Contracts and agreements are important documents for any organization because they are inked terms and conditions for businesses. Signed contracts define the terms and conditions of strategic relationships with other stakeholders, suppliers and relevant authorities. It is therefore imperative that each contract go through multiple reviews by the legal team, as they are one responsible for ensuring that all business objectives from a particular agreement are worked out appropriately.
While contract management is a long and tiresome process, things are changing with the introduction of new techniques like Artificial Intelligence. For the time being however, things are manual and companies need to follow a few best practices in order to ensure that they get things right.
Conducting thorough research
Every contract management process must begin with a comprehensive investigation about the terms of the contract and the respective parties involved in it. Legal teams should interview representative from all respective organizations and gather relevant details about the extent of the terms of the agreement as well as the goals of the contract. This is also an important time to learn about any prior commitments that have been made by either side because they can hamper negotiations down the road.
Knowing who to deal with
Identifying the appropriate authoritative individuals that have the power to formulate the contract in important because it allows legal teams to save considerable amounts of time presenting and negotiating terms before the actual people in power. This also highlights how things will work out; for example, if the contract is to be approved by the board of directors, you need to able to reach them and obtain their approval.
Analyzing the contract and its relevant details
Once the preceding two elements have been cleared out, the next step is to dissect the contract and all the relevant documents required to make it happen. These are essential because at times some of these have to be obtained by gaining approval from multiple sources. If these things are not taken into account, the timelines can substantially widen and as a result the negotiation efforts and business relationships can come under fire.
Create timelines and milestones for complex projects
This is one of the most effective ways to handle more complex projects. Breaking down larger tasks into smaller ones can make them more manageable and as a result they can be executed with higher efficiency. Milestones are also beneficial in ascertaining relevant timelines for each project because it creates a framework that allows the legal team to identify how long the respective task will take to execute. Since the milestone is about delivering or completing a smaller task it becomes easier to see how things are going and then determine the resources that will be required to see it through.
Negotiations are the cornerstone of formulating effective contracts and agreements because they steer the direction that the entire operation is going to take. Being weak here means that you lose out on any advantages that you had intended to obtain out of the contract. Following the other four steps leads to a much better negotiation effort because the legal team knows who they’re dealing with as well as the purpose for which the contract is being executed. Subsequently, contract management also becomes simpler when negotiating for what you need in a business contract.