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Contracting Parameters
What Is It
Contracting Parameters define the specific criteria, guidelines, and conditions that shape the negotiation, drafting, and management of contracts within the organisation.
These parameters, alongside Self-Help Resources and compliance guidelines, form a critical part of the contracting framework that governs legal and operational functions.
Contracting Parameters establish the boundaries and requirements for safe and effective contract management, reflecting the organisation's risk tolerance and compliance needs.
Given the evolving legal landscape and market conditions, Contracting Parameters must be regularly updated to incorporate new laws, practices, and risk mitigation strategies.
Wherever a contract-related legal or compliance obligation exists, the Contracting Parameters will stipulate the necessary positions and practices required to meet these obligations.
The parameters encompass guidelines, procedures, and best practices to ensure all contract management activities comply with legal and regulatory standards.
Contracting parameters are significant in optimising legal department performance—they impact every aspect of contract-related operations and compliance.
The absence or poor management of Contracting Parameters can have substantial, identifiable, and ongoing negative effects on contract management's efficiency and effectiveness.
Scope
The content of Contracting Parameters will comprehensively address all aspects of contract management critical to the organisation’s operations. However, the basic infrastructure of Contracting Parameters will include chapters on:
◼️ Part 1 - Contract Formation: guidelines and criteria for negotiating and drafting contract terms and conditions
◼️ Part 2 - Approval Processes: procedures for reviewing, approving, and executing contracts
◼️ Part 3 - Risk Management: protocols for identifying, assessing, and mitigating risks associated with contracts
◼️ Part 4 - Compliance Standards: requirements for ensuring contracts adhere to legal and regulatory obligations
◼️ Part 5 - Performance Metrics: criteria for measuring and monitoring contract performance and compliance
◼️ Part 6 - Amendment Procedures: guidelines for modifying contract terms and conditions post-execution
◼️ Part 7 - Termination Conditions: criteria and processes for ending contracts prematurely if necessary
◼️ Part 8 - Dispute Resolution: mechanisms for addressing and resolving conflicts or issues arising from contracts
◼️ Part 9 - Document Management: practices for the storage, retrieval, and management of contract-related documents
◼️ Part 10 - Training and Support: resources and training for staff involved in contract management and execution
Resource Status
In the GLS legal ops – Contracting Parameters are considered both a “Foundational” and “Repeater” resource within the process ecosystem of an in-house legal team.
The Foundational Resource is a CRE that is responsible for determining the overall performance capabilities of a “critical” legal function. If it is not optimised, the function can never be optimised.
A Repeater Resource is a CRE that is common to two or more “critical legal dept. functions”. Once optimised, this CRE can improve all critical legal functions in which it is comprised.
Contracting Parameters are one of the most significant examples of Foundational Resources.
Best Practice Features
The best practice features of Contracting Parameters are as follows:
◼️ Clear Definitions: must have precise and unambiguous definitions for all contract-related criteria and conditions
◼️ Consistency: should be uniform across all contract types and functions to ensure standardisation
◼️ Flexibility: should be adaptable to accommodate changes in laws, regulations, and business needs
◼️ Accessibility: must be easily accessible to relevant stakeholders for effective implementation
◼️ Integration: should integrate seamlessly with existing systems and processes for efficient contract management
◼️ Regular Updates: need to be updated frequently to reflect new legal and regulatory developments
◼️ User Training: provide comprehensive training for staff to ensure proper understanding and application of the parameters
◼️ Compliance Monitoring: mechanisms should be in place to monitor adherence to the parameters and identify any deviations
◼️ Performance Metrics: establish criteria for evaluating the effectiveness of the parameters and their impact on contract management
◼️ Feedback Mechanism: incorporate feedback from users to improve and refine the parameters continually
Business Value
Contracting Parameters deliver the following value to the Business:
◼️ Enhanced Efficiency: streamlines contract processes with clear guidelines and criteria
◼️ Cost Savings: reduces reliance on external legal services and minimises costly errors
◼️ Consistency: ensures uniformity in contract terms and management practices
◼️ Risk Mitigation: provides frameworks for identifying and managing potential risks
◼️ Compliance Assurance: helps maintain adherence to legal and regulatory requirements
