HOW TO MAKE A PRODUCTIVE CONTRACT PROCESS
If you’ve been reading other posts or the book Secrets of Productive Contracts, you know we need to think digitally about the contract work we do. This means we look beyond just our portion of the contract drafting or preparation. We understand a contract sits within a wider contract process. Sometimes we are already aware of the processes before and after we see a contract. Sometimes we aren’t so we need to investigate.
When we apply Triple O Productivity to a contract process, we are engaging with our clients and the business in a positive way, finding ways to make their work life easier and happier, as well as improving your own.
A word of warning… I am not a management consultant or a process specialist. I can’t tell you what Six Sigma is and I have never inspected a production line. There are some serious experts around who love the granular detail of process mapping – that’s not what this secret is about.
Lawyers should be enterprise architects
This secret is about simple process mapping tools and questions you can use right now (without a consultant or fancy software) to help rapidly outline process steps in complex contract relationships.
Why is it so important that our contract process runs smoothly? Why not just worry about the contract document? Why do we need to get our contract process and contract document in sync?
WHAT HAPPENS WHEN YOUR PROCESS AND DOCUMENT ARE OUT OF SYNC?
At the Athens Olympics in 2004, in the Women’s 8s rowing final, a controversy erupted.
Despite a strong, synchronised start by the Australian team – who were rowing powerfully towards possible medal contention – at some point in the final 300 metres of the race, one athlete stopped rowing. This was unheard of at elite level rowing and had never been seen in Olympic history.
The remaining athletes tried encouragement, prodding, yelling. It didn’t help. Sally Robbins had dropped her oar and stopped rowing. Robbins was dubbed ‘Lay Down Sally’ by various media outlets and criticised publicly by team mates, leading to a court case.
It’s clear something went wrong for Robbins. Whether an athlete breakdown is physical or mental or even some combination of the two is beside the point.
The other athletes in the boat would later describe how they felt ‘ripped off’ and powerless. They felt ‘frustrated and annoyed and pissed off’. They were in disbelief and they were embarrassed. Whilst we might never know what it’s like to get to an Olympic Games, we can imagine how it would feel if we were in that boat after months of tough training and years of sacrifice.
The fact is, even though just one out of eight athletes was not in sync, it had a massive impact on the performance of the whole team.
…even though just one of eight athletes was not in sync, it had a massive impact on the whole team’s performance.
This is the same for contracting. You need to get your contract process and contract document to work smoothly and in synchronisation.
Does it really matter if the contract process doesn’t match the contract document? If you’re not entirely convinced, let’s dive a bit deeper into how the contract process affects your personal productivity.
HOW THE CONTRACT PROCESS AFFECTS YOUR PRODUCTIVITY
External sales channels are always tricky for lawyers or anyone working in compliance heavy areas. As an organisation, you have the benefit of less overheads but an increased risk caused by lack of control and less visibility. Those that manage these external sales agents are often salespeople themselves, which brings with it another set of challenges. Good salespeople often promise the world because they are eager to please and show the capability of the organisation. In reality, things are often slower and less shiny than the picture a salesperson paints.
When it comes to getting a new external sales agent on board, timing is critical. When you think of it from the sales channel manager’s point of view, they are keen to get a new stream of sales coming in (and they have targets to meet). From the new agent’s point of view, by committing to sell our products they (and their team) may be without steady income for a certain period – ‘between jobs’ – whilst we get organised to bring them on board.
From my point of view as the lawyer crafting the documents, the standard agreements to get these new agents on board were a hassle! There was no challenge, it was purely data entry and traffic direction. I knew it was important to get these agreements done quickly and I did want to help to get them done fast. However, my inner three-year-old would say ‘I don’t wanna!’ whenever a new request for one of these agent agreements would arrive in my inbox. Still, I generally got the documents out within one to two business days (or faster if the request was urgent). Fairly reasonable time frames.
Contracts and Legal staff are good at fixing problems. However, this ignores the point that many of those problems could have been avoided.
International Association of Contract & Commercial Management
After receiving complaints that ‘legal is holding things up for weeks’, I was surprised. I didn’t think my part took very long, except perhaps when I needed to go back for further information – but that wasn’t my fault, right?
I decided to investigate and I mapped out the current process, asking questions and mostly asking why. Testing the reasons I was given often needed a why asked at each step in the process.
