Contract Heroes

The Art of Contract Management at CLM Simplified Academy 2023

Episode Summary

Today, one element that should never be overlooked in any organization is contract management. Imagine a well-oiled machine, where every gear perfectly interlocks to form a seamless symphony of productivity. That's the magic of effective contract management. It harmonizes every operation, streamlining processes, and eliminating unnecessary bottlenecks. By getting it right, your organization can gain an unmistakable advantage in the market, outshining competitors and securing its position at the forefront of innovation and excellence.

Episode Notes

In this episode of the Contract Heroes Podcast, we are delighted to have three distinguished guests with us - Mary O'Carroll, Chief Community Officer at Ironclad and former Google Director Legal Ops and CLOC President; Laura Frederick, founder of How to Contract and ContractsCon, and a Lawyer; and Debbie Hoffman, previously Managing Associate General Counsel at Western Union, and currently a board director and executive leader with expertise in fintech, real estate, mortgage lending, and blockchain.

During our conversation, we discuss contract management implementations and finding a successful system with Mary. We emphasize the importance of taking a phased approach and starting small with pilot projects. Our discussion also covers the decision of whether to start with the legal department or procurement contracts, the role of consultants in the pre-implementation process, and effectively monitoring and managing contracts for compliance and value maximization. Laura joins as an expert in negotiating contracts, discussing the concerns of commercial lawyers and the trend of over-contracting. The episode concludes with Debbie sharing her experience with implementing a new tool at Western Union and the challenges faced. 




Episode Transcription


Intro [00:00:05] You're listening to the Contract Heroes podcast. Your one-stop shop for all things contract management. And now here are your hosts, Marc and Pepe.


Marc Doucette [00:00:14] Hello, everybody. My name is Marc Doucette. I'm the CEO at Koho Consulting. With me, I have my co-host, Pepe. And today we're going to be doing just a couple of interviews. You know, I really thank you guys for being with us during this lunch hour I know there were plenty of other speakers to go listen to, but you chose us, so I really appreciate that. So during this these couple of next conversations, we're going to be trying to stay as focused on CLM implementations as we can that's that's what our businesses were partnered with a couple of vendors here we do help them with implementations, help our customers to make sure that they get a system that they're actually going to be able to use, want to use and have user adoption with. So we brought Mary up, and we're going to have about 10 minutes here too, to have a quick conversation. And the first question that I wanted to ask her was, when it comes to your customers and folks that have you've seen implementations done for, how do you see them being successful when taking a phased approach instead of trying to do everything all at once?


Mary O’Carroll [00:01:15] Yeah, we talked about this a bit this morning already, but it's just the idea of getting all your stakeholders aligned at the same time and trying to roll out one solution and saying, hey, this is going to be good for everyone is honestly a bit unrealistic. You're never going to have everyone on the same page. You're never going to have everyone focused on the same set of features are must have requirements as the top things for the whole company. Everyone's got their own. Like this is what works for me and what, what I want from my day to day and change management is hard. This is something that affects so many parts of the company. So instead of trying, I think to get everyone aligned and to spend a year doing that, you know, stakeholder alignment, this is requirements gathering change management process is to just start small. And even if it's a pilot with, just find the group that is willing to work with you that trust you and roll something out that is successful. Start with something simple. I can from personal experience, we've tried like let's do the most complicated template and contract and then everything will be easy from there. Well, big mistake, because, you're going to have to learn from starting small and then increase the complexity as you go along. That's definitely it's all a learning process. It's all bringing people along. So if you're successful with something to start with and other people can see that, what you will find is another team or even that team itself will be like, wow, our NDAs are so much better now. Yeah, I don't have to deal with that. Hey, this other contract is also really annoying, let's get together and templatize that and put that into the workflow.


Marc Doucette [00:02:46] Yeah, I think that's, that's a fantastic place to start. And you know, another question I have is, you know, when we talk about departments, right? And do you see more success when you know, with hey, let's start with legal, let's start in the legal department or maybe the bigger issue is with procurement contracts and trying to focus on one of those areas before trying to do both at the same time.


