OneSpan North America Inc.
Author: Tim Cummins, CEO, IACCM
Welcome Readers! On the Commitment Matters blog, my article titled The Role of the Lawyer: A Growing Focus on Contract Management (July 2013), spawned a variety of comments. I think many will be stimulated to think and perhaps react to this important topic.
The legal profession is undergoing dynamic change. Over the next few years, the role of the lawyer will look very different from today. 1-9
In many respects, the legal profession has managed to resist the technology-led transformation affecting other professions for a remarkably long time. As an example, a recent article in the In-house Counsel Journal observed – without apparent irony – that many lawyers are now 'so technically proficient that they write their own e-mails'. The impacts of technology on fields such as medicine or engineering have been far more dramatic.
Much of the basic work of a lawyer can now be undertaken far cheaper and on an outsourced basis, forcing a re-think of many services. Technology is also undermining tasks such as contract development and drafting. Compound that with demands for increasingly global intelligence plus the general disquiet over the level of fees and salaries, and you have irresistible pressure for change.
One IACCM member – himself a senior in-house counsel working in Germany – recently commented: “Law schools are still teaching people to become judges, because that is how they see the pinnacle of their career. But increasingly, corporate issues do not even go to court”.
The need for change is rapidly becoming evident within the major U.S. law schools, which have generally resisted alterations to their time-honored approach to legal training. In part to respond to demands from the market for wider skills, and in part to justify the duration of current courses, law schools are adding more practical, business-oriented content to their programs. In several cases, they have approached IACCM to partner on the development of modules covering contract or commercial management or to gather research on international comparative law.
This pressure seems to be reflected in the announcement this year by US law-firm Weil, Gotshal and Manges (one of the top 20 in the US) that it is eliminating many of its junior lawyers and support staff and cutting pay for 'under-performing partners'. In-house Counsel Journal confirmed this trend when it reports that 'jobs for paralegals are on the decline'.
Among the many shifts that appear to be on the cards for the legal profession (and already underway in some countries) is the rapid erosion of the partner-model law firm and also increased integration with other professions, such as accountants, to offer a more coherent business service. But with so many law students still pouring out of universities and law schools, other changes appear inevitable. One of these is the likely move by many trained lawyers into the field of contract and commercial management – which is, for many businesses, a growing area of recruitment.
Today, legal training does not prepare lawyers for this role, though of course their knowledge has some direct application. And since few universities produce qualified contract or commercial management graduates, it can be a great opportunity for a lawyer. Indeed, with contract management increasingly reporting to the in-house law department, there is a natural tendency to recruit qualified lawyers to the role.
In addition, law schools are waking up to the fact that they must expand their body of training and equip graduates to enter the world of business. With entry level jobs disappearing at an alarming rate, the need for action is becoming more and more urgent.
For IACCM, a consequence has been rapid growth of interest in our work from both law firms and law schools. Research, case studies and the underlying 'body of knowledge' that we have developed are suddenly very relevant for both new course content and new chargeable services. There is also increased attendance in our Managed Learning and certification program as lawyers seek a fast-path route to expanding their commercial competence. For example, some 35% of IACCM members are today legally qualified, even though only 15% are in-house counsel. And approximately 20% of those undertaking IACCM certification have an existing legal qualification, compared with less than10% five years ago.
Interesting trends indeed; but perhaps somewhat frightening for the largely unqualified, uncertified body of contract and commercial managers currently in business. Suddenly they face a whole new breed of competitors for their jobs. Indeed, many of these contract and commercial staff have tended to hang on the coat-tails of the lawyers because they saw this as a high-status role.
While legal knowledge is without question a critical aspect of good contract management, it is just one of the required areas of knowledge. All practitioners need to remember that successful contracts deliver the intended business results – and this requires sound understanding of areas such as finance, relationship management, project management and performance management. So if you are a lawyer planning to make the move to contract management, be prepared to expand your skills. And if you are a non-lawyer concerned for your future, it may be time to develop and promote your specialist knowledge in the overall disciplines of contract management.
