to the legal manager and/or senior management.
- Compliance calendar: Create a schedule of required reviews and updates based on both internal policies and external requirements. A financial services firm avoided penalties by implementing quarterly ownership reviews synchronized with regulatory reporting deadlines.
- Documentation hierarchy: Establish a clear hierarchy of documentation, from primary sources (share registers, articles of incorporation) to derivative summaries. A Bio-Tech client streamlined their process by maintaining both detailed supporting documentation and executive summaries tailored to different audiences.
Comprehensive Documentation Management
The foundation of effective UBO management is comprehensive, standardized documentation. An international consulting firm created what they call a “UBO passport” – a standardized digital package containing all essential UBO information in formats that satisfy various requesting entities. This package includes a visual representation of their ownership structure, standardized declaration forms for all UBOs, verified identification documents, and supporting evidence of ownership claims.
The firm reviews and updates this package quarterly, ensuring they’re always prepared to respond to UBO requests. When a potential client recently requested UBO information as part of their vendor onboarding process, the firm provided their complete package within hours, impressing the client with their professionalism and accelerating the contract negotiation process.
Establishing Clear Communication Protocols
UBO requests often create urgency because they involve sensitive personal information and complex corporate structures. A real estate development group created an internal UBO communication protocol that specifies exactly who should be contacted when UBO information is required, what information can be shared with whom, and how sensitive documents should be transmitted.
Their protocol includes a designated email address for all UBO-related communications, templates for requesting additional information from shareholders, and secure file-sharing procedures for transmitting sensitive documents. When a banking partner recently requested updated UBO information with a tight deadline, this clear protocol enabled them to gather and provide the necessary information without the confusion and delays that had previously hampered similar requests.
Assigning Dedicated Responsibility
UBO compliance requires dedicated responsibility and clear accountability. A manufacturing client previously experienced significant delays in contract negotiations because their UBO information was scattered across different departments with no clear ownership. By designating their corporate counsel as the “UBO officer” with authority to maintain and provide this information, they reduced their response time from weeks to days.
In smaller organizations, this responsibility might fall to the CFO or general counsel, while larger entities might have a dedicated compliance function. Regardless of company size, having at least one backup person familiar with UBO processes ensures continuity during absences. A technology company implemented this approach after losing a potential partnership when the only person familiar with their UBO documentation was unavailable during a critical negotiation period.
Implementing Regular Review Processes
UBO information isn’t static – ownership structures change, controlling interests evolve, and regulatory requirements update. A financial services firm implemented a monthly UBO review process after experiencing a significant compliance issue when a major shareholder’s reorganization wasn’t properly reflected in their UBO documentation. This proactive approach has prevented similar issues and demonstrated their commitment to regulatory compliance to partners and regulators alike.
When you set up an Effective review processes, include scheduled periodic reviews (even when no changes are known). These reviews ensure that, whenever there’s a shift in ownership or control, the necessary reporting is up to date. A healthcare technology company avoided potential regulatory penalties by identifying a previously undisclosed beneficial owner during one of their quarterly reviews, allowing them to update their regulatory filings before an upcoming audit.
Leveraging Appropriate Technology
For companies with complex ownership structures or frequent UBO requests, technology can significantly enhance efficiency. An international retail group implemented a dedicated UBO management module in their compliance system that allows them to track UBO information, set automated review reminders, and quickly generate reports in various formats requested by different partners and regulators.
Technology solutions might include centralized document management systems with appropriate access controls, automated verification tools that check UBO information against public records, workflow tools to track requests and approvals, and calendar systems for review reminders. Even smaller companies can benefit from relatively simple technological approaches, such as encrypted storage systems for sensitive documents and standardized digital templates for UBO information.
From Compliance Burden to Strategic Advantage
Companies that excel at UBO management transform what many view as a regulatory burden into a strategic advantage. A private equity firm noted that they give preferential consideration to investment opportunities where the company can quickly provide accurate UBO information. To them, it indicates not only regulatory compliance but also good governance and organizational discipline – qualities that significantly impact investment decisions.
Speed in providing UBO information can be particularly valuable in time-sensitive transactions. A technology services provider recently won a significant contract partly because they could provide comprehensive UBO information immediately, while their competitors required days to gather the same information. The client, facing tight implementation deadlines, viewed this efficiency as a positive indicator of the provider’s overall operational excellence.
Beyond speed, transparency in UBO matters builds trust with partners, clients, and regulators. A pharmaceutical distribution company that had previously been hesitant to disclose ownership information found that their new proactive approach to UBO transparency actually opened doors to partnerships with larger organizations that valued their clear governance structures and compliance mindset.
