Staying calm in the wake of a disaster is a challenge for almost everyone, but it’s especially important for senior executives who want to protect their companies. Maintaining a measured approach can be even more difficult in a crisis if a company is unprepared for what might threaten their bottom line.
That was the case for some companies that had uninsured deposits with Silicon Valley Bank (SVB) and Signature Bank. For general counsels and chief legal officers, the immediate concern when faced with a severe crisis is to take care of the company: help it maintain stability, manage contracts and relationships, and help its leaders navigate the situation, even if it’s Friday and the regulators have just tied up your cash.
I spoke recently to GCs and CLOs who discussed how they’ve kept temperatures from rising in the boardroom and their companies on an even keel. What most of them have in common is this: they’ve optimized their contract-management strategies.
Bolster your Backups
Every good legal officer has a sturdy, table-top tested crisis plan in his or her pocket, one which they’ve updated as their company evolves. It should include lists of key stakeholders and support personnel to inform in a crisis, access to cash-flow and contract information, and outreach plans to stabilize operations.
One of the most important ways to ensure you and your team mobilize through both crisis and calm is to utilize tools that make accessing contracts and meeting compliance regulations easier. Using Contract Lifecycle Management (CLM) technologies to summarize contract details including key terms; what happened during every stage of negotiation; and who approved what, when, and why, allows you to streamline the contract process and, when required, quickly respond to a disaster.
The most effective CLMs should:
- Include contract management tools that allow real-time collaboration in a meaningful and easily tracked way.
- Automate the review process to leverage technologies such as artificial intelligence to streamline workflows and find efficiencies that improve cross-functional dialogue.
- Use configurable dashboard technology to monitor the status of contracts and other legal matters, integrating:
- Enterprise Resource Planning software, which provides in-depth due diligence on the vendor.
- Enterprise Legal Management (ELM) software that provides a holistic view of the relationship: who’s still mad you took a “bad cop” approach during the last negotiation; who feels you haven’t responded quickly to simple requests; which customer got a discount; and ultimately, which customers care enough about your organization to help you.
- Salesforce, InterAction® and other CRM software providers that help you gauge the strengths of your relationships. How long was the sales cycle? How competitive was it? How committed are they?
- Free up in-house counsel to focus on strategic work rather than routine contracts.
- Free up the GC or CLO to be a more effective, strategic partner to senior leaders.
These types of integrations provide value long after a contract is executed. When integrated with ELM, CLM connects transactional contract data and provides insights into how each relationship works. Contracts can be reviewed and approved in the cloud and are completely auditable.
Once CLM and ELM integrate, they can be linked to broader business systems to conduct in-depth due diligence on vendors to gain a clearer picture of third-party relationships. The more data points and insights you have at your fingertips, the easier it is to focus on the most effective course of action.
All Together Now
The GC’s and CLO’s prime directive is clear: Take care of the company. In an increasingly complex and fast-moving world, it matters how we react and prioritize, and integrated technology is critical in achieving that.
Making certain your systems are optimized helps keep you and your company ready for anything. But integrations are essentially data bridges that can’t be set up overnight; there is a process to get you squared away with the right CLM.
Parley Pro®, part of CounselLink®, starts by inventorying current technologies (and the manual activities) used in the contract process and documenting which are integrated and which stand alone. Recognizing that an integrated process requires buy-in from different parts of the organization, we diagram the contract lifecycle. We also document the benefits at each stage and help clients visualize an optimal process using six phases – initiate, review, negotiate, approve, analyze, and manage. We often create multiple versions of this lifecycle diagram because stakeholders might see different benefits with different configurations.
It’s not just a question of the tactics involved in integrating these systems; it’s also about communicating the reasons why users should adopt CLM once everything is connected. You might want to consider creating incentives to bring more people under the tent.
For example, integrating ELM and CLM provides a single sign-on for users to seamlessly switch between programs without logging into multiple applications. By automating tasks such as contract creation, review, and approval, companies minimize errors and inconsistencies.
For those GCs with integrated systems who feared that only $250,000 of their company’s deposits at SVB would be protected by the FDIC, their system could tell them whether they were directly affected, whether customers were directly affected, and what the company’s obligations were. That made it easier to launch a plan compared to those GCs who had to manually scramble to find contracts and then comb through them to determine a company’s vulnerability.
Strong Support for Strengthened Relationships
A robust CLM plays a huge role in the GC’s ability to help the CFO and CEO every day and during a crisis:
- Assess opportunities to address cash-flow challenges. If you can’t liquify assets and pay your obligations, employees could leave, or suppliers could look elsewhere. You’ll need a Plan B that identifies your options, your immediate obligations, and sources of alternatives for paying them. For example, some customers might be behind on their payments but could be incentivized to catch up.
- Quickly survey contracts and customer/supplier relationships. This helps determine important precedents that can be applied to other negotiations. For example, they can identify situations where the company has helped customers in the past; some might even be willing to provide an advance at a discounted rate.
- Understand and analyze operational, risk-allocation, and organizational data. You need a good grasp of your everyday business activities to benchmark and establish goals and plans. Your CLM can provide you with a dashboard full of metrics that helps you set strategies to get things done.
- Know who needs to be included in specific communications. A centralized contact list that pulls from your integrated systems should include your PR team, your bankers, security, outside attorneys, everyone on senior leadership, board members, and other key support people, including outside vendors. You should also be able to generate a separate list of key customers and their primary contacts.
A strong CLM can also help you with relationships. When you negotiate contracts, for example, you’re forming or strengthening relationships. Optimized CLM technology enables quicker negotiation in a more structured way to build better relationships. During challenging times, those good relationships can be leveraged – along with contract data – to reinforce trust and credibility with partners and regulators.
Great decisions require speed and accuracy, which can be difficult if your systems don’t talk to each other. But when they do, you have a weighty tool to help you protect your company.
A crisis can be life-threatening for your company, but it can also signal opportunity. The SVB and Signature Bank meltdowns provide a perfect opening to advocate for a CLM upgrade at your company. You can tell your C-suite that without it, your access to critical data could be compromised or delayed; that with more data points and insights at your fingertips, it will be easier to focus on the most effective course of action.
Olga V. Mack is Vice President at LexisNexis® and CEO of CounselLink® CLM, a next-gen contract management company that has pioneered digital negotiation technology.
An award-winning general counsel and operations professional, Olga embraces legal innovation and has dedicated her career to improving and shaping the future of law. She shares her views in her columns at Above the Law, Forbes, Bloomberg Law, Association of Corporate Counsel (ACC) Docket, and more.