Introduction to contract management

Copyright 2017 Berkman LLC
INTRODUCTION
TO CONTRACT
How to get started in commercial contract management
MANAGEMENT

Speakerbio
2
Mark Little | President and CEO | Berkman Solutions
Mark Little is a senior executive and corporate lawyer with
over ﬁfteen years of experience in legal, compliance and risk
management technology.
He has been a featured speaker and commentator on risk
management and compliance around the world.
He has led global teams and done business in Asia, the Middle
East, Africa, Europe and North America. His expertise includes
contract authoring, commercial contract management, risk
management and compliance technologies.
Mark received a Juris Doctor (JD) from Cornell Law School
and a Bachelor of Arts (BA), with All College Honors, from the
University of Washington.

Companyoverview
Berkman Solutions provides compliance and risk management software and services. We help
organizations around the world to improve performance with better management of contracts,
legal entities, due diligence, compliance, and legal risk. We are lawyers, compliance experts, and
business people ﬁrst; technologists, second.
Our team has managed, negotiated, and drafted almost $4 Billion in contracts across industries
and around the world for the last ﬁfteen years. We have performed and facilitated due
diligence on thousands of companies. Berkman staff are recognized experts on contracts, risks,
due diligence, and legal entities. We write and speak about compliance, legal risk, and contract
management regularly.
Our clients operate in every sector of the economy: health care, sports and entertainment,
manufacturing, business services, and more. We count Fortune 500 companies as well as small
businesses (and everything in between) among our clients.
3

Disclaimer
These materials are for informational purposes only and
not for the purpose of providing legal advice. You should
contact your attorney to obtain advice with respect to
any particular issue or problem. Use of these materials
and any e-mail links contained within the site do not
create an attorney-client relationship. Berkman LLC is
not a law firm and the author or presenter is not your
attorney. The opinions expressed in these materials are
the opinions of the individual author and may not reflect
the opinions of the firm or any individual.
4

MARK LITTLE
mark.little@berkmansolutions.com
1.855.517.2193 (in North America)
+1.503.517.4293 (global)
berkmansolutions.com

Training objectives
You have just been tasked with getting your organization’s
contracts organized.
• Where do you start? How do you stay organized?
• Why does contract management matter?
• How can you exceed everyone’s expectations?
We will answer all of these questions…
6

Introduction
Purpose
Topics covered
Topics not covered
7

Purpose
Learn how to turn contracts into meaningful data for
contract management
8

Topicsnotcovered
Government contracts
Legal representation
Law of any jurisdiction
10

Topicscovered
What is a contract?
What is contract management?
Working with a contract
Working with documents
Working with the contract portfolio
Contract management systems
11

WHATISA
CONTRACT?
Hint: it is not a document.

Thebasics
Parties
Offer and acceptance
Intent to be legally bound
Consideration
13

Parties
It takes two to tango.
14

Parties
Yes, there can be more than two.
16

Offer&Acceptance
“I’ll offer you four boxes of pencils for $4.”
“I accept your offer.”
18

Intent
Do we both want to have an enforceable deal?
Or, are we just announcing bold ambitions?
20

Consideration
Let’s exchange beneﬁts or items of value. Without two
sides to the exchange, it is a gift or something else.
22

Thebasics
Parties
Offer and acceptance
Intent to be legally bound
Consideration
24

Thebasics+
Oral v. Written contracts
Capacity
Term
26

Oralv.Written
27

Oralcontracts
Are oral agreements valid?
28

Writtencontracts
Lots of legal principles regarding both form and
substance. Type of contract and jurisdiction matter a lot.
Important advantage for contract management…
30

Capacity
Wait, we can’t contract with whatever and whomever we
choose?
34

Humans
People can’t contract sometimes: too young, legally
incompetent, etc.
35

Legalentities
The legal entity you want to contract with might not have
the capacity to enter contracts.
The representative (human) might not have the authority
to contract on behalf of the entity.
37

Term
When and how to do contracts start and ﬁnish?
39

Definiteterm
Effective date + Termination date
40

Autorenewals
This contract is good, we will let it repeat even though we
reached the end.
42

Renewatoption
One party has the option to renew.
45

Untiltermination
Renews automatically until a party terminates the
contract.
There is often a prescribed termination notice period and
process.
47

Evergreen
Evergreen continues indeﬁnitely until one party
terminates the contract.
49

WHY
CONTRACT
Contract management makes money and reduces risk.
MANAGEMENT?