Conclusion
Structured Approach
UBO requirements have become a standard feature of the business landscape. Rather than treating these requirements as a burden or an afterthought, forward-thinking companies implement structured approaches that turn UBO compliance into a business advantage. By developing comprehensive documentation, establishing clear communication protocols, assigning dedicated responsibility, implementing regular review processes, and leveraging appropriate technology, organizations can transform UBO compliance from a source of delay into a demonstration of operational excellence.
Proactive Approach
Whether you’re requesting UBO information from others or providing it in response to contractual requirements, a proactive approach will save time, reduce risk, build trust, and potentially give you an edge in competitive situations. In today’s complex regulatory environment, effective UBO management isn’t just about compliance – it’s about strategic business advantage.
About AMST Legal
At AMST Legal, we provide advice how to improve your (legal) processes. Compliance work – like UBO requests – is part of that. Contact us at lowa@amstlegal.com or book a meeting here for help with your legal (compliance) framework.
10 Tips You Need to Know to Improve Your Contract Templates
1. Introduction
Sales teams, entrepreneurs, procurement specialists and legal professionals all share one common need: contracts that are clear, efficient and enforceable. When done right, they accelerate deals, minimize risks and build trust. Contract Templates are great to achieve this.
These legal documents do not only formalize agreements but also protect business interests by clearly defining risks, responsibilities and expectations between the contractual parties. However, as important as contracts are, the process of managing them can be complex, time-consuming and inefficient.
The solution is standardizing contracts in templates. This can be in the form of template NDA’s, Custom Agreements, General Terms & Conditions, Master Services Agreements, Order Forms or even letters. The key is to create easy to use, not overly complicated (and short where possible!) templates that cover the company’s risk. A great practical book on this is ‘Sign Here: The enterprise guide to closing contracts quickly’ by Alex Hamilton.
Creating and maintaining strong, streamlined contract templates can help companies enhance efficiency, reduce legal risks and optimize resource allocation. Also see my article on this here. However, simply having templates is not enough. Organizations need to ensure that they are accessible, up-to-date and aligned with both legal and business objectives.
This article series, “10 Tips You Need to Know to Improve Your Contract Templates”, was written to help businesses tackle these challenges head-on. We will explore key strategies to improve contract templates, ensuring they become valuable tools that drive efficiency, consistency and strategic growth.
Let’s start by understanding why we need templates in the first place and how to overcome common issues that arise from their use. This Introduction article will be followed up by 10 more articles including a practical, step-by-step guide explaining how to improve templates, creating better processes and rolling them out successfully.
2. Why we need (better) Contract Templates
Companies need to work on avoiding overcomplicating contracts and to focus on improving contract workflows.
One effective way to achieve this is by creating standardized templates for the company’s most common agreements. For example, Non-Disclosure Agreements (NDAs), Terms & Conditions (T&C), Data Privacy Agreements (DPA), Service Level Agreements (SLA), Master Services Agreements (MSAs) etc.
Standardized contract templates can also significantly reduce the time spent on repetitive drafting. It enables faster contract creation, review, and approval, which not only speeds up business processes but also frees up valuable resources for more strategic tasks.
Moreover, contract templates help maintain consistency in the language, terms, and legal safeguards across all agreements, reducing the risk of errors, contradictory clauses, and legal disputes. By ensuring that key legal protections are consistently applied, contract templates minimize legal risks and contribute to more efficient, reliable contract management overall.
However, despite the clear benefits of using standard contract templates, many companies struggle with effectively implementing them. The correct use of these templates often remains a stumbling block, and failure to address common issues can lead to inefficiencies, delays, and legal risks.
In the next paragraphs, we will first highlight what the 4 most common issues are with Contract Templates, secondly what the consequences are of these issues, finalizing with explaining are the 9 advantages of having great (so not complicated & long) Contract Templates.
3. Common Issues with Contract Templates
While standardized contract templates can improve efficiency, many organizations encounter obstacles that prevent them from fully realizing their potential by using contract templates. In practice several factors can hinder the successful implementation and utilization of such contract templates.
Four of the most common issues with contract templates include the following:
Complexity
Overly complex and lengthy templates often result in confusion and create more questions than answers for the commercial team who use the templates in practice. The language may contain specific legal terms or overly complex wording, that can be difficult to comprehend, which in turn can slow down the contract review process. We also often spot that templates are outdated and no longer fit with the products & services that the company is providing.
Accessibility
Locating and using the correct template can be a challenge. The absence of a clear system for accessing the right templates often results in the use of outdated or unauthorized versions, creating further inconsistencies.
Limited Resources
Many businesses lack the resources to dedicate time to continuously improve their contract templates. This lack of investment often leads to templates that are outdated or irrelevant to current business needs.
