For businesses overwhelmed by a high volume of contracts, compliance outsourcing can help ensure that contractual agreements are set up for success and fulfilled properly. Enlisting in a managed legal service provider, such as a fixed-fee law firm, can help internal legal departments with tasks such as reviewing vendor contracts, monitoring compliance with terms of agreements, negotiating, and identifying risks.
Below, we’ll explore some nuances of this critical business element and how companies that leverage contract compliance outsourcing can free up internal legal teams for more strategic work as well as review some contract compliance best practices.
Why Businesses Must Pay More Attention to Contracts
Contracts and business go together because contracts are business. Contracts provide clarity, help manage risk, offer legal protection, aid in relationship management, and specify responsibility and accountability, so it’s no wonder they are pillars of modern business. But from drafting through execution, there’s a considerable amount to cover and precision matters.
By having a well-drafted and agreed-upon contract, businesses can minimize the risk of disputes and ensure that they are working towards mutually beneficial outcomes—so long as leaders can ensure that all i’s are dotted, and t’s are crossed.
Growth companies with limited legal resources are often challenged to find the time to read each contract line by line, resulting in a vendor contract pile that, for the most part, gets ignored, resulting in a plethora of compliance issues later on.
Outsourcing contract compliance management is a practical solution for legal departments that are underwater, thanks to a high volume of contracts. A managed legal services provider, such as a fixed fee law firm with a full bench of contract professionals, can help busy internal legal teams resurface—and help move that overwhelming stack of vendor contracts into the reviewed and approved pile.
How Outsourcing Compliance Contracts Can Help Your Business
When it comes to contracts, there is a lot to cover, from establishing one with your clients or customers to fully understanding what you’re signing up for with vendors, having knowledgeable legal counsel behind every contract can be the difference between a successful partnership or a headache down the road.
Companies need to ensure that every contract they sign is a smart move for the business, and can be challenging for already swamped legal departments. Outsourcing contract compliance to the right partner that fits a business’ current needs can help companies effectively stay on top of their contracts.
When selecting outsourced compliance contract services, it is best to find support that has specific contract experience. There are many qualifications to look for and questions to ask, including:
- What is your track record with contract negotiations? Having a partner versed in negotiations is one of the leading benefits of outsourcing compliance contracts. A legal team with extensive contract knowledge and experience can help expedite your negotiation processes by being fully fluent in contract language, highlighting opportunities, and understanding exactly what risks and red flags to look out for.
- What is your turnaround time? You’re already experiencing a bottleneck with internal legal. One main priority in enlisting outsourced contract help is to increase the speed—without sacrificing accuracy—at which you can process contracts, so seek out counsel with a guaranteed turnaround time.
- Can you help our internal team better manage the contracts we don’t outsource? Chances are, if your legal team has a contract playbook, it’s either hardly used or outdated—or both. As you evaluate your options for contract compliance outsourcing, look for someone who can help not only get through the contracts but up-level and optimize your legal team (and while they’re at it, update your playbook).
While there are various ways to augment your internal legal department, a high-quality fixed-fee law firm can provide the managed services you need (backed by an entire team) without the added fees of a retainer or the solo experience with just one new internal employee. By adding a team with deep contract experience, your company can quickly—and confidently—process contracts to ensure compliance and that your business doesn’t miss a beat.
Best Practices for Contract Compliance
As previously mentioned, for many organizations, contract playbooks were established once long ago—and then not updated or revisited ever again. Because times have drastically changed since many of these best practices were established, enlisting outsourced legal operations support can help legal teams to update their contract playbooks, templates, and negotiations support.
Here are some best practices for contract compliance that organizations can follow:
Develop a contract management policy
Best contracting practices would recommend that companies establish a formal policy for contract management that outlines the roles and responsibilities of all parties involved in the contracting process, including contract creation, review, approval, and monitoring. An outsourced legal team, such as one with deep contract expertise, can help businesses quickly create a contract management policy.
Centralize contract management
In today’s modern and connected age, it can save businesses considerable time and money to store contracts and related documents in a single repository that ensures easy access and tracking of contractual obligations. For businesses unsure where to begin or uncertain about what technology is best, a fixed-fee law firm with a legal operations function fluent in current solutions can help companies quickly implement and successfully start using a contract management tool that will work for the specific needs of the business.
Review contracts thoroughly
It goes without saying that you want to have your legal team review all contracts thoroughly before signing to ensure that all terms and conditions are fully understood and agreed upon. This is one step where enlisting outsourced compliance contract assistance can enable you to leverage the experience of lawyers knowledgeable of current trends and deeply familiar with the nuances of your business and its vendors or clients.
Monitor compliance regularly
With contracts, you want to make sure that your company is fulfilling your commitments—and so are your vendors or customers. Your legal department should monitor compliance with contract terms regularly to ensure that all parties meet their obligations and take prompt action to address any issues.
Conduct periodic audits
Periodic audits of your contract management process are a must. For businesses that have a maxed-out legal department, this is a good opportunity to realize value through outsourcing. A managed legal services provider with a strong contract practice and legal operations functions can perform audits to ensure compliance with policies while also identifying areas for improvement.
Invest in contract management software
Software that automates and streamlines the contract management process improves efficiency and reduces the risk of errors. It’s important to pick the solution that fits your business, and leveraging an outsourced managed legal services provider, such as a fixed-fee concierge law firm with a team of legal technology experts, is a great way to ensure you not only select the tool that matches your specific needs but that it can get up and running quickly.
Organizations that establish best practices for contracts and compliance can meet contractual obligations—and hold clients and vendors to the same—while minimizing risk and maximizing efficiency.
modCounsel: A Practical Solution for Contracts
At modCounsel, our team of experienced contract law professionals lives and breathes contracts—so your team can focus on the high-impact work they enjoy. mC IO Contracts combines the power of AI with the knowledge and experience of our team, giving you 24-hour contract review cycles and a fixed-fee model at the level your organization needs to scale. Companies that work with us benefit from our extensive experience with contracts and now you can access high-quality concierge law firm services that fit into your budget.
Commercial contracting should move at the speed of business
Contracts can feel like risky business, but companies have options. Outsourcing contract compliance can enable your internal legal to build credibility while protecting your business from risk.
Connect to learn how modCounsel and mC IO Contracts can benefit your business.
References/Footnotes:
Law.com: “It’s All in the Details: Why Precision Matters in Commercial Real Estate Agreements.”
