Tip 3: Legal Involves Other Departments
Introduction
Previously, we shared valuable tips on how to structure legal’s responsibility of the contract process. Access it here if you haven’t read it: https://amstlegal.com/tip-2-legal-in-the-lead/. Continuing, we are moving on to tip 3. That concerns making sure that Legal involves other departments when drafting and rolling out / implementing templates.
Looking back, we have seen lengthy processes when working with large corporations. There, it would typically take 3-6 months before their client contract (a relatively straightforward Services Agreement) would be negotiated, agreed and signed. When working there, we were able to reduce the time spent on this to maximum 1-2 months. Keep reading to learn how you could do the same.
How to shorten the contract process
Three tips
We were able to bring this period down to a maximum of 1-2 months by:
- sitting down with the business to discuss how the contract could be improved, not only from a legal point of view but from a business point of view;
- amending the templates accordingly; and
- strongly involving the business with the roll out/ implementation of the new templates.
This provided an overview of the contract process and having other departments that use the templates on board from the start.
Why should legal involve other departments?
I have seen this working in every company where I had the opportunity to use this strategy. It is therefore my strong belief that Legal absolutely must:
- consider the opinion of other departments of the company, and
- draft/amend the contract templates accordingly where necessary and possible.
This applies especially to commercial contracts and less for purely legal templates like NDAs (Non-Disclosure Agreements) and DPAs (Data Privacy Agreements).
Alignment with the business – for example Sales, Products, Finance or Compliance – is essential to make sure that the templates do not only cover the legal risks, but also cover important business risks, practical issues and all products/services of the company. Another important reason to include these departments in the creation of the templates is to create a support base. The business will be a lot more engaged if they understand and agree with the template contract and if they have helped with the creation of it.
Conclusion
Incorporating insights from other departments when drafting and implementing legal templates can significantly shorten the contract process. By involving key teams such as Sales, Products, Finance, and Compliance, Legal can create templates that not only address legal risks but also align with business needs. Ensuring cross-departmental alignment leads to more effective contracts and greater support from the business. That makes the process more efficient and streamlined.
Stay tuned for our next article on tip 4. In the meantime, contact us at AMST Legal if you want to enhance your contract process through personalized expert help.
Creating Contract Templates That Work: Why Legal Should Lead
In our previous article about the 80% Template – 20% No Template Rule, we explained why companies should work towards using approved templates for around 80% of recurring contracts. The remaining 20% consists of complex or non-standard contracts that require a more tailored approach.
Once you have identified which contracts should be standardized, the next question is: who should lead when creating contract templates and rolling them out across the organization?
Our answer is clear: Legal should lead the process. However, this does not mean that Legal should draft a finished template in isolation and then push it down into the organization.
What Legal Leadership Means When Creating Contract Templates
When you have applied the 80-20% Rule, you are ready to take the next step – make a new template. Sounds very obvious that Legal needs to be in the lead. However, consider a SaaS company selling the same software to multiple enterprise customers.
A SaaS Example: What Can Go Wrong?
The customer terms may include an Order Form, SOW, Master Services Agreement, SLA, etc. (See our overview of essential SaaS contracts and documents). When no one leads this framework, problems quickly arise:
- The payment terms have not been aligned with Sales & Finance
- Sales may reuse an old Order Form
- Product descriptions may differ between agreements
- The SLA may promise service levels that Operations cannot deliver
- A DPA or Security Annex may contain obligations that Privacy, IT or Security has not assessed
How Legal Creates One Contract Framework
Legal should bring these documents and decisions together into one coherent contract framework. It should be clear:
- Which template applies to which type of deal
- Which parts commercial teams may complete or amend
- Which deviations require Legal or management approval
- Who must be consulted about technical, financial or operational commitments
- Where the latest approved version can be found
This does not mean that Legal decides pricing, product capabilities or security standards. Legal should ask the relevant teams for input, ensure that commitments across the different documents are consistent and translate the agreed position into practical templates and procedures.
That is what letting Legal lead means in practice. This is the basis of effective contract template governance.
Why This Is Not as Obvious as It Sounds
Having Legal lead template development sounds obvious. In practice, however, we regularly see two problems:
1. Small businesses, start-ups and scale-ups
Founders or commercial teams use templates downloaded from the internet or created internally. This is understandable during the early stages of a company, but those documents should be reviewed as the business grows and its products, services and risks develop.
2. Larger organizations
The company has approved templates, but commercial or operational teams maintain their own versions for specific products, services or customers. At one company, we found 40 versions of the same sales agreement. Together with the relevant teams, we reduced this to three.
Both situations create similar problems:
- outdated wording
- inconsistent contractual positions
- unnecessary negotiations
- increased Legal review.
Therefore, make sure that Legal is in the lead when making and rolling out new contract templates. We have seen too often that management or the commercial team use templates that Legal has not approved. This can create numerous problems later on.
Legal Should Lead, Not Impose
Legal taking the lead does not mean that Legal decides everything alone. Actually, relevant business owners should make the commercial and operational decisions, while Legal advises on risk and documents the agreed position.
The people who use and negotiate contracts have real experience. Legal needs their practical knowledge to ensure that the templates are correct and will actually be used by the business.
For example:
- Sales understands recurring customer objections.
- Procurement understands supplier issues.
- Product knows what the company can actually deliver.
- Finance understands pricing, invoicing and financial exposure.
Legal should actively ask for their input and use it when creating or improving the templates. Legal remains responsible for coordinating and safeguarding the contract framework, while the wider organization helps create a result that works in practice.
This also reflects the AMST Legal TTTN framework (Templates, Team (Training), Tech/AI & Negotiation). Templates include the related procedures, while Team covers training and cooperation. Legal leadership connects the two so the next steps can be taken. Using Tech & AI and knowing how to Negotiate these templates is crucial.
Better Templates Without Greater Dependency on Legal
Legal should take ownership of contract template development, approval and governance. When done properly, this does not create greater dependency on Legal. It gives business teams approved starting points, clear responsibilities and practical boundaries within which they can operate.
The principle is simple: Legal leads and coordinates the process. The business provides the practical, commercial and operational input. Together, they create templates that are legally sound, commercially workable and actually used.
In Tip 3: Legal Involves Other Departments, we explain how cooperation with Sales, Procurement, Product, Finance, Compliance and other teams can improve both your templates and the wider contract process.
Does your company use outdated or unapproved templates, or too many versions of the same agreement? Contact AMST Legal to discuss how we can improve your contract templates, procedures and workshop for commercial & legal teams.