- Why does the commission team need to approve the agreement if the fees are standard?
- Why does the new agent wait to complete training until the agreement is fully signed?
- Why does the legal team see the agreement before the Director approves the new partner?
- When does the new agent need access to systems?
- Why do we send the Agent an unlocked, editable copy of the agreement when we aren’t really prepared to negotiate the terms?
- Why does the area manager need to approve the agreement?
- Can’t we just notify them when the agreement is finalised?
- Why is the process linear?
- Does each step depend on the other or can finance and the legal team approve separately?
See below for further examples of questions to help tease out the why reasons behind slow and unnecessary contract process steps.
When I knew the process, I could see it wasn’t ‘legal’ slowing the whole process down, it was a combination of each link in the chain taking a day or two extra to get the correct information they needed to do their piece of the on-boarding. There was also an issue of trust. Certain teams didn’t trust the manager to use standard commission structures or terms. This meant these suspicious teams wanted to approve every document before and after it went to the new agent.
We solved these issues with some of the following workarounds.
MAPPING THE ENTIRE PROCESS VISUALLY
Everyone involved could see how their task contributed to the whole. So many times when I was discussing the process, someone would point at the mind map and say ‘Huh, I guess I could just get a copy here at the end instead of the start if that’s the approved version’ or ‘Gee I didn’t realise the whole thing had that many steps’ or ‘I didn’t know it came to legal before me; if it’s legally approved I don’t need to see it’.
REFINING THE APPLICATION FORM
We reworked the application form so new agents gave us all the information we needed at each step to smoothly approve and create a new contract. They couldn’t progress or finish the form unless they filled out each field.
WE ELECTRIFIED IT
With the process automated via DocuSign, we were now prompted if fields were left blank. We could also lock down the standard terms. This gave those suspicious teams comfort. They no longer wanted to approve before and after contract creation, they only wanted notification when new agent joined so they could provide systems access – all the information they needed was now automatically sent to them. Less work and less risk makes compliance folk very happy.
KEY NEGOTIATION AREAS
The biggest item which was often negotiated or discussed was exclusivity. This was a decision around whether the agent could only sell our products or whether they could promote competing products also. After discussing and training the team on the risks, pros and cons of exclusive agents, we put the power back into the hands of the sales manager with an amazingly sophisticated legal technology tool…a tick box.
… all the users of a contract must row together with complete trust in each other, the contract document and the contract process.
It was easy to set up, the managers understood it, and new agents loved it because they felt they were getting something for their negotiating.
ð Check this box if clause 16 (Exclusivity) applies
By getting all contract users row together and get in sync, we made the entire process much less stressful and faster.
Just some of the areas that can get faster include:
- Approvals – If you know who and what department needs to approve certain issues, you can more easily ask them questions about the contract directly as they arise.
- Thresholds – When you understand the process, you know the threshold issues of the stakeholders, which can help you provide clear advice about potential contract changes.
- Knowledge management and upskilling – By understanding the pre-contract process, you can create useful tools for salespeople to help them manage customer expectations around legal negotiations. This gives clients new skills and frees up your time from handling the same, low-value questions – it’s a win-win!
- Improve your contract document – Understanding the contract process can show you more ways to streamline your document. There might be entire sections that aren’t needed or areas which aren’t clear. Lawyers often find lots they can improve in precedents. Talking to Contract Owners is an important way to better understand both the contract process and contract document and then improve both.
To operate at optimum productivity, all the users of a contract must row together with complete trust in each other, the contract document and the contract process.
HOW TO GET IN SYNC: MAKE A REVERSE SANDWICH CONTRACT
To get in sync, we need to think about contracts differently.
When contract users are rowing in sync…
- Each person trusts the contract document because it’s easy to read, key information is easy to find, and the structure makes sense.
- Each person can trust the contract process because it is logical, makes sense and is transparent.
- Almost anyone can read the contract and explain its basic structure easily.
- Operations staff can understand key areas of the agreement and act on them.
- Positive customer experience moves smoothly from the presentation of a solution from a sales person into the formal record of that agreement.
- Each person in the contract process has a sense of ownership over the contract document and process, not just the outcome or their particular area.
