Tips to Ensure Compliance During Contract Drafting and Review

Written by on October 20, 2021 in Business with 0 Comments
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It can take a while to complete the entire contract drafting process. Both parties need to be patient, attentive to detail and have good negotiation skills. Offers and counteroffers are exchanged back and forth until an agreement is reached. The work is far from done.

After the contract has been signed, your focus should shift from finalizing it to making sure you comply with all terms and conditions. Before you sign an agreement, it is important to think about how you will comply with the terms of contract management. This agreement could have a significant impact on your daily activities or just one action. Implementing solid contract management software can streamline the entire drafting and review process to ensure compliance.

These top tips will help you and your department standardize the contract drafting process to ensure compliance.

Use Templates

While contracts are subject to variation depending on the company's needs, creating templates that work well in high volumes is possible. It is possible to save time and maintain consistency by spending more upfront to identify common clauses and company-specific terms.

Set Goals and Measure Your Progress

There are two possible ways to look at contracts. The first view is that contracts are a mandatory document that takes up time and effort. The second view allows you to make a promise and achieve a goal. Which one is most beneficial to the final result?

When you think about how you can comply with your contractual obligations, you should set goals and metrics for each stage. Setting goals is ten times more likely for people to achieve them. Consider the purpose of your contract in general and identify metrics that will assist you in achieving it.

Collaboration Is Key

The key is to find the right balance between collaboration and productive competition. To ensure a smooth contracting process, the legal team should work seamlessly with the other departments, procurement, operations, or sales. The likelihood of unintentional errors and compliance issues is significantly reduced when multiple people review a document. A well-organized system emerges when people from different departments work together and can succeed in most processes.

It is important to remember that it can be difficult to collaborate on every input. To receive feedback and edits, it is essential to have a working system in place.

Be Clear About the Roles.

Contract compliance isn't a one-person show. It is not a department-specific task. Compliance is everyone's job. To ensure that people follow through on their responsibilities, they must know precisely what they are.

It is essential to be clear about the roles and responsibilities involved in contract drafting. Clearly define who is responsible for what, when it must be done, and with whom they should collaborate to make it happen.

Your organization could be at risk of not complying with the contractor being in breach if expectations are unclear, roles are unclear, communication is poor, or communication is not effective. Clear roles are only possible if there is a solid contract management system.

Improve Consistency and Efficiency with Playbooks.

Some contracts, such as sales agreements, require negotiation. However, the company will have a range of negotiating positions. Over time, however, a pattern of comments from other parties emerges. It is important to keep these contracts consistent and improve efficiency when drafting them, especially if it takes a long and tedious process. To document the positions and comments, a playbook can be helpful. The playbook typically includes descriptions of negotiation patterns and highly-contested clauses, as well as acceptable edits.

Using Advanced Technology Can Further Streamline the Process

Law departments are exploring advanced technologies such as artificial intelligence to use their roadmaps for contract review. This automates the review process, which allows it to move faster and more efficiently. It also saves time and makes it easier for in-house counsel to do more strategic and high-value work.

Keep Track of Every Change!

Changes, modifications, and adjustments are fundamental components of any contract. One of the most important aspects of maintaining compliance is to make sure that all changes are recorded meticulously concerning the individual who initiated them and the date at which the change was made. Prior to this, keeping track of changes involved downloading the document, employing Microsoft Word to edit it, and then sending the document back. In the event of two people working on the same document simultaneously, document reconciliation needed to be done, which was a hassle and could result in uncorrectable errors.

Outsource

In certain situations, such as large volumes of internal contracts or rising in volume, outsourcing their review to a low-cost legal service provider on-shore or offshore may make sense. However, it is best to do a thorough cost-benefit analysis and risk exposure analysis before making this decision.

Final Words

It is not worth the effort to comply with all aspects of the contract implementation process. Every stage of contract management should be focused on compliance. You don't want the law to be messed with. Compliance is a sure way to avoid any legal troubles.

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