Mary O’Carroll [00:03:06] Contracts are not necessarily owned by one team anymore, and we see that it's organized in every possible size and shape as a center of excellence. It's owned by procurement, it's owned by legal, it's owned by everybody. It's owned by nobody, honestly And I think it's less about like who needs to own it and Lucy said it really well, defining the roles and responsibility. If you're working with a legal team, if you're part of a legal ops function, you know, that is your clientele. You want to understand what their needs are, but it's really about finding the right place to start. So within legal, let's say they have a really good relationship with the procurement team, and the procurement team is really hungry for a better solution. Maybe that's the place to start. On the other hand, maybe procurement like, Hey, you know what, we have our own procurement solution and it's our repository and it works fine, go away. And sales is like, Oh my God, we would love to accelerate revenue. Well then start there. You know, find what works best for your company.


Pepe Toriello [00:03:59] Yeah. And from the implementation side, I would say that, well, for the sole reason that everybody's here, everybody knows why. I mean, why a CLM is important for an organization. But being working for over 150 implementation projects like we've seen that some companies that they have decided they have the budget to implement the CLM, but I cannot stress how important is to work with a consultant and can help you with the pre-implementation process, because we've seen a lot of the times that there are companies they already want to kick off, but then they reach out to us and it's like, okay, you tell me what should we implement? And it's like it doesn't work like that. You know that you get to have your processes and because even if you don't have that type of work, it's going to be hard to have somebody that he doesn't know how it works inside the company to know how it's going to be more effective, Right?


Mary O’Carroll [00:04:53] Yeah, I think it's a balance. There's certainly you can over rotate to like trying to be over prepared and getting all your templates harmonized and everything all ready and cleaned and metadata tagged before you're ready to move. I think that is also the same mistake of like trying to boil the ocean and doing all the same contracts all at once. You do need to just jump in and get started at some point and learn from that because you'll be like, Oh, I wasted all this time doing everything now we learned we have to change it all.


Pepe Toriello [00:05:20] So do you see any, you know, like how can organizations ensure that they are effectively monitoring and managing their contracts to ensure compliance and maximize value, like there's any other kind of recommendation like common elements that or organizations can start monitoring?


Mary O’Carroll [00:05:38] Well, we're here at CLM conference, so clearly you need a CLM. I mean, it's very difficult to do otherwise. Someone said earlier, you have to review everything. You have to monitor everything if you don't have controls in place. And the best way to have controls in place and we get human error out of it is to put systems in place. And I remember the original question, which was, can you have systems in place without taking the time to figure out your processes? Well, you know, kind of impossible. You can't just say, come in here consulting and help me automate this process. And you're like, Well, what is the process? Oh, we do it 15 different ways to Sunday. Well, can automate that. You have to think through in that process about what's the journey, what should it look like, what's the decision tree? You've got to do a little bit of work.


Pepe Toriello [00:06:22] Yeah, I agree. And, you know, that's something that, you know, obviously we can help with from a certain perspective, but it's fantastic that lies around and doing things to really help organizations make sure that when they do decide that it's time to implement the CLM that they can really hit the ground running and have everything ready to go for that implementation. And that helps dramatically. Mary, I think the last thing that we wanted to just touch on here was regarding A.I., right? And we know that Ironclad is is rolling out something that's that's going to be new, It's going to be innovative. And, you know, how do you see that helping customers from an immediate impact?


Mary O’Carroll [00:06:56] The A.I. that that is here today is very different than the A.I. that was here a year ago. It is impacting your actual day-to-day work. And I think that is a really significant difference. And it's there's substance behind all the hype that existed in the past. So when it changes the way that you're working day to day and we're not talking about like every so often I need to find something in the A.I. Is helping me do that. But you're negotiating a contract like that's the 80% of the role and responsibility that you should have and that's changing, that's made easier, that's facilitated. You're not doing mundane work. The expectations that you have for your day job immediately go way up and you start taking that for granted. Frankly, you know, all the technology we have in our day-to-day consumer lives, we can't imagine going back to a life where you can't just look up the weather or, you know, I don't know all the things that just happen easily. Now, think about then going to a new job, though, and someone says you're used to doing all this with tools and with process and with A.I. you don't have to do all this copying and pasting and maintaining stuff on email and on Excel spreadsheets anymore. And then you go to your new job and they go, Oh yeah, we don't have tools for that. We do things, it works fine the way it is. Would you tolerate that? I mean, our expectations are so high right now that people wouldn't wouldn't be okay with that. And so that's putting so much more pressure on our industry to modernize and change, because it's going to be that's going to be the bar. I mean, that's what people expect when they come to work. And that's what your Clients, your internal business partners, will expect.  


