What do you do if your organization's strategic objectives are not reflected in your contracts?

A company’s business strategy and its embodiment in sales contracts is a very important but oft overlooked concept. This embodiment of strategy is done in the drafting of standard contract templates. In my mind, the factors to be considered in strategic template drafting are these: —Revenue recognition —Inside sales and farming customer base —Risk management —Contract management —Updates in pricing, product, regulations and other terms —Geographic footprint There are limits on how open ended a sales contract can be. You have probably encountered order forms with an embedded link to online t&c’s that state they are subject to change by the provider at any time. Are these contracts even enforceable? In my legal opinion, No.

To close loopholes that do not reflect the organization's strategic objectives in contracts, it is essential to adopt three alternatives. Firstly, involve all stakeholders in the contract drafting process to ensure that all objectives and needs are clearly understood and incorporated. Secondly, use a specialist consultancy to review the contracts and ensure that they are aligned with the organizational strategy. Third, implement a system for periodically reviewing contracts, allowing for continuous adjustments as the company's strategy evolves. These measures help to create contracts that are more cohesive and aligned with the organization's strategic objectives, promoting greater efficiency and business success.

Stakeholders in the earlier phases can be engaged to understand: 1. The gaps at the foremost 2. Reason of the gaps as per them. 3. How can we work on the gaps from their point of view to ensure bridging. The contract templates, or the strategies made can be run through these stakeholders and their understanding and inputs can be then taken and considered as to the manner of their incorporation. By engaging stakeholders from different teams, there is usually high chances of getting insights pertaining to the strategies that are prevalent in the industry or which are adopted by the competitors or companies engaged in similar industry.

Sales people want contracts that get signed as is. InfoSec is wary of customer demands to beef up or change standard security measures. Billing wants invoices paid on time without change to the standard process. Some internal business clients value contract and project management, others want agility, others don’t want anyone looking over their shoulder. And then there are us lawyers who want a legal utopia in which no risk exists. My comments here are a bit sarcastic, but only a bit. The path to success in bringing everyone together is the participation of executive leadership, which has its own challenges. Don’t be afraid to take the reigns when the stagecoach is near the edge of the cliff.

To engage the stakeholders affected by contracts, adopt two main measures. Firstly, establish clear and continuous communication, keeping everyone informed about objectives, expectations, and the progress of negotiations. Organize regular meetings and feedback channels to ensure that their concerns and suggestions are heard and considered. Secondly, involve stakeholders from the start of the contract drafting process. Hold workshops and collaborative sessions to integrate their needs and perspectives, ensuring that the final contract reflects everyone's interests. These approaches promote greater alignment and commitment to contractual objectives, improving the outcome of negotiations.

Start by clearly identifying the gaps between your strategic goals and the contract terms. Prepare a detailed explanation of how aligning the contract with these objectives will benefit both parties. Schedule a meeting with key stakeholders to discuss these points. Approach the conversation with a collaborative mindset, emphasizing mutual benefits and long-term success. Propose specific changes that directly address the strategic objectives, such as new deliverables, timelines, or performance metrics. Ensure that the revised terms are clear, measurable, and achievable. By focusing on alignment and mutual benefit, you can create a stronger, more strategic partnership.

I think that a contract negotiator must possess several essential skills when renegotiating terms that do not reflect the organization's strategic objectives. Firstly, they must have strong analytical skills to identify discrepancies between organizational objectives and contractual terms. Effective communication is crucial, enabling you to clearly articulate the organization's needs and listen to the other party's concerns. Advanced negotiation skills are needed to find mutually beneficial solutions. Adaptability is key to adjusting strategies as new information emerges. Finally, resilience is important to persist in the face of resistance and reach an agreement in line with the organization's strategic objectives.

One of the major step post updating the process would be to effectively communicate and make the stakeholders aware of the changes/updates made in the templates, protocols, related policies so that there is no gap in actually implementing the changes theoretically and practically.

Updating an organization's internal processes is essential to ensure alignment with its strategic objectives. Outdated processes can create gaps that prevent the company from achieving its goals. Continuous updating allows processes to reflect changes in the business environment and strategic priorities. This includes reviewing policies, procedures, and contracts regularly. A good example is renegotiating contracts to ensure that they are aligned with strategic objectives, such as innovation, efficiency, and sustainable growth. In this way, updating internal processes and aligning strategic objectives work together to promote organizational effectiveness and long-term success.

Monitoring contract compliance is crucial to ensuring that contracts are aligned with the organization's strategic objectives. Continuous compliance makes it possible to identify and correct deviations quickly, ensuring that contracts meet performance and efficiency targets. This monitoring involves regular audits, the use of performance metrics, and constant feedback from the parties involved. It also ensures that all contractual obligations are fulfilled, avoiding legal and financial risks. Keeping an active eye on contracts helps the organization stay focused on its strategic objectives, promoting consistent and sustainable performance over the long term.

A good practice for commercial counsels and contract managers is to get together every couple months and share their experiences with negotiating and managing standard contract templates. What clauses receive the most flak from customers? Are there emerging patterns for resolving differences on clauses? Is the company struggling to make good on service delivery, product implementation, use of subcontractors? Clear and complete SOWs that are drafted using the agreed form and that don’t amend the master agreement without approval? Customer pushback on the length of the term and renewals? Are problems due to template language, or do they come from poor negotiation or failures within the company?

Data protection and privacy law compliance are a big and real challenge for commercial entities these days. Yes, you can ask your lawyers to provide template Data Processing Agreements (DPAs) and Business Associate Agreements (BAAs). But if you don’t have corporate compliance programs in place, you are living on borrowed time. If you don’t have compliance programs in place, your company needs to put interim rules in place to avoid trouble: —Review products and services for what if any personal data and protected health information is processed. —Don’t automatically attach DPAs and BAAs to contracts without threshhold determination. —As a last resort, restrict business to countries that don’t impose onerous law (which are dwindling).