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Approvals: how legal can remove friction from contract process

Alex McPhie, 15 July 2019

Contract magic

It’s an unwritten rule in business: don’t enter into agreements which don’t have legal approval. 

It’s a position none of us can afford to be in, and the risk of entering into an agreement full of legal risk, or missing a commercial opportunity because legal dragged its feet, is huge.

Despite this, many businesses struggle with both the initial roll-out and then enforcing an appropriate approval process. This is not surprising given the wide range of stakeholders often involved and required to approve any given agreement. 

Through working with our incredible customers we’ve identified some of the key challenges around legal approvals - and how to make them work for your business. 

Implementation: building your approval workflow 

1. Take the time to map out the full contract process

From the point of requirement to a fully signed document, map out the route your document needs to take, detailing where legal approval is required. This can be a lengthy process - set time aside with your legal team to nail it down. Collaboration is key - ensure you use and work through current examples of legal approval workflows to foster a team-wide agreement.

2. Be mindful of other approvers in the business

Colleagues in commercial, finance and data security teams might also be key parts of the approval workflow. Make sure you include their approvals in your planning. In our experience, approvals tend to start with commercial teams, then finance and data security, before legal at the end. This ensures that there are no further changes to the document from external parties, as well as giving lawyers ultimate ownership of the contract.

3. Communicate and get help 

Other teams in the business that deal with processes, like procurement or operations, might have insight to add - make sure you communicate with them and draw on their expertise.

How complex should the approval process be? 🧐

The approval process doesn’t need to be complicated. It can be tempting to try to implement a legal approval process to get from 0-100 in one attempt, but this is often a mistake. Complexity can lead to paralysis while teams consider multiple designs, without ever implementing anything. Instead, start with a simple procedure, gather feedback on its advantages and disadvantages, and iterate with additional approvals if you feel they’re needed. If your new process starts out more complex than the old one, it has no chance of being adopted quickly.

Legal approval processes vs other approval processes 📚

It’s likely that commercial teams will have approval processes within other business systems of record. Sales teams might manage approvals with Salesforce, and HR with Workday, Greenhouse or Prescreen. This can cause uncertainty where legal approval is concerned - should approvals live in HR systems, or contract management systems, or something different entirely?

In our customers’ experience, it’s best for legal approvals to sit within contract management systems. Contracts are ultimately a legal process, and the legal system of record should be the best source of truth for them. This allows for better organisation of files across different teams, without legal losing sight of the end-to-end process.

How can I be a workload weightlifter? 💪

“Teamwork makes the dream work” applies to legal processes too. Implement approval processes across the entire team, to avoid one member of the team drowning under approval work. Many of the legal teams we work with leverage shared inboxes - or even #contracts Slack channels - to deal with requests. This technique works well at Juro too, with inputs from whoever is given the responsibility or has time to manage incoming requests. Teamwork is the best way to ensure everyone has an equal responsibility to manage the legal approval workload. 

How do you get the balance right? ⚖️

Finding a system that ensures approval is granted by the correct person, without compromising on speed and efficiency, is tough - it’s the efficiency sweet spot that every team is looking for. But it’s not impossible - we’ve seen this work best in situations where legal and business teams come together, with legal empowering the business to make the right decisions, but keeping control beyond a certain level of risk. 

For example, some Juro users set their approvals at a template basis, but with supplementary approvals delegated to contract authors and tracked by an audit trail. This gives freedom to users, but keeps legal in the loop, with a detailed audit trail if any questions arise.

The risk if you don’t create a frictionless process is that you’re stuck with a bureaucratic and restrictive process, causing internal relationships to deteriorate, which can impact the business overall. If approvals become too restrictive, then commercial colleagues will find a way to circumvent them. But if you find the right balance of control and enablement, then legal can stop being a blocker, and truly become a partner for growth.

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Topics: Contract magic

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