reviews of contract documentation

A typical full bodied review of a contractual documentation might involve all of the following steps.

Contract Reviews – Detailed Checklist

1. Prepare the draft to suit the transaction with the customer;
2. Work through the internal approval process, which may involvement multiple areas of the business;
3. Send to solicitor/lawyer to ensure fit for purpose (including briefing them, with an allowance of time to review, prepare advice required and amendments;
4. Repeated internal review, if required;
5. Send to the customer for review;
6. Wait for response from customer, sometimes in conjunction with a conference call;
7. Line by line review of the comments from the customer by:
   1. lawyer, inhouse or external, or worse still, both; and
   2. sales team;
8. Discuss amendments to be made internally, isolating those which are:
   1. to be conceded and accepted;
   2. to be negotiated; and
   3. not accepted.
9. Make the required amendments to the draft contract;
10. Send to the customer for review;
11. Rinse, then repeat process from step 6 above onwards;
12. Sign the agreement.

This is not the ideal state of affairs to review contractual documentation for each single transaction. Contracts should be restructured to facilitate a more time efficient review process and reduce delays between commercial agreement and finalisation of formal legal documentation.
Businesses sometimes omit some steps of the review process for reasons which include:

1. The language used in the documents instils an impression of risk into the customer;
2. There is no time to do so due to commercial pressures and timescales;
3. Does not have the resources to do so;
4. The business does not have access to legal advice which is cost effective relative to the value of the transaction – it is not a commercial exercise.

Business Case for Change

These steps might be able to be avoided with contractual documentation has been drafted in such a way so as to reduce iterations or detailed review. There are a series of benefits which include:

1. reduced time between closing the deal closing the contract, which leads to:
   1. Faster conversion of sales;
   2. Higher turnover of sales conversions;
   3. Staff are focussed on what they are best at;
2. review time by senior staff is dramatically reduced;
3. significantly reduced costs of legal advice over time;
4. Standard risks are provided for in standard templates, which can be topped up as needed.