Marc Doucette [00:08:28] And that's that's going to be joining us is going to be Laura Frederick and she is the founder at how to contract. Also had a wonderful event a few weeks ago. So you know, maybe we can kind of kick things off and you can give everybody a little bit of background on what that event was about and what you're actively working on.


Laura Frederick [00:08:44] Yeah. So I'm Laura Frederick. I started a company called How to Contract about two years ago. After 25 plus years being at large law firm's in-house, I was commercial contracts at Tesla. That was my last job before I left in 2019. So I lived a life of commercial contracts and now I focus on helping people learn and not from an academic perspective, but really, like, what do we actually do every day when you work as in-house counsel, when you work as contract managers? So our big event was Contracts Con, which was just a fun celebration. We called it an extravaganza because it was really about, you know, coming together, networking, people connecting, having just a great time for all of those of us who love contracts.


Pepe Toriello [00:09:33] So, Laura, we know that you are an expert in negotiation contracts, right? But I'm pretty sure that you've seen some, you know, commercial lawyers talking about CLM like, what do you think are like the things that they're asking you, or maybe what's like the main questions that commercial lawyers have regarding CLM?


Laura Frederick [00:09:51] Yeah, What I see is it's this unknown. It's supposed to help, it's going to automate, but how do we go from here to there where it's going to be protecting the company? Because I think as. Commercial lawyers, that's our job. We protect the company and we use risk management to protect the company. We use our knowledge and expertise, whether we're in-house counsel or contract managers. And so I think there's a promise of it helping, but it's being able to see the vision of, well, then how are you going to manage risk? Because everything is, it depends. And how can a system know the 100 factors I consider and whether I'm gonna give this limit of liability or not, or whether we're going to do this kind of indemnification. Right now, that's a real soft knowledge base that is. And so I think that's what I usually hear is like, how do we get from here to there on the CLM?


Pepe Toriello [00:10:46] Right. And I think this is going to be make a lot of sense since we've been discussing law review, legal review policies. But do you think companies are over contracting? And if you do like, what do you think will be like the best way to reverse this?


Laura Frederick [00:11:01] Yeah, and I think there is a lot of that's those 20-page NDA is that's the 100-page document. I mean those are representative of our contracting or during negotiations when companies just have to like we trade template versions of a limit of liability, you know, somebody sends their form, we redline it based on our playbook. We send that back, you know, and then we're kind of at the same spot like, okay, what do we do? How are we going to come together? And that's where I mean, my bias is always about training, because I think training is the key to be able to negotiate these things. And so I think, you know, as lawyers, as contract managers, it's a little bit like deer in the headlights sometimes that we're asked to review things. We're asked to do things that are beyond our expertise, especially as we're moving things away from the lawyers to the sales teams or the contract managers or whatever other internal teams, You know, asking them to do that without the same foundation is just going to create a lot of fear. And when you have that fear, you have that resistance. So I think offering training, assuring the teams that they're not going to be expected to do more than they're capable of, because I think that I know if that was me and I didn't you know, I graduated from law school a year ago and I'm going to be thrust in the middle of contract negotiations. And the counterparty says something. You know, when I was a new lawyer, it was always like, well, let me think about that, you know? And then I'd go run and find somebody who knew the answer. And so I think the speed of contracting with CLM getting implemented, it's that human factor we have to remember, and especially not necessarily the lawyers, but the other people who were shifting all this work to those are the people that it's you know, it's going to take more than just guess what, you're now in charge of this. We really need to focus on that training, making sure they're comfortable.


