What can RADICAL Contracting do for you?
The point of contracting is to allow the parties to quickly create enough certainty to get going with a commercial relationship. Well. In theory. Unfortunately, the traditional contract lifecycle process is onerous, time-consuming and costly.
Day-to-day contracts can suck the life out of overworked legal teams who should be spending more time on bigger, more strategic, and more interesting projects. This is exactly why we came up with our groundbreaking approach to contracting: AKA, ‘RADICAL Contracting’. We explained RADICAL contracting in our book, Sign Here, but you don’t have to do it all yourself. We can also help apply it to your contracts.
We aim to take the pain out of day-to-day contracting for you, focusing on collaboration, reasonableness and quick and simple processes that free up your team’s time so they can focus on more interesting and complex projects. We’ll also help you make significant cost savings, freeing up your budget to invest in the exciting things that’ll help your team.
In this blog post, we will delve into the RADICAL methodology, highlighting its core principles and how it differs from the traditional approach to contracting, to save your team time and stress while delivering better results for the business as a whole.
What is the contract management lifecycle?
The contract management lifecycle is hard work. The contracting team has got to do the initiation and planning, drafting, negotiation, approvals, implementation, monitoring and closing stages of a contract.
For smaller contracts, the process is often slow and full of unnecessary work, but it doesn’t have to be this way. You can outsource the entire process, and make it even better. When we work with our clients, we improve and expedite the process through our RADICAL Contracting methodology. This is based upon four key principles…
Instead of just focusing on what could go wrong, we help ensure that it goes ‘right’
RADICAL Contracting is based upon four key principles that we believe are crucial to delivering a better contracting process:
Contracting should foster great relationships
First drafts that are one-sided, long-winded, and overly focused on when things go wrong, can destroy trust before the relationship has begun. This leads to lengthy negotiations and increased costs. Instead, we believe in adopting a reasonable position from the outset: first drafts that represent a ‘middle ground’ and focus on what is essential to successful delivery. We work with our clients’ current templates, and help refine them over time to remove the need for unnecessary negotiations. We also believe relationships should be actively managed, using the contract as a baseline but recognising that deals need to evolve. We can help you after signing with amendments, either as one-off projects, or as part of the managed service.
Contracting is a standardisable process
Over the contract lifecycle, there is a natural sequence to what needs to be done. You’ll never be able to solve all of the problems with your contracting process in one go, but the process can keep being improved as part of the service. Not every deal will follow the “happy path” - we are used to tricky negotiations - but by improving the standard process the business will get the benefit of closing deals faster and your inhouse team can focus on the areas where they can add the most value.
There is no silver bullet
Many are trying to sell you simple solutions to your contracting: AI, contract lifecycle management (CLM), and more. But contracting is about relationships between humans, which will always be complex. We focus on small, fast improvements, rather than trying to solve everything with technology. Lots of small changes rather than one big change is not only safer but more effective: if something works, we embrace it and repeat it.
We work with CLMs, we work with AI; but one-size-fits-all systems not only fail to live up to their promise but also slow you down in the long-run. What we’ve found is that simple tools, like document automation, give you the benefit of speed and reliability, and can keep being improved. There may be no quick fix, but there are tried and tested ways of safely improving your contracting, and no end to the improvements that are possible. And we can provide the technology as part of the service, without needing to get budgets or run transformation projects.
Fixing contracting requires leadership
Contracting involves lots of specialist departments that may not see the whole picture, with no one leading on improving the overall process. This is a missed opportunity. Leadership is needed to create a functioning and coherent end-to-end process.
We help you become the leader of your team by managing the smaller stuff, streamlining the process and saving you time and money. This gives you the opportunity to focus on strategic initiatives. By taking a leadership role in contract management, you can foster collaboration among departments, align goals, and drive efficiency.
So, what is RADICAL Contracting, and how can it help you?
Reasonable rather than maximal positions
Rather than trying to win on every point, we focus on reasonableness and heading to the middle ground from the outset. Unreasonable terms lead to negotiations that can create delay, reduce value or kill deals altogether. Long-term deals must be reasonable, with both sides feeling good about the negotiation outcome long after the contract has been signed.
Automated rather than manual processes:
It’s not possible to automate everything, but there’s no value in carrying out simple and repetitive tasks manually if technology can do it better. We make your processes as lean as possible first and then apply automation to deliver further improvements.
Core to the RADICAL approach is getting your processes and basics in order before applying automation, which is something we do.
Data-driven rather than relying on folklore
We consistently collect relevant data that helps us to understand what is happening and whether the adjustments we are making are helpful. We give you full access so you can understand what is happening and make better decisions. Data is a powerful way to change behaviours. It’s also more reliable than opinion.
Incremental improvements rather than large-scale transformations
We make incremental improvements and continuously learn rather than implement large-scale transformations. We adopt an approach of getting something going first and tweaking it from there: there will always be room for improvement somewhere.
Collaborative rather than adversarial
It’s important that you connect the departments within your organisation, and that you create great commercial relationships with the other parties. Reasonableness and collaboration are core to this approach.
We engage with the ‘other side’ rather than treat them as adversaries, and this is what is crucial to our success: the overall experience we create for them is vital in building confidence and trust between your organisations. This maximises the opportunities to generate value for the business and make things much easier and faster for your team.
Accelerated rather than ponderous
We all know how frustrating it can be when contracting processes take forever: one figure suggests that the average time to review a contract is over 30 days.
Speed is key. And it’s achievable. The point of putting “accelerated” at the heart of the RADICAL approach is to reduce the time to close. But it doesn’t reduce your opportunities to explore the options and think through the consequences - it actually frees up time to spend time on that.
Long-term relationships rather than short-term transactions
The objective of our contracting processes should be to create long-term, rather than transactional relationships with your customers and suppliers. If you don’t invest in the relationship, you’ll reduce potential value. Flexible contracting arrangements and investment in contract performance management are essential.
The 3Rs Methodology: How does this fit in?
So now you understand this new way of contracting and how we can take over the process, your next question is probably: well, how on earth do you actually deliver this radical new approach to contracting?
This leads us to the 3Rs.
The 3Rs methodology is a structured approach to implementing RADICAL Contracting, which aims to fix contracting in three stages.
We use the 3Rs with every single client we work with…
This involves standardising your contract lifecycle management process: put the core templates and tools, such as contract templates, playbooks and standard processes into place, ready to be improved. It’s crucial that they exist before you can apply technology.
Apply cost-effective and straightforward technology that works. Once the basics are in place, apply simple technology. This can include systems that your organisation already uses. Quick wins lead to immediate benefits.
This requires us implementing a continuous improvement process that keeps enhancing your contract terms and contracting process, focusing on your stakeholders’ needs.
Using data, we can draw on diverse disciplines such as Lean, design and data analytics, allowing you to demonstrate business value. Quality and cost-effectiveness can keep improving to meet your evolving business needs.
The 3Rs methodology will transform your contracting by:
· speeding up your time to close contracts
· ensuring that you are using the right people
· reducing your cost per contract
· improving risk management; and
· delivering better business outcomes from your commercial relationships.
When you prioritise reasonable positions, data-driven decisions, incremental improvements, collaboration and acceleration towards long-term relationships, your legal team will be less stressed and overworked and will have time for more interesting and complex projects.
The RADICAL approach looks at the whole lifecycle of a contract and adopts a continuous improvement approach.
If you’d like to free up your and your team’s time by us managing your smaller contracts for you, please get in touch with us here.