contract playbooks - association of corporate...

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Contract Playbooks Diane Flyer L.A. Care Health Plan December 11, 2013

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Contract Playbooks

• What is a contract playbook • Who will use it • Why create one • What does it look like • Keeping it current

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What is a Playbook?

• A notional range of possible tactics in any sphere of activity

• A scheme or set of strategies for conducting a business campaign or a political campaign

(www.TheFreeDictionary.com)

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What is a Contract Playbook?

• A guide to: – Managing the contract negotiation process – Business context for legal terms – Business and legal risk management/

allocation

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Why Create a Contract Playbook

• Training • Guidance on completing templates • Understand contract terms • Adhere to corporate risk positions • Risk allocation management • Pre-established fallback positions

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• Delegate to other departments – Dollar threshold – Use of standard terms

• Best practices – Industry standards – Incorporate lessons learned

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• Consistency in contracts – Terms approved by legal/business leadership – Promote business objectives – Improved risk management

Ø More certainty

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• Ad hoc arrangements – Expensive to create, manage – Greater risk exposure

Ø More uncertainty

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Who will use it?

• Legal • Procurement • Contract management • Project management • Sales • Business development

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Tailor the guidebook to the user

• Legal – More robust discussion of legal and business

issues • Limitation of Liability

– Are you the buyer or seller – What is the business context – Is it enforceable given choice of law – What is the corporate policy

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• Procurement/Contracts – Focus on business issues and corporate policy

• Limitation of Liability – Are you the buyer or seller – What is the business context – What are the risks; can they be mitigated – What is the corporate policy

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• Sales/business development – Discuss business issues and corporate policy – Focus on what can/can’t do

• Limitation of liability – What is the business context – What is approved – What requires higher-level approval

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Training

• Tailor to user – Scope – Focus – Depth

• May vary by contract type

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Training

• Provide business context for legal terms – Use of real life examples, war stories – Explain why terms change as a result

• Compliance with policy, approvals – What is the policy – Business rationale

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Training

• Simple – Easy to follow/understand – What to escalate – When to escalate

Ø If too complex – will ignore

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Training

• Guidance on completing templates – Use of simple forms – Limited – What to complete

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Training

• Consequences of unauthorized – External

• Use of real life examples, war stories – Internal

• Failure to adhere to policy

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Training

• Understanding contract terms • Risk management

– Legal risks and alternatives – Business risks and alternatives – Negotiation fallback positions

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Preparing the Playbook

• Can take many forms or formats • Which contract forms

– One per form, or multiple forms in one – Which form to use – Dollar thresholds – Other party’s paper

• Different playbooks based on users

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Preparing the Playbook

• All terms, or select terms • For each term discussed

– What is the standard – What alternatives are pre-approved – What needs to be escalated – To whom

• Legal, business decision-maker

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Example – Which Form to Use

• Purchase Order vs. Contract Factor Purchase Order Contract Term Up to one year Over one year Dollar value Up to $XXXXX Over $XXXXX Software No Yes Intellectual property No Yes Risk issues •  Business critical requirement •  Disclosure of trade secrets, proprietary data •  Disclosure of protected health information,

personal information

No Yes

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Example - Simple

Term Standard Acceptable

Alternates Unacceptable Alternates

Escalate Deviations to

Choice of Law California Delaware New York

Texas Legal

Limitation of Liability

Fees paid Multiple of fees paid, not to exceed 3x

Unlimited liability Vice President

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Example - Detailed

Termination for Convenience Company, by written notice, may terminate this Agreement, in whole or in part, for its convenience. If this Agreement is terminated for convenience, Company’s sole liability shall be for payment under the payment provisions of this Agreement for Services delivered and accepted before the effective date of termination. General Intent. This clause sets forth the basic right to terminate for convenience. Because this is not a right inherent in a contract between commercial entities, we also include a limited remedy for the Subcontractor, so this is not considered a breach of contract. Principal Elements. The first sentence denotes the right to terminate for convenience, in whole or in part. The second sentence is an abbreviated damage/settlement calculation for convenience termination. Approved Fallbacks. The following clause may replace the Termination clause upon approval by the Project Managing Director when a Subcontractor requests either the deletion of, or rendering mutual, the termination for convenience right.

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Example – detailed (cont.)

The Termination for Convenience clause may be replaced by one of the following alternate clauses upon approval by the Engagement Managing Director when a Subcontractor requests either the deletion of, or rendering mutual, the termination for convenience right. Alternate 1 Notwithstanding any language in this Agreement to

the contrary, Company may terminate Subcontractor, in whole or in part, for Company’s convenience to the extent Subcontractor’s scope of work under Company’s Prime Contract is terminated by the Government and such termination renders continued performance under this Agreement wholly unnecessary. In such a case, Company's only liability to Subcontractor is to pay amounts recovered on Subcontractor’s behalf from the Client.

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Example – detailed (cont.)

Termination for Convenience (cont.) Alternate 2 Company may terminate this Agreement, in whole or in

part, at its convenience, but only to the extent that the Client terminates the Prime Contract, or otherwise makes changes to the work to be performed under the Prime Contract. In such a case, Company's only liability to Subcontractor is to pay amounts recovered on Subcontractor’s behalf from the Client.

No other changes or additions to the above clause are permitted without Legal Department review.

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QUESTIONS?

•  Top Ten: –  Top Ten Considerations when Creating a Bring-Your-Own-Device (BYOD) Company

Policy –  Top Ten Roles of the Law Department Business Operations Director

•  QuickCounsel: –  Regional Distinctions for a Global Records Management Policy –  Document Management, Contract Management, Records Management, and Knowledge

Management Systems: What Are they, What Do they Do, and What are the Differences? –  Legal Project Management

2012-2013 ACC Resources Produced by Huron Legal

2012-2013 ACC Resources Produced by Huron Legal •  Webcasts:

–  Legal Hold Fundamentals and the New "Starting Line" for Legal Hold Programs –  Law Department Strategy and Business Planning –  Developing your Emotional Intelligence to Improve Your Effectiveness as an In-House Counsel –  Practical Tips for the New General Counsel –  Right Place at the Right Time: Optimal Staffing Approaches –  iBudget! How to Use Budgets to Your Advantage –  Showing Departmental Value Using Benchmarks and Metrics

•  Legal Quick Hit: –  Metadata - What is all the Hubbub About? –  Technology Implementation Methodology Best Practices –  Legal Project Management –  Change Change Management: It's More than Processes and Systems; It's Transforming People It's More

than Processes and Systems; It's Transforming People –  Digital Shadows and Footprints: Employee Mobility and Theft of Trade Secrets-Guarding the Crown Jewels –  Technology Update for Law Departments –  Sizing Up Contract Management - Measuring Twice, Cut Once –  Corporate Legal Departments: The New Reality

Additional Resources •  InfoPAKs:

–  Organizational Effectiveness: The New Imperative for Developing a World-Class Legal Department

–  Legal Hold Fundamentals and the New “Starting Line” for Legal Hold Programs

•  Primer: – Legal Project Management – Knowledge Management

•  ACC Docket Article:

– First What, Then Who: Optimizing Workload Allocation and Resource Management Stop Putting out Fires and Start Working Proactively with Your Client

Networking Opportunities

• Welcome Center Sponsor – 3 years

•  Law Department Management Committee Networking events – Hynes Convention Center Football Party (Boston) – Boudro's (San Antonio) – Taste Five (Denver) – Oktoberfest (Orlando) – Elevate Lounge (Los Angeles)

contract playbooks - association of corporate...

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