Objectives
Process improvement
Risk management
52

Processimprovement
Pre execution (contract signing)
Post execution
54

Riskmanagement
Reduce unexpected losses in the portfolio.
56

Benefits
Grow revenue
Reduce expenses
Expand margin
60

TURNTEXT
TO DATA
Working with a contract.

Grabthebasics
Title
Parties
Consideration
Owned entity
Internal assignment: division, department, location
Effective date + End date (and other dates as needed)
Contract type
63

Copyright 2016, Berkman LLC
Title
Consideration Parties

Ownedentity
Your legal entity.
Parent company, subsidiary, afﬁliate, special purpose, etc.
65

Dates
Effective date: start of contract
Termination date: end of contract
Renewal notice date: due date for notice to stop renewal
Absolute dates: May 5, 2008
Relative dates: “2 years from the date of execution”
66

Copyright 2016, Berkman LLC
No effective date. A little hard to calculate the term.

Typesof contracts
Many…
68

Typesof contracts
Legal classiﬁcations Business classiﬁcations
69

Legal
Real v. Personal property
Government contracts (US)
Uniform Commercial Code (US)
United Nations Convention on Contracts for the
International Sale of Goods (Vienna, 1980) (CISG)
71

Business
Revenue v. Expense
Real estate v. Everything else
Regulatory types, like BAAs in health care
Tailored to needs of organization
72

Advancedoptions
Financial terms
Provisions
73

Financialterms
Payment provisions
Interest rate calculations
Price changes
Discounts
Floors and ceilings
and more…
74

Provisions
Speciﬁc obligations of the parties.
Actions are required, permitted, or prohibited.
Obligations change under certain conditions.
75

DEALWITH
Working with multiple documents connected to a single contract
and the passel of documents across the portfolio.
DOCUMENTS

Oneto many
One contract can have many documents
78

Typesof documents
Amendments
Addendum
Schedules / Exhibits
Insurance certiﬁcates
Statements of work
Price schedules
Master agreement
Subcontract
80

Docs overtime
Some types of documents do not multiply in the contract
record, but some do.
81

Turntext todata
Must lift all relevant dates, tasks, and alerts from each
document in the contract record, even as the number of
documents grows.
84

Master/subcontract
Master agreement provides a framework for subcontracts
either with different counter parties or for different units
of work.
Are subcontracts managed within the master contract
record or is each subcontract managed separately?
87

Separateortogether?
Where is the weight of the business terms?
How different are the subcontracts from each other?
How much overlap is there in management function?
89

CONTRACT
PORTFOLIO
Collection of contracts, preferably all of the them, gathered for
analysis.

Without portfolioview
Don’t worry, most organizations do not have a portfolio
view of their contracts.
Most look like this…
92

Analysis
To get meaningful information, start with the basics.
94

Gettingstarted
State of the ﬁles
Scope of the work
Who is on board (and who is not)
97

Stateof thefiles
Paper or electronic?
Current location?
Document packages complete?
Contract metadata available?
100

Spreadsheets
How many?
What metadata?
How current?
Consistent across spreadsheets?
Enforced validation (text v. data)?
Document association?
101

Scopeof the work
Revenue v. Expense
Legal entity
Division or business unit
Territory or region
Department
102

Theteam
Formal and informal approval
Users v. Consumers
Core v. Casual users
103

Getresults
Report on allocations
See all expirations and renewals
Assign tasks
Get automatic alerts
104

CONTRACT
SYSTEMS

Repository
Master list of all contracts
• Spreadsheet (only one)
• Software
107

Document storage
Where will you store documents from now on?
• Paper ﬁles
• Network storage
• Online storage
108

Introduction to contract management

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