◼️ Improved Performance: optimises contract management processes for better outcomes
◼️ Strategic Flexibility: allows adaptable practices that evolve with business needs
◼️ Informed Decision-Making: equips decision-makers with standardised evaluation criteria
◼️ Enhanced Training: supports training with clear, standardised resources for staff
◼️ Operational Scalability: manages increased contract volume and complexity efficiently
Legal Department Value
Contracting Parameters deliver the following value for the Legal Department:
◼️ Streamlined Processes: simplifies and standardises contract management workflows
◼️ Reduced Workload: alleviates repetitive tasks through clear, predefined guidelines
◼️ Enhanced Accuracy: minimises errors and inconsistencies in contract drafting and execution
◼️ Faster Approvals: accelerates contract review and approval times with established criteria
◼️ Improved Compliance: ensures all contracts meet legal and regulatory standards
◼️ Better Risk Management: provides tools for identifying and addressing legal risks
◼️ Efficient Resource Use: optimises allocation of legal resources by automating routine tasks
◼️ Training Support: offers a structured framework for training new legal team members
◼️ Increased Transparency: enhances clarity and understanding of contract management procedures
◼️ Ongoing Improvement: encourages continual refinement based on feedback and performance metrics
Who Needs It
Contracting Parameters are essential for:
◼️ Legal Teams: requiring standardised guidelines for effective contract management
◼️ Contract Managers: need clear criteria for drafting and overseeing contracts
◼️ Compliance Officers: ensuring contracts meet legal and regulatory standards
◼️ Procurement Departments: benefiting from structured procedures for vendor agreements
◼️ Business Units: need consistent frameworks for managing internal and external contracts
◼️ HR Departments: requiring standardised templates for employment and other HR-related agreements
◼️ Senior Management: need assurance that contracts align with strategic objectives and compliance
◼️ Training and Development Teams: using resources to educate staff on contract management best practices
◼️ External Consultants: need access to standardised guidelines for advising on contracts
Productivity Consequences
A legal team operating without Contracting Parameters will face a wide range of inefficiencies, including:
◼️ Increased Workload: manual handling of contract processes due to lack of standardisation
◼️ Longer Approval Times: delays in contract review and finalisation without clear criteria
◼️ Inconsistent Practices: variability in contract management leading to potential errors
◼️ Higher Costs: increased need for external legal support and corrections of errors
◼️ Increased Risk: more significant chance of compliance issues and legal disputes without structured guidelines
◼️ Training Difficulties: longer onboarding times for new staff without standardised resources
◼️ Reduced Efficiency: slower contract creation and management processes
◼️ Poor Resource Allocation: inefficient use of legal resources on repetitive tasks
◼️ Knowledge Gaps: loss of best practices and inconsistent application across the team
◼️ Fragmented Collaboration: difficulties in coordinating efforts and maintaining clear communication
Tech Implications
Implementing Contracting Parameters will have the following technology implications:
◼️ System Integration: requires seamless integration with existing contract management and enterprise systems
◼️ Access Controls: necessitates robust access management to ensure secure and authorised use of parameters
◼️ Compatibility: ensures compatibility with various software tools and platforms used by the legal department
◼️ User Interface: demands an intuitive and user-friendly interface for efficient navigation and utilisation
◼️ Data Security: involves protecting sensitive contract information through encryption and secure storage solutions
◼️ Update Mechanisms: requires systems for regular updates to reflect changes in laws and business practices
◼️ Search Functionality: implementation of advanced search features for quick retrieval of contract-related information
◼️ Scalability: ensures the system can handle increased volumes of contracts and parameter updates
◼️ Support Infrastructure: provision of technical support and maintenance to resolve issues and ensure smooth operation
◼️ Training Tools: includes digital tools and resources for training users on how to apply Contracting Parameters effectively
What Next?
The GLS Knowledge Centre has a wealth of resources available for learning more about the importance of a Clause Bank and how you can effectively implement one - check out a few on the right.
The GLS Legal Operations Centre contains everything you need to effectively implement your own tailored Clause Bank in a cost-effective and timely manner. Check out the resources linked on the right.
Also, feel free to contact GLS to book a consult to discuss your Group Legal Policy needs right here.