Pepe Toriello [00:12:55] Yeah. And I think you know something else when you say being comfortable, right? I think that there are two parties that are negotiating contracts. It's always been done the same way, right? It's in word. You're saving it somewhere, hopefully not in your desktop. But now with these CLM tools, you know, we're starting to see or have seen that there's a lot of automation that can take place. So when it comes to negotiating, how should companies look at that, and what can be automated during that negotiation process? Is it simply just having a system that can keep that audit trail and show you the latest versions of the documents? What does that look like best practices? You know, is there somewhere you should start and maybe try to work towards, or does some of that need to stay manual?


Laura Frederick [00:13:34] Yeah, I think it's a lot of it depends on your leverage because if you're able, for example, a lot of companies won't negotiate their terms if it's under X dollars. I love that because it's really saying to I mean, even though we want to be nice, we want to help the customer, we want to give them what they want. But I think having bright line rules that like that really do help. And then in terms of like the manual, they'll always be manual because at the end of the day there's, you know, lawyers favorite phrases, it depends. And how there's too many factors. It doesn't depend on five factors. It depends on 100 or 200 factors. And lawyers being able to automate that through a system that is active and accurate is what I think we're not going to be there anytime soon. I think we can make progress, we can automate, but I love automating low level contracts. I love NDA automation, things like that, where at the end of the day, as long as it doesn't have terrible stuff, who cares? That's kind of how I feel about it. I love putting out forms and saying, this is our form, you're going to sign it if you want to do business with us in a starting in a fair place, that's great too. So those are the kinds of things I think we can automate. But again, it's you have to have people who know, who understand how to make those risk decisions in this process.


Pepe Toriello [00:14:57] Right. Then I would say that in our experience building CLM implementations, we've seen that in some customers. You can have the best technology, but when they want to automate complex contracts, you get a start from there. Right. Because a lot of the times the commercial teams, if you want to make them self contracting departments, but they don't understand what a class mean. It's going to be hard and it's always going to go through legal, right. So I think like one way to start the implementation of your contract, you just like work on the design of the contract. So it's easier for the commercial teams to just, like, use their playbook so whenever they start you in a negotiation with a new vendor, so they can have a way on how to make it way easier.


Laura Frederick [00:15:43] Yeah, and I think that's right. And I think that's again, you know, I think of when I've been able to strip down contracts to a shorter number of pages, it's because I know what's important. I know what the risks are, and not because I studied a class or somebody taught me some academic thing about how limited liability should be. It's like, okay, after my lifetime, I've seen this is where all the disputes happen. You know, they happen in payment, they happen in quality of product or service, they happen on termination. And then, only then do we get into indemnity and limited liability. But the operational things and having people trained on the operational things, so they know where the real risk is, that's going to be so important. But if you can train the people who are doing the contracts and negotiating them on those real risks, not the academic risk, but what is this company with these products and services? What do we really worry about then that's going to be such an important step towards enablement and getting to shorter contracts because they don't have to, you know, say in two pages, all this stuff when it's not a big risk.


Marc Doucette [00:16:49] Now, I think that's great. And, you know, thank you so much. I know we've talked about this in more depth on the podcast before, but I appreciate you coming up here and sharing your just crazy amount of knowledge that you have with everybody. Does anybody have any questions for Laura before we move on?


Laura Frederick [00:17:07] Sorry, this is more of a soapbox than a question. It really  irritates me when I hear somebody say we should have a cut-off based on how much this contract is worth. I've worked at Microsoft and I've worked with small startups and my attitude was always the same. You never take advantage of your leverage. You know, your customer thinks like a business person. Lucy said this earlier, think like a sales person. And now I work for a startup in the health care industry, for example, and I've been told this story. It's not worth that to us for us to negotiate this contract with you. And I'm like, But I'm protecting health care data. I can't give you a right to that data. I don't have that right with my clients, but I can't buy the product right, or at least negotiate that. Yeah, and it's a frustrating position to be in. And I've said many times, I don't treat people this way when I was at Microsoft. Customer first. And so I just don't want people to think in your contract management program that suddenly, so maybe we have a win-win contract with your customer is, is smart. And if I were a business person, I was like, Oh, we need a different lawyer. Yeah, I know. And I hear you. And I think it's, it's nothing that I've ever done where we always had lots of options and optionality. I didn't just have a straight, but I'm seeing it more, not that I'm advocating for it, but I see companies have numbers because it's the scaling. If they've got one lawyer who's processing 5000, 10,000 contracts a year, how can they negotiate each contract? So that's why you have a table and that's why you pushed them out of the business. When you have some of these issues like, hey, this is the $5,000 contract that's asking for three things, and these three things are required because she's regulated by HIPA. Yeah, you know, let's be reasonable. Yeah. Yeah. I've even been told, look, our board of directors has to rule that contract if it's less than $50,000.  Okay. You're going to be in business for a long time. . So sorry. No, I appreciate that, I know for sure. I hear you.


