Contract review is key to any in-house legal profession. While any lawyer specializing in contracts might start out with a checklist of standard terms and conditions, experience teaches us a lot more about what to review in a contract. This is especially true with in-house counsel, as more than just the legal aspects are scrutinized – business and risk management sides are also in focus.
Several ways to approach contract review, beyond a mere checklist, are suggested in an informative article on Above the Law. This article draws from Lisa Lang’s experience with in-house counsel and provides helpful insights.
-
The Business deal: The contract should be designed to help achieve the specific goals and objectives of the business deal in question. Understanding the business deal makes it easier to ensure as much.
-
Risk analysis: Contract review also involves the identification of potential risks that may come with the agreement. These risks not only relate to legal aspects, but also financial and operational areas. Understanding how much risk your employer is willing to tolerate can make risk mitigation strategies easier to assess.
-
Legal compliance: The contract must also adhere to relevant laws and regulations. The industry-specific legal landscape might have specific regulations that must be taken into account.
-
Industry-specific considerations: More than just a checklist, contract review should ensure that the contract is tailored towards your employer’s industry, the nature of the transaction, and the involved parties.
-
Performance metrics and KPIs: Performance metrics and Key Performance Indicators (KPIs) must be realistic, measurable, and in-line with your employer’s larger business objectives.
-
Dispute resolution: An evaluation of dispute resolution mechanisms is key to ensure they are fair, efficient, and practical. Options for alternative dispute resolution methods like arbitration might need to be considered.
-
Post-execution considerations: Contract review also deals with considerations beyond just getting the deal done. These include management, renewal, and termination of the contract.
-
Communication and Collaboration: To gain a holistic perspective, collaboration with various stakeholders, like internal business units, is necessary.
-
Technological integration: Contract review can be improved with the use of technology, such as contract management software or AI. Any contracts related to software should also take software systems integration into account.
While a checklist can serve as a useful starting tool, contract review is in essence a process that takes the broader context into account. It accommodates a detailed analysis, considering business and risk management aspects. Optimal value and minimized risk are the key goals of the process.