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Comments from readers
Jason Smith â€¨Let me respond to Tim's suggestion that the legal industry merge with other non-legal professions…
In the U.S., this is not possible under the ethical rules that govern the practice of law. This differs from other countries where attorneys and non-attorneys can partner in business ventures and share fees, etc. … In order for this [merging legal with non-legal] to occur in the U.S., the ethical rules would have to be modified by the state bar associations, because lawyers and non-lawyers are still unable to share fees as is the case outside the U.S.â€¨ â€¨
This topic, alone, is a giant area for ongoing debate, and is highlighted in the discussions around contract management, which has become a quasi-legal practice, especially in companies where non-lawyers are approved to develop and negotiate contracts (legal documents). Of course, this is generally done under the watchful eye and careful management (or should be) of the legal department… but it's easy to assume this isn't always the case.
Regardless, it's viewed more as risk by exception than the norm… and it won't become the norm that non-lawyers are handling all legal aspects of contracts until the rules in the U.S. change… which is not likely in the near future.
Shalas Benson â€¨This shift of many lawyers from traditional law firm attorney roles to contract manager, negotiator or procurement roles may be more apparent in recent years due to the economic downturn.
However, as a lawyer who ditched the traditional law firm track many years ago in favor of a more practical, enjoyable and more lucrative contract and business management role in a major corporation, I know that the shift is not new. Many attorneys currently serve in these roles. It is just more obvious now. With the increase in business speed, the need of business leaders for immediate contract interpretations, issue resolution and creative problem-solving, they won't wait for an appointment next week with legal counsel. I
Instead, many business executives choose to include well-trained attorneys in contract manager roles. Working closely with corporate in-house legal departments, the attorney contract managers can gain credibility quickly based on the quality of deliverables produced for legal counsel review and approval.â€¨
An issue many attorneys have to deal with both professionally and personally when moving from a law firm to a contract manager role in a corporation is the perception by some in the legal community that the attorney turned contract manager just couldn't make it in the real world law firm environment.
However, as attorneys in corporate legal offices quickly learn, not only are the contract managers well equipped to understand legal risks and issues in contracts, but also, because they work “in the business” the contract managers have a solid understanding of the practical operational and business impacts of language included in agreements.
In a way, the contract managers may identify issues more critical to the business than their colleagues in the legal department.â€¨For those non-attorney contract managers who fear losing job opportunities to attorneys, take heart. Having hired and trained many attorney and non-attorney contract managers, it is not always the former attorneys who make the best contract managers. In fact, for attorneys to be good contract managers, they have to remove some legal issue blinders to work effectively.
Often former attorneys get stuck in a rut by focusing on traditional legal terms and conditions such as IP issues, indemnities, warranties and limitation of liabilities miss major issues in other documents included in the agreement that are of greater import to the business.
Because the attorney contract manager may consider “business” and “technical” documents to be just add on exhibits to the terms and conditions in the agreement, they may not understand the importance of reviewing -SOWs, SLAs, pricing exhibits and transition plans. More often than not, it is in those exhibits that business disputes arise. (In fact, I've never heard two business people argue over the terms of an indemnity clause!)â€¨
If you are a non-attorney contract manager who has been working “in the business” for some time, don't sell yourself short. When applying for new contract management jobs, it may be to your advantage to ask the potential employer if he or she intends to test the skills of applicants by giving them sample contract documents, including exhibits to review and redline before a hiring decision is made. If so, welcome the opportunity to complete the review and redline. If you have practical experience, it will show. In contrast, young inexperienced attorneys may miss critical issues entirely. â€¨
Tim Cummins â€¨Shalas, thanks for this – and the various other comments you have made to other blogs. It is great to have your detailed confirmation of these points. You are of course quite right that many existing contract managers have a background like yours. I think a danger (which you allude to) is that it will become seen as an alternative career for lawyers and that this could limit the breadth of understanding that is necessary to good performance – and which you so clearly articulate in your comments.â€¨Tim
Unidentified â€¨As an attorney that recently transitioned into the contracts management world, this was a great piece to read. I left the traditional law firm model because I wanted to delve deeper into the day-to-day operations behind a business, but faced the same negative perception outlined by Shalas. I've also seen a lot of hesitation from employers about hiring attorneys for contract management roles. I think there's a fear that attorneys will jump ship to a counsel position after a year or two of experience. It will be interesting to see how the landscape of the legal market will change in the next few years.â€¨