Contract automation - script the critical moves - Weagree
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(b) Script the critical moves (clarity resolves resistance)

Contract automation requires a leader to be precise about the critical steps of implementation. Why? Well, clarity resolves resistance. Ambiguity or uncertainty exhausts a lawyer because those are two things that appeal to their driver, not their elephant. Solving ambiguity or uncertainty requires thinking, choices and decisions, but not an acting on their intuition. Since riders are very logical, they can be swayed by many options and they need a clear goal. This is called decision paralysis. Research shows that when a person needs to decide about something, too many choices hinder and lead to not deciding at all.

Successful change requires translating goals into concrete, specific behaviours or actions: instructions about the new way of working must be crystal clear. It all boils down to being specific. (Clarity dissolves resistance.) Drivers hate to make a choice (at the exclusion of other options) and any ambiguity makes everything worse. Scripting the critical moves allows the rider to decide and lead the elephant in the right direction.

Be clear about how people should act. This is one of the hardest – and most important – parts of the framework. As a leader, you’re going to be tempted to tell your people things like: “be more innovative!” “customers first!” But you must not stop there. Look for the behaviours and see how those may need to change. Scripting the critical moves may include that your legal team members tells their (internal) client – backed by you – that for the benefit of the near future performance, today’s priority is to get contracts automated.

ASML created momentum and succeeded. When ASML started with contract automation in 2010, they had not one proper model contract. Of course, they did have a number of ‘templates’, which worked fairly well, but they basically needed a complete review. Their head of legal realised that while their model contracts were not top-notch, their first priority was to bring all (or at least a considerable number of) suppliers under a formal contract. As ASML used to have a supply chain of over 5,000 suppliers, they could not rely on the assumption that all suppliers were delivering under ASML’s general terms and conditions of purchase. With only a fraction being under a formal contract (in 2009), the legal department better focused on speed than on quality.

What happened? The automation of all procurement contracts caught the attention of the procurement department (not surprising: contract automation was the result of a comprehensive review of their procurement process and the legal department had organised roadshows to showcase and discuss their automated contracts). The first Q&A question of ASML’s automated Long Term Agreement was “what is the buying model?” with only ASML’s four procurement models as the available options. What’s special here? – This was a legal department that stood next to the business. The response from ‘procurement’ was highly supportive: it triggered a re-review of the Weagree template, this time with procurement participating closely. The results of the second review came to the attention of ASML’s CFO who then activated a larger group. Within nine months after kick-off of using contract automation, the core supply chain contract had been turned around three times.

Being undone from legalese and contractual noise (i.e. irrelevant or inadequate clauses that would otherwise be left in the first-draft ‘just in case’), negotiations of ASML’s new Long-term supply agreements took much less time than the years preceding contract automation: the transaction cycle reduced from an intense two years to only a few months with little back-and-forth drafting. An explosion of contracts generated with the Weagree Wizard, negotiated and signed was the result. Moreover, as contract automation had caught momentum, the legal department also upgraded and finetuned all their procurement contracts in collaboration with their procurement managers.

Contract automatation – which contract to start with? When a head of legal asks the legal team which contracts should be automated first, team members will be geared towards ‘efficiency thinking’:

  • not the Power of attorney (because it is too easy to automate and too quick to compete),
  • not a Contract amendment agreement (because it is a ‘quicky’ that is presumably made quicker from scratch).

Wrong approach. Wrong assumptions; precisely these documents may be time-consuming on an annual basis: there is no good model Word-document for it, the follow-up, managing the lack of robust administration (no accurate overviews). But the conclusion might be correct (it depends on your business).

Maybe they think of another one:

  • our Strategic purchasing agreement ? (and raise yet another objection: maybe not, because it is too large and not yet finished anyway).

This premature efficiency thinking will not work – it is problem-oriented thinking. Instead, a head of legal should ask which contracts they create most frequently, or which are the most important ones? (which is where to find the bright spots). Get your legal team to look into their files and count. Look into your contract lifecycle management application (how many contracts of certain kinds were signed?) and count.

Critical moves and external support. In large multinationals, automating contracts might be a large project, often requiring external support. In such case, in-house counsel should work on upgrading the model contracts, and on reviewing the automated templates and related questionnaires. Any external (interim, freelance) legal counsel or law firms involved to carry part of the work-overload should not fully take over the model contract upgrading work, and should not do the testing the automated templates. Not participating in contract upgrading or in finetuning the automated questionnaires by those who are supposed to embrace it, implies that no internal ‘ownership’ will be established. And such ‘ownership’ is crucial after launch of the automated contracts.

A legal department should not outsource part of its core business process to external professionals; instead, it makes sense to assign any additional professionals to the support of the day-to-day affairs. However, involvement of external support in the contract automation project is welcome if it relates to a language-review of the model contracts or to initial template-insertion work (in the Weagree Wizard, template insertion work can easily be split up and divided among juniors and seniors).

Template-testing as a critical first move. Sometimes, lawyers simply fail to start. Although a ‘perfect’ questionnaire appears to be less crucial for a ‘perfect start’ with contract automation, it needs to be reviewed anyway. So, sit down with every lawyer, answer a questionnaire together, and check the created contract together (make a compare against the original model contract). Effectively, this should be no more complicated than the review of a first-draft contract sent by the other party. Such joint processing of the questionnaire may reveal emotional disconnects with the new way of working, but also any points of attention.

Usually, delegating contract creation to the business is a great success; if you hesitate delegating contract creation to the business because you have fears about their (mal) appreciation: talk to the person ultimately responsible for that business unit. Share your concerns (after all, compliance with contractual obligations are that business unit’s responsibility). If you believe that more ‘control’ is desirable, impose an intermediate step of workflow approval (i.e. no contract can be generated before a lawyer approved the Q&A-results). At Weagree, we have seen numerous instances of customers where delegation led to 100 times more contracts created: business units do not employ bad-faith employees, but employees are sometimes completely fed up with the delays in contract creation. Realise what is better: having an unknown part of your business covered by (hopefully, correctly imposed) general terms and conditions or be able to have a business create hundreds of tailored contracts for all those ‘covered cases’?

Contract automation change management Rider contract automation script critical moves

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