Marc Doucette [00:19:26] Well, that was great. So we really appreciate that. Thank you. Well, Laura, thanks for coming up. Having a quick conversation with us. Thanks a lot, Laura. Our next guest is going to be Debbie Hoffman.


Debbie Hoffman [00:19:38] Hello.


Marc Doucette [00:19:39] So thanks for joining us, Debbie. Maybe just give a quick background on yourself.


Debbie Hoffman [00:19:43] Sure. So I've been in-house attorney at a company that got sold to a in a global M&A transaction. I started my own blockchain technology consulting company. And then most recently where all this really came into play was at Western Union. I headed up, among other things, the procurement, the legal procurement side of things.


Marc Doucette [00:20:04] Great. In Western Union or any of your previous organizations, were you part of any CLM implementations.


Debbie Hoffman [00:20:10] At Western Union in particular the prior role that I had years ago, we didn't have such great CLM options.


Marc Doucette [00:20:19] And what is that process? What did that look like? Is it still ongoing or are you currently using the tool?


Debbie Hoffman [00:20:25] Yeah. So it took about a year to get it up and running. Everything that's been said in this room, I lived it and breathed it pretty much except for the, you know, like the continuation is, is ongoing and it's never done right. So that's kind of I can talk more about that to whatever extent you have questions. .


Marc Doucette [00:20:42] Can you just give us some examples on like how was that vendor choosing process? Like, how do you know when a vendor met all your requirements for CLM?


Debbie Hoffman [00:20:52] So that's a great question. I wish I could have said to you, we picked this vendor because they met all the requirements. A lot that has been said today is about partnership and stakeholders. And so in developing that relationship, basically our procurement department said, okay, these are the three CLMs we want you to look at. I gave them one more because I had heard of one more and they kind of they looked at it, but they didn't really see it. So I had a choice of three very expensive, fairly inexpensive and probably middle of the road. I'm just saying price because I'm going to be practical for a minute because when it came down to it, I would have loved the ones with belts and suspenders and that had everything, of course. But my CLO said, You know what, Debbie, we're not going to pay for this right now. And you're like, what?  Everybody in this room knows how much we needed this. So ultimately it came down to the procurement. The chief procurement officer said, Well, you know what, we will pay for  this, and it's a minimum investment for the cheapest one. So we're going with that and that's what we went for. Now it's fine. But to pick, you know, I can't say that I had a pick on. I had a lot of choices.


Marc Doucette [00:21:59] And do you think, you know, with the tool that you're using now, do you already see that you might be outgrowing that soon and need to look at something else?


Debbie Hoffman [00:22:07] I think the biggest issue we have, the tool we're using now, is wonderful. And I don't want to say it's bad, but the biggest challenge with it is that it doesn't come with a lot of help. So when we talk about people to help you implement and do the I.T. aspects of it and the building, the templates in the playbooks, we did all that. We have to do all that internally ourselves. And so that made it less expensive, but makes it much more challenging to continue to build it out.


Marc Doucette [00:22:32] Time consuming.


Debbie Hoffman [00:22:33] Time consuming and having dedicated teams and having people in procurement. All right. Say, hey, I don't have time to build out this additional playbook which we need in here or to, you know, to train. So when you do that all internally, it just takes time. Yeah, it takes time.


Marc Doucette [00:22:46] And who internally owns the is there a system admin that that's on your team.


Debbie Hoffman [00:22:52] Technically yeah. The, the lawyers on my side and then there's certain procurement people on from the procurement side. So the great news is I would say this is one of the best partnerships I've ever seen in my career between and between legal and procurement, because we both knew that we needed it.