Thomas Barton, Helena Haapio, and Tatiana Borisova
A WORD OF WARNING, DON’T PUT LIPSTICK ON A PROCESS PIG
As we said before, don’t put lipstick on a pig. This means don’t bother trying to hide the true nature of something to make it gorgeous.
The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency.
A key aspect of Secrets of Productive Contracts and Reverse Sandwich Contracts is to really understand the document you are digitising. Not only that, you need to know the process that document goes through from go to whoa. If that’s too much work for you, then stick with paper.
Reverse Sandwich Contracting isn’t a magic wand. It isn’t going to fix your terrible process for you. What it does do is highlight what the current processes are, allowing you to provide a better option.
YOUR CONTRACT DOCUMENT AND CONTRACT PROCESS NEED TO BE SOLID
You need to have a 90% understanding of the whole contract process for Reverse Sandwich Contracting concept to really have a productive effect in your business.
If you don’t know the process, set aside time, 20–30 minutes, to talk with people who use that contract regularly. This may involve salespeople who present the contract to the customer or the operations team who need to build what the customer has agreed to buy. Better still if you talk to both.
Examples of what you need to know:
- Who initiates the contract?
- What is normally negotiated?
- Who needs to sign it?
- Who needs a copy at the end?
- What changes?
- What stays the same?
- Which areas cause the most disputes?
- What areas of the contract are questioned?
There are robots you can train to do this analysis if you have the time and cash. We are going for low-code options to start with, to whip our contract process into shape.
Even the best coding, visualisation or legal writing is misplaced if it does not serve the needs of the audience, the clients or users.
Helena Haapio, Daniela Alina Plewe, and Robert deRooy
The groundwork you put in to understand a contract process can launch you into an ‘Aha!’ moment of clarity about the contract life-cycle as well as your client’s motivations.
The fact you are asking for input into a contract from those that use the contract will have positive effects, increasing your reputation as a proactive and trusted advisor. Especially when you obliterate unnecessary steps.
Would clients or people in your organisation be shocked if you gave them an automated contract process and said ‘If you use this contract and there are no changes to the standard, you don’t need to come to legal. Just get it signed.’?
How would your business react? Can you hear yourself saying the above sentence or does it make you feel uneasy?
The groundwork you put in can launch you into an ‘Aha!’ moment of clarity about the contract life cycle and your client
GET IT DOWN AND MAKE IT VISUAL
Unclear contract processes delay contract turnaround. When you actually put pen to paper (digitally or literally) and map out a process for everyone to see, this issue become clear. Some will point to the process and say, ‘That’s not the approved process!’
Regardless of what the ‘approved’ or ‘ideal’ process is, getting down the actual process that really occurs is crucial for the below reasons.
YOU DON’T REALLY KNOW THE GAME UNTIL YOU KNOW THE PLAYERS
It’s helpful if you can identify most of the key players in the lead up to getting a contract signed and actioned – these are the people you need to speak with about what they need from the contract (and they could also be future minions… remember to think digitally!)
START A VISUAL CONVERSATION
A visually mapped out process is a conversation starter. It says to your stakeholders that you care enough about them and their work and the contracts they use to create a useful visual tool.
TRUST BUT VERIFY
Your version of the process might be correct from your point of view, but someone else who uses that contract might be aware of another, side process that also happens. This is much easier to spot on a visual process map than a list of dot points. You might not learn about these silo processes without a visual map to talk to.
PREPARE YOUR REQUIREMENTS LIST
Because we’re using the process map, you can also build out a requirements list. This can help if you want to move to a more high-tech solution down the track.
EVIDENCE OF HOW AWESOME YOU ARE
A mapped out visual process gives you a great starting point to show later when you’ve improved the process (everyone loves before and after photos!). This can be a great way to illustrate the value of making contracts more productive – they save not only legal time but processing time and resources across a company. Celebrate your successes visually!
THIS PROCESS IS A MESS – AND YOU EXPECT ME TO MAP IT OUT?
Yes! It’s easy to do with a few tools and the right questions. Process mapping is a serious business; it’s beyond the scope of this book (and me!) to show you the best way to map your contract processes. The below tools will give you a great start on how to map a process and gather requirements to boost the productivity of your contract process.
Okay so we know we need to map out processes, but how do we actually go about it?