Excessive Legal Review
Despite having templates in place, Legal often still need to review and negotiate a high volume of contracts due to the lack of well-defined processes and the issues mentioned above. This increases the burden on the Sales, Procurement & Legal department and slows down the contracting process.
The existence of these obstacles highlights the importance of having a clear strategy and process for managing contract templates. Understanding these common issues is a first step towards addressing them and ensuring smoother contract workflows.
4. Consequences of Contract Template Issues
The issues described above surrounding contract templates can have significant, far-reaching consequences for businesses in several areas. The idea of having solid contract templates in place relies heavily on whether the templates are easy to use, if they are consistent and whether they have been reviewed and continuously get managed properly. Mainly, this revolves around inefficiencies connected to the contract templates due to poor contract template management.
Incorrect, overcomplicated and long templates result in the following issues:
Delays in Contract Creation, Negotiation and Closing
Complex and outdated templates can prolong the time it takes to finalize contracts due to the need to involve legal professionals. If the template is too complex, it won’t be possible for anyone to use the template at issue. Additionally, this can cause delays that may disrupt operations and hinder business growth that otherwise would have been possible.
Increased Risk Exposure
Contracts that are inconsistent or not properly reviewed make the company vulnerable to legal and financial risks, including disputes, compliance issues, and unfavorable terms. This is especially the case if there are several contract templates that cover different areas.
Higher Workloads
The inefficiencies of managing contract templates translate to additional work for Legal and other involved departments. This means that they must spend more time resolving problems, negotiating terms, and handling unnecessary contract revisions since they are the only ones who are fit for the job. In turn, this creates less time for them to focus on more complex, high-value deals.
Strained Business Relationships
Poor contract management can also erode trust with clients, vendors, and partners. If the contracting process is slow, confusing, or fraught with errors, it can negatively impact business relationships and damage the company’s reputation. For instance, the counterparty can get the impression that the inconsistent templates may reflect your way of doing business.
In other words, the consequences of poorly managed contract templates extend far beyond operational inefficiencies. To prevent these issues, companies need to reassess their contract management strategies and prioritize the development of high-quality templates.
5. Results of having State-of-the-Art Templates
When businesses take the time to develop and maintain strong contract templates, they unlock a wide range of benefits that positively impact both their day-to-day operations and long-term strategic goals. These benefits arise from the ability to standardize contract processes, reduce legal risks, and enhance collaboration between departments.
Nine key advantages are:
Shorter Contract Negotiation Times
High-quality templates serve as a strong starting point for contract negotiations, eliminating the need to negotiate basic terms and conditions from scratch. Since most of the standard clauses are pre-approved and align with company policy, both parties can focus on customizing specific deal points rather than revisiting the entire contract.
Increased Efficiency and Simplified Contract Handling
Streamlined templates reduce the time and effort required to draft, review, and approve contracts. This reduces the administrative burden on both Legal and business teams, allowing them to focus on higher-value tasks such as negotiating complex deals or working on strategic initiatives. In fast-paced industries, this can provide a critical competitive advantage.
Reduced Workload
With standardized, well-organized templates, the Legal department can reduce the number of contracts that require individual review. This means that only the most complex or high-risk contracts will require in-depth legal review. It allows the Legal team to focus on more strategic activities, such as risk management or regulatory compliance.
Enhanced Consistency and Contract Quality
High-quality templates ensure that contracts across the organization are aligned with company standards, reducing the risk of errors and inconsistencies. Enhanced consistency also helps to build trust with external parties, as they can rely on the fact that the company’s contracts follow a predictable structure.
Risk Mitigation
Strong contract templates serve as a built-in risk management tool, ensuring that all agreements contain the necessary legal safeguards to protect the company’s interests. By ensuring that contracts contain the necessary legal safeguards and are compliant with applicable regulations, companies can better manage their legal and financial risks.
Decreased Legal Costs & Improved Cost Efficiency
With fewer contracts requiring in-depth legal review, companies can reduce their legal expenses and allocate their budgets more efficiently. This cost efficiency allows companies to allocate their legal budgets more effectively, focusing on complex matters that truly require expert legal input.
Stronger Business Relationships
A smooth and transparent contracting process enhances trust and collaboration with clients, vendors, and partners. It also reduces delays and confusion, making it easier to finalize agreements quickly and without unnecessary back-and-forth.
Optimized Resources
Well-organized contract processes help businesses make the most of their available human and financial resources. By standardizing and streamlining contract workflows, companies can minimize the time and effort spent on repetitive tasks, allowing teams to focus on strategic growth initiatives rather than administrative burdens.
