“When All You Have is a Hammer”: Law Firms Are Good at Legal Advice, But Creating a Contract Management System Calls for Process Capabilities


The Point

1. Responding to skyrocketing legal demands on business, the Legal function has two options:

(1) assign one or more lawyers, in-house or in a firm, to deliver legal expertise in one-off tasks (draft deal documents, court representation, counseling business people on how their actions are likely to be treated by courts or regulators), and

(2) use disciplined processes for systems that scale Legal’s capabilities in routine and recurring tasks (see further explanation here and here).

2. Law firms are organized to deliver only the first of the above two capabilities (though almost all law firms have long maintained technology-enabled processes for signing up new clients and matters, keeping track of time to be billed, and collecting their fees — i.e., to run their own businesses).

3. These days “CMS” is a hot topic: Many business enterprises are rethinking their “contract management systems” to improve creation, execution, analysis, and ongoing accessibility of their contracts.

4. Contract management systems can have a big impact on a company’s health — not least on accelerating the order-to-cash cycle.

This Matters to Your Business

Because their subject consists of a company’s contracts, and because a contract is a legal document, it might seem natural to view contract management as something to place under Legal’s authority.

But while some (but by no means all) of the legal profession’s members are adept at drafting contract language, lawyers as a profession have almost no skill in designing the process-based workflows that comprise a contract management system.

And the attorneys who make up law firms tend to be too individualistic to “work and play well” with the project managers and technology experts (not to mention other lawyers) who are so critical to designing contract management systems within a business.

Unsurprisingly, there are loud voices within the legal profession that insist law firms should be in charge of contract management systems (for instance, here and here) .

Because …

For years I’ve looked to Ken Adams as the leading U.S. lawyer on effective contract drafting. He puts it this way:

” … I’ve looked at countless contracts and have concluded that the contracts world is awash in dysfunction. That applies to contracts drafted by law firms ….

“Law firms might be excellent at getting the deal done. And I know plenty of individuals at law firms care about clear, modern contract drafting. But nothing I’ve seen suggests that law firms as institutions are equipped, in terms of process expertise and content expertise, to tell companies how best to handle their commercial contracts.

To serve that function, I’d look to a process-driven organization that combines technology competence with real contracts expertise, not bogus conventional wisdom ….”

To design and implement a company’s contract management system, I would look to an alternative legal services provider like Elevate, or to a CMS software provider like Ironclad, or to the legal group of a Big Four accounting firm like Deloitte. There are many good providers in each of these categories.

Get legal advice from those who are good at it — like law firms or in-house counsel.

And get help on implementing business systems and their component processes from those who are good at those tasks.

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