What’s a mind map? Great question! A mind map is an easy-to-use tool so you can ‘brainstorm thoughts organically without worrying about order and structure. It allows you to visually structure your ideas to help with analysis and recall.’
At a basic level, a mind map can be pen and paper or a whiteboard and a marker. You pick a starting point – for example, a customer is interested in a product and a sales person presents them with a contract – and map out each step in the process.
I think mind maps are excellent. Studies seem to show different levels of effectiveness for their use in students, but there’s also a truckload of positive studies on mind mapping (from an admittedly biased but well-educated source, Tony Buzan, the ‘inventor’ of mind maps).
- they are easy to make (point and click, drag and drop, type, type, type)
- they look cool (pretty colours!)
- they are quick to make
- they are easy to change if the process changes (click, drag and drop)
- there’s an app and they are online
- you can present on them if you need to without developing a dreaded, boring slide deck
- you can save them as an image or a PDF
- they feel brainstorm-y and collaborative when done in groups
You can upgrade from the free version to a premium Coggle account for around US$5 per month. This gives you greater storage room for more mind maps and other enhanced features.
HOW TO CREATE A CONTRACT PROCESS MIND MAP
The below steps are based on Tony Buzan’s ‘7 steps for Mind Mapping’, tweaked for contract process mapping.
- Start in the centre of the whiteboard or page.
If you are using pens, whiteboard markers or sticky notes, starting with the central idea in the middle gives you freedom to go anywhere with your lines and ideas. You might have process mapping on one side and random ideas you get for improvements along the way on the other side. Starting front and centre gives you space to think creatively.
I work in Coggle, which has no real boundaries in any 2D direction. It also allows me to move branches around easily, add in emojis / icons and keeps my terrible handwriting a secret.
- Name it and picture it.
Confidently write the contract you are mapping in the centre of the page, and if you can, draw a small picture (or use emojis ?) that are relevant to the agreement. Images and headings help keep you focused on what you’re mapping out.
- Use different colours for different branches.
With different colours, you can highlight which processes are problematic (red) or working well (green). You can colour code branches by who is doing the task (different colour for each person). You can set aside a certain colour for questions that arise about this step in the process (I use pink!) so it’s fast and easy to take notes that make sense later. Overall, colours make the whole map more interesting to take in and show to others.
- Use curved branches, not straight lines.
Straight lines make your brain bored. Curve it up to help your brain ease along the process.
- Limit each line to one distinct action that is undertaken in the process.
You don’t need to go down to the level of click here, open this file, save file as kind of detail, but try to keep the ‘tasks’ as one line.
- Work your way through the agreement steps, as you know them.
Build up the story of the contract process, as you currently see it. Go systematically from around the first interest in having a contract (e.g. a customer approaches a sales person and they discuss a product purchase). It’s good to go back a few steps before and after your current knowledge of contract creation to really help nut out links in the contract process chain.
After you have completed your initial draft, go through the mind map process again with other stakeholders, like an interview, and get feedback on how they see the process working.
AVOID THE PROCESS PIGS – LOW HANGING FRUIT
Just like with our low hanging fruit documents, we want to start out with low hanging fruit process also if possible. We are just warming up in our Reverse Sandwich journey, so start small and work up.
Stick with documents that have linear work flows (i.e. I send to Justin, Justin fills in information signs and sends to Brittany, Brittany signs and we are done!). Use documents which do not need attachments.
Once you master the basics, you’ll be process mapping like a pro and will easily spot areas you can speed up with Triple O Productivity.
TRIPLE O PRODUCTIVITY FOR YOUR CONTRACT PROCESS
Let’s get stuck into the Triple O Productivity method for our contract process!
OBLITERATE (CONTRACT PROCESS)
Key Question: Do we need this step in the process? Can we do something else so this step isn’t needed?
Just like when we applied the obliterate step to the contract document, we’re now looking at the contract process to see what we need to get rid of.
Other questions to consider:
- Who holds up the process?
- Can we cut that person out of the process?
- Which tasks take the longest?
- Do we need that task fully completed or can it be shortened?
- Why do we need that step in the process?
- What would happen if we didn’t do that task?
- Can we remove that task?
- Can we get rid of this step or combine it with another to streamline the process overall?
- Does finance need to sign off if the contract is based on locked-down, pre-approved pricing?