Empowered Commercial Teams
With easy access to effective contract templates, commercial teams can take the lead in negotiations without the constant need for legal intervention. When teams have access to well-structured, pre-approved templates, they can confidently lead discussions and close deals faster.
In summary, adopting state-of-the-art contract templates into your business processes leads to a wide range of benefits. Not only do they increase efficiency and reduce legal costs, but they also improve the consistency and quality of your contracts. By streamlining contract workflows and fostering better business relationships, high-quality templates help companies mitigate risks, optimize resources, and accelerate growth. Implementing these templates is a smart investment that delivers long-term operational and strategic advantages.
6. Experienced Results of Contract Optimization
Throughout Robby Reggers’ 20-year career advising businesses on contract optimization within legal departments, the most successful outcomes were achieved by companies that embraced a collaborative methodology for template optimization. By refining contract templates with input from across the organization, companies can ensure that their contracts are not only legally robust, but also fully aligned with business objectives and responsive to customer needs.
For help improving contract templates, negotiations and related processes, reach out to us via lowa@amstlegal.com or book an appointment with Robby Reggers here.
How to improve your Contract Processes with Better Cooperation
Legal should focus on Better Cross-Departmental Cooperation
As we have highlighted in previous posts, it takes leadership and a team to improve your contract templates. Once Legal has taken the lead and the centralized responsibility to improve the contract templates, the next step is to involve and work together on this goal with other departments. The creation and use alone of contract templates will only offer limited benefits This is not only essential to receive all required input for the contract templates, but also for a successful implementation of the contract templates.
Legal professionals often limit their interactions to their Legal colleagues or senior management when creating and implementing contract templates or negotiating contracts. This limitation, while understandable, can lead to contract templates and agreed contracts that are legally sound but are missing critical business insights.
Additionally, as mentioned above, the complexity, inaccuracy and lack of processes will lead to the use of unauthorized or outdated templates and excessive Legal Review due to lack of internal processes and support from other departments.
Insight Integration: A Collective Approach on Template Creation
Therefore, aligning contract templates with the practical realities of the business is essential. Departments such as Sales, Products, Finance and Compliance offer invaluable insights on commercial and financial risks, practical considerations and the specificities of products or services offered by the company.
This input ensures that the contract templates are not only legally robust, but also fit in the commercial roadmap of the company and cover all other company risks (e.g. technical, compliance, operational and financial).
Another important reason to involve these departments in the drafting process of the templates is to create a sense of ownership and support from these stakeholders. When departments contribute in the development of the standardized contract templates of a company, they are more likely to endorse and actually use the templates. This collaborative approach not only enhances the quality and relevance of the contract templates but also ensures their acceptance and utilization across the organization, ultimately leading to smoother operations and reduced risks.
Enhancing Cross-Departmental Collaboration – Improve Communication & Cooperation
Legal´s role in improving the communication and cooperation with the rest of the company cannot be understated. Regular, strategic meetings between Legal and other departments are essential to set the stage for a more integrated and efficient approach to contract management of the company.
These discussions should focus on:
- a) Strategic Alignment: First, Legal needs to clearly communicate its short and long term intended contract optimization strategy to all departments. Secondly, these departments should share their strategy and specific requirements and contributions to the contract process and templates. This will give Legal the opportunity to create and roll-out the best strategy to improve the Company´s contract processes and templates.
- b) Issue Identification and Resolution: Facilitating an open dialogue where Legal and all other departments can highlight challenges encountered with current templates and collaboratively develop solutions to streamline cooperation and reduce operational burdens.
- c) Training and Involvement: Initiating internal workshops to educate teams on optimal contract template usage, Legal engagement policies, while encouraging feedback and suggestions for improvements to ensure templates remain relevant and effective.
- d) Proactive Communication: Discussing the optimization of the empowerment of the commercial teams, meaning that all relevant contract-related documents and information are proactively shared with customers and partners by the Sales, Partnerships and Procurement teams.
This will greatly minimize the workload of Legal and maximize their output due to a decreased need of Legal clarifications and Legal involvement in negotiations. The importance of regular, inclusive meetings and training sessions cannot be overstated. When planning, it is essential to engage every layer of the organization, from grassroots employees to top management, in strategic discussions and trainings.
These sessions serve as a cornerstone for aligning strategies, creating an environment where all team members are equipped with the knowledge and skills to navigate the complexities of the contract optimization process and their roles effectively.
By maintaining a consistent schedule of these critical discussions and training, organizations can avoid the pitfalls of reactionary measures during peak periods of activity. Instead, a well-informed and strategically aligned team will be ready to handle the demands of the business efficiently, ensuring continuity and resilience in the face of challenges.