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  • Joe Cangelosi

Why you need a contracts program


 

DISCLAIMER: The information provided on this website and blog post does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only.

 
Picture it: you’re sitting at your desk digging through dozens of client emails and trying to ignore the unopened snail mail on your desk. Clicking through your inbox, you see an email from your project manager/producer/design lead… “Can you sign this??? OMG, I NEED IT RIGHT NOW OR THE WHOLE PROJECT IS GOING OFF THE RAILS!!!” Sound familiar?

You open the document. It’s a sales contract from a vendor that has something your business needs to service your client. Time is of the essence. You read through it, understanding some parts of it, not understanding others... Wishing one part was a little different but not sure how to express it… You want to make some comments but it’s a PDF… It hasn’t been made easy for you to evaluate this and that’s not an accident.


If you run an agency, people are constantly trying to sell you something. It would stand to reason for you to ask,

“If everyone is trying to sell me something, how come I don’t have any power to negotiate these contracts?” The answer is you do.

What is a contracts program?

A contracts program is just what it sounds like: an organized plan for how you handle contracts, what contracts you use, who can sign them, how they get signed, etc.


At the simple end of the spectrum, a contracts program might just be a list of authorized signers (and this should be a short list). A more complex program could be a suite of standardized documents built out with signature and archiving automation. It can also include standard turnaround times or policies about payment terms, insurance or really anything else that can go in a contract.

Benefits of a contracts program

One major benefit of a contracts program is understanding your commitments and your exposure.


If you sign contracts willy-nilly without understanding everything that’s in them, you can wind up on the hook for everything from surcharges to insurance to legal fees for third parties, without any way of collating and understanding the risk. If you have your own standard contracts, you can set baseline goals and limits on things like payment terms, liability to third parties, insurance coverage, loss and damage of rentals or anything else that’s important to you or your industry.


Another benefit is ease of use. If you hire a lot of subs or freelancers, it’s helpful to have a defined process and a standard document that each of them signs. Signature automation (via something like DocuSign) helps with this a lot. Be warned: not all e-signature apps are created equal; authentication of the signer is critical.

The role of attorneys

When people hear the word “contract” often the next word they think of is “lawyer.” Any two persons can enter into a contract, so an attorney isn’t strictly necessary, but when you’re setting up a contracts program, an attorney does have an important role to play.


Assuming your contracts program is going to rely on your own standard contracts (which I recommend) the first role of the attorney is to work WITH YOU to write the base contract or contracts. I stress WITH YOU because what you don’t want is a scan of carbon copy of a photocopy from the back of a contract law textbook from the 80’s.


You want the contract to be relevant for your state, your industry and for your particular use case, and no standard contract fits that bill. You provide the industry knowledge and the concerns that keep you up at night. The attorney provides the appropriate legal mechanisms. language and structure.


The other contribution you should encourage your attorney to make is to help you understand the real intent behind each section of the contract, and where it’s ok to tinker for a particular deal using logic and not legal knowledge. You don’t need an attorney to look at every minor negotiation, but some sections of a contract have much more to do with statutes and legislation than how they sound to a non-lawyer. Make sure you know which is which, and when you need to call in a pro.

Tools & Automation

If you have people signing contracts out in the wild (even things like start paperwork for freelancers), sooner or later you’re going to want to have some professional tools gathering those signatures. There are many e-signature tools available now, with good integrations and open API’s.


Many storage platforms have them built in, like Dropbox with HelloSign and Citrix ShareFile with their own product. Other platforms, like PandaDoc, handle document workflows and versioning. There is even contract management software that can handle versioning, redlines, signatures, track commitments, set reminders and document storage, all in one app.

Conclusion

At the end of the day, there’s no silver bullet; every business is different, but it might well be time to take a look at how your commitments are structured.


If you’d like to chat with me about contract programs or signature automation, drop me a line at joe@teelexinc.com