- Is there consistently missing information, duplication, multiple locations for the same data, etc.?
- Where do you wait for someone to make a decision?
- At what point is information provided or put somewhere (for example) an inbox?
- Where are the approvals and are they all needed?
OPTIMISE (CONTRACT PROCESS)
Key Question: Now we are left with only the necessary process steps, is there a way to make every step in the contract process smooth, simple and speedy?
Is there a way to improve on the steps we absolutely need to have? If you must get approval by finance, what’s the best way to go about it (e.g. send the request to a general inbox, a single person or provide other notice? Do we need their approval always or only over a certain threshold?). We are looking to make every necessary step in the contract process as smooth, simple and speedy as possible for each person in the chain.
Other questions to consider:
- Which tasks add the most value to the contract process?
- Who owns those high-value tasks?
- Do we need that many rounds of negotiation?
- Could we set a cap on the number of negotiations rounds?
- Can you challenge the idea that one person cannot perform more than one step in sequence, perhaps several things can be actioned at once?
- To reduce the number of handoffs, what do you need? (training, pre-approved levels, help from IT)
- Could the finance team provide pre-approval for contracts under a certain amount?
- Perhaps particular approvals aren’t needed if the contract is a renewal or a variation?
- Who needs a fully signed copy?
- Can we add people who need a signed copy at the end of the workflow to automatically receive one?
- What steps in the process take the longest and can we speed them up?
OUTSOURCE (CONTRACT PROCESS)
Key Question: What parts of the contract process are best completed by…
a Robot Minion?
a Contract Owner Minion?
a Customer Minion?
a Minion Minion?
Thanks to Secret 1 we’ve structured our contract like a Reverse Sandwich, thanks to Secret 3 we are thinking like a lazy lawyer, constantly on the lookout for minions (human or robot) to speed up the contract process for all.
Delegating to the right technology or people (minions!) helps speed up the necessary steps in a contract process. Automating the contract process is one of the beauties of going digital.
Other questions to consider:
- Can I provide options for different situations (so lawyer’s help isn’t needed)?
- Do I need to be entering this data or can someone else enter it then I check over it?
- Can a paralegal approve this or does it have to be a lawyer?
- If the standard template is used, does this need to come to legal?
- Do I have to send a reminder email or can the application send that for me?
- Can an application automatically email and notify each person who needs notification?
Get your contract process productive. Be curious
MINDSET: IT’S COMPLICATED
It is not enough to know how to write well; one should also learn to engage others in the process, elicit information, and communicate the core message effectively to the different readers.
Thomas Barton, Helena Haapio, and Tatiana Borisova
Some processes are more complex than others. This is often caused by a new type of contract process (people aren’t sure really how to do it, no one knows how it will go) and this can lead to throwing extra people at the problem. This confuses the process for approvals and sign off.
When there are more cooks in the kitchen, there are more balls in the air and a higher chance of bottlenecks (+ increased rate of clichés!).
Once you have the general overview of the process end-to-end (i.e. in a mind map or simply in dot points), it helps to break down the process more formally so each player can see their exact role. This is more important for chunkier processes with many moving parts. You might not need this if the mind map is clear, there are not many people involved, or the steps are relatively simple and linear.
Swim Lane diagrams are useful when there are several independent actions needed by different players at separate times. The basic idea of a Swim Lane diagram is that the process moves forward and we can see who is responsible for which part of the process depending on whether the task sits in their lane.
How I started swimming in Swim Lanes
Franchise agreements are often very long by themselves but are also weighed down by strong laws in Australia which cover the kinds of information potential franchisees must get. There are also timing factors where a potential franchisee must receive certain information and then have 14 days to review that information.
I first got into Swim Lane diagrams when I wanted to give the key players in a Franchisee contracting process a checklist for all the items they needed to complete to successfully set up a new franchisee. It took a fair bit of mapping and discussions but we got there in the end. The result was a deceivingly child-like looking, colourful diagram where each person could look for their lane and colour to confirm what they needed to do at eah stage in the process.
There are some fancy applications you can use to map out swim lane processes. After testing a few, I found they look fantastic in the demo but were difficult to build from scratch. So I made my own basic version in a spreadsheet.
You can download a copy of this basic template from the Resources page.