Marc Doucette [00:23:08] That's great. And I think, you know, something that we're starting to see in the space is that there is a need for managed services and having an organization that you can outsource the upkeep of these CLM tools to and, you know, whether it be something maybe a later application like what you're using or if you do go for that expensive option, I think it's more even more important that you have somebody on your side to help you configure the tool because that cannot fall on the internal team either. More important things for you to be focusing on throughout the day. Then I got to create this new template in the system and you know, I'm the one doing it. .


Debbie Hoffman [00:23:40] Now 100% and what I would tell like the all the other CLMs in the room is if you can tier your pricing so that those of us in-house could say, okay, well we're going to start with step one, but then maybe we'll get two and three later when everybody sees how great it is.


Marc Doucette [00:23:52] Yeah. And that's definitely something that our partners do and are aware of is they want to make sure we everybody always talks about, you know, having a phased approach right to this implementation. Let's get some quick wins. Let's get our foot in the door and make sure that we can get user adoption to get these teams excited about actually using a new tool that they're not just going to throw in the closet and never use and try to email legal.


Debbie Hoffman [00:24:11] Again, right?


Marc Doucette [00:24:12] Yeah. No. And when you talk about adoption, you know, it's a lot of training is involved. And when you have a very complex system, training can take forever, right? So it's better just to go with the low-hanging fruit like, say, the central repository with all of your contracts and go with the workflows team. Go with approvals. And then go to the contract post signature management. So this question, Debbie, I would like to have your viewpoint from the customer side. Because I think one of the main issues is to have, you know, unexpected surprises in this is an art. Right. When you work as a consulting company because you need to build S.W. So this is what you're paying for. Right. So what would you say? Like what's the best way for a consultant of the CLM implementation to understand the client, to know their needs?


Debbie Hoffman [00:25:08] So that's a great question. And I actually have a lot of questions back about that. All right.  So when we did this, we've been talking a little bit today with my table. We had our policy, which we talked about. So that was our baseline. And we built that out. It's building the playbooks to know what are your positions. And I think I'd love to know, like know more, about how others build their playbooks. And so we partnered with an outside counsel to help us. And we had to literally, like, work with them hand in hand. So they knew our internal positions because they didn't know. So I do think it's really challenging when you're in-house to have the bandwidth to build your positions, to build these playbooks. And I think so. I don't know that I answered your question, but that's that's kind of I have a question back to your question.


Marc Doucette [00:25:54] Well, I would say that I think having pre-built models, I think that one right now, like one of the main trends in the implementation of the CLM is focusing on verticals. Right. Because it's not the same intake form from biotech and a real estate finance company. So it's easier because if you're getting all your contract requests by email or fax, maybe you have no idea how you can make it more efficient, but you have like models of different intake forms and the information that they need for different contract types. That's going to make.


Debbie Hoffman [00:26:26] 100% and you have to have all the different. And so we didn't start with all of our different models. We started with our basics. And then as we again over actually over a year, then you realize, okay, your wish lists of the specific we mean, one of the things I'm going to focus on here is it was contingent labor contracts. So we where do we have contingent labor, we had at Western Union all over the world. But we looked at where did we have those contracts most often and start with that and then later built out some of the other countries. But we didn't just say, Oh, we need to have continual labor contract templates for every country. You can't do that.


Marc Doucette [00:27:00]  Yeah. Well, we only have a couple of minutes left. I think we could talk about this forever, but any questions for Debbie before we wrap up?


Debbie Hoffman [00:27:11] Okay. I guess not.


Marc Doucette [00:27:12] Well, thank you. And for everybody that's out there, I don't know if any of you have heard of our podcast. We specifically have over 50 episodes that are just related to CLM. We've also had Laura to talk more tactically about how to work with contracts and negotiate them and what should be a part of them. But everything that we're talking about today are things that we have discussed on the podcast. So feel free to scan our QR code over here, and it'll take you directly to the site, and you'll be able to also find us on Spotify and Apple. But appreciate you all giving us your lunchtime to have a conversation with everybody. And thank you so much