As you can see, it’s pretty simple! Each person who needs to approve or see a copy of the contract is down the left side. Each part of the contracting process is slotted in to the relevant lane, depending on who completes the task.
Some of the players in the process want to receive notifications at every stage or approve documents. This might be needed at the start, so include these information alerts to begin with. Once people start to trust the process and understand the steps it has gone through, you can Obliterate these unnecessary steps in the contract process. As people understand that they process itself is strong, they won’t feel the need to approve each stage.
So now we know the tools we can use and the basic process of mapping processes, what are we looking for along the way? What are the questions we need to ask ourselves and our stakeholders to correct a problematic process?
When you optimise one area of a process, it might mean that process can now be outsourced. Work your way through your process map, focus on the tasks that slow the process down. Challenge yourself and the task owners to really explain the reason why that task takes so long.
If the process is still slow, you might not have the root cause. Keep asking why! Try the ‘ask why five times’ method if you aren’t getting anywhere, and use the below Checklist for Common Process Problems.
CHECKLIST FOR COMMON CONTRACT PROCESS PROBLEMS
PROCESS IS TOO SLOW
If people complain the contract process is too slow:
- Which exact steps are too slow? How long does each step take? Ask the person complaining to isolate the biggest bottleneck.
- Who owns the contract process steps that are slowing everyone down? Check in with them and ask how can you make life easier or speed things up for them.
- Reduce the number of people in the process.
- Gather clear and accurate information as early as possible (see below).
- Try to link in with an existing customer database to reduce data entry (which people find boring and often put off doing).
MISSING OR INACCURATE INFORMATION
If problems involve missing or inaccurate information:
- Require all information from clients or customer before the contract process kicks off (i.e. in an application form or other collection method).
- Add hard stops that don’t allow people to proceed without entering required information.
- Use drop down menus or check boxes instead of free text fields to eliminate errors and speed up data entry.
- Create a report on measurements for information accuracy and set a minimum average standard.
- Reject documents with missing or inaccurate information.
NOW IT’S YOUR TURN
What business process would you like to map out and improve? Are any of your contracts out of sync with the business? Which agreement parts or processes slow you down the most?
I’d love to hear how you map out legal processes!
SOURCES AND LINKS
GW Dent, ‘Business Lawyers as Enterprise Architects’ (2009). 64 The Business Lawyer 279 (2009); Case Legal Studies Research Paper No. 08-25. Available at SSRN: ssrn.com/abstract=1264063 or dx.doi.org/10.2139/ssrn.1264063.
TD Barton, H Haapio and T Borisova, ‘Flexibility and Stability in Contracts’© (2014) Retrieved via ulapland.fi/loader.aspx?id=5a80d6cd-83dd-4126-bb16-a069b85533d2, accessed 10 June 2017.
I also agree with fellow automation-lover Terry Walby from Thoughtonomy in disagreeing with Bill Gates to some degree. A little automation is better than no automation – even on an inefficient process. See T Walby ‘Why Bill Gates was Wrong on Automation’ (8 September 2015) Retrieved via thoughtonomy.com/why-i-disagree-with-bill-gates/, accessed 10 June 2017.
H Haapio, and DA Plewe, and R deRooy, ‘Contract Continuum: From Text to Images, Comics, and Code’ (February 23, 2017) Retrieved via papers.ssrn.com/sol3/papers.cfm?abstract_id=2928604, accessed 10 June 2017.
S McCoubrey, ‘Can plain language change our approach to conflict’ (November 2016) Presented at Clarity2016, Wellington, New Zealand. Retrieved via clarity2016.org/can-plain-language-change-our-approach-to-conflict, accessed 7 June 2017.
Mind Mapping, ‘What is a Mind Map?’(2017) Retrieved via mindmapping.com/mind-map.php, accessed 10 June 2017.
Think Buzan, ‘Mind Mapping Evidence Report’ Retrieved via b701d59276e9340c5b4d-ba88e5c92710a8d62fc2e3a3b5f53bbb.ssl.cf2.rackcdn.com/docs/Mind%20Mapping%20Evidence%20Report.pdf, accessed 10 June 2017.
For 5 Why technique straight from Toyota, see toyota-global.com/company/toyota_traditions/quality/mar_apr_2006.html, accessed 27 May 2017.