Building Relationships Through Contracting With Alex Hamilton

Made with speech-to-text software, so a few words may be off.

0:00You're listening to the Contract Heroes podcast, your one-stop shop for all things contract management. And now, here are your hosts, Marc and Pepe. Hello, everyone, and welcome to another episode of Contract Heroes. Today on the show we have with us Alex Hamilton. He is the CEO over at Radiant Law. He's also the author of Sign Here. It's a great book that we're gonna chat a little bit about. Um, but before I flip things over to Pepe, and he can give us a little bit more information on what we're gonna be chatting about, I did wanna flip things over to Alex. Alex, thanks for joining us. Uh, very excited to have you here. Great to be here. And, uh, yeah, looking forward to this conversation. Thank you. Thank you for having me. So, uh, yeah, a little bit about, uh, my background. Uh, like you say, I used to be a real lawyer.

0:49Um, I worked at, uh, UK and US firms, uh, and was a partner eventually at, uh, Latham & Watkins doing technology outsourcing deals, so kind of commercial contracts all the way through. Um, and, uh, ultimately got, uh, frustrated that we couldn't really do, uh... add as much value as I thought we needed to for our clients. I felt the incentives in the legal industry are pretty broken and weren't leading to the best behaviors. Um, uh, you know, the, kind of the billable hour, we're still talking about it, but everyone still seems to be doing it, and so on. Uh, and so I eventually, uh, ended up setting up Radiant Law in 2011, uh, as a fixed fee only firm, s- UK firm, but we kind of support clients around the world, uh, focused on, uh, just commercial contracts. Uh, a lot of tech, a lot of process, but ultimately trying to help clients create lots of great relationships at scale. And that's kind of what we do. Awesome.

1:52And that's exactly what we want to talk about with you, Alex. And this is, uh, about the importance in how relationships play on the contractual processes, right? And how, uh, current, uh, companies, w- well, maybe it's not that they don't care, but maybe they haven't put it, the, the time and the effort to have better processes, right? So this is something that we want to talk about, and, and, and how Radiant is, is helping, uh, uh, your, your, your clients. So Alex, I would like to start this interview and ask you, the first question would be why, how do relationships play a, such a pivotal role in contracting processes? I mean, I think it's so big I'd almost go the other way around, that I think contracting's pretty important in the context of creating relationships. Because relationships are what create the value, right? I mean, we, we work for big companies doing lots of contracts with other companies.

2:50Uh, and even though that seems like it's, you know, uh, a relationship between these legal entities, legal entities don't really exist, right? You know, people exist. You can't touch a company. And, um, it's, it's ultimately about relationships between people at those organizations, and, uh, that's what creates the value. And so from, to my mind, a contract is there to put the bare minimum bones in place in order to get that relationship going and support that relationship. But we've got it all bound backwards, right? Contracting has become the big topic, and we're very focused on, you know, getting rid of risk and putting all these ridiculous terms in our contracts, and completely oblivious to what impact that has on how we're gonna work together in the future. Um, so yeah, I, I think it's all about relationships. Yeah. And, and I, I think that's really what it boils down to.

3:45I mean, when we're talking about relationships, you know, you, you have to build that trust with your, your customers, you know, when you're closing deals, if you're onboarding vendors, um, hiring new talent, you know, to, to join your organization. These are really what we're talking about here, is relationships. So I like how you kind of flipped that one around, Alex. And, and you know, why do you think it is that for the longest time, I think this might be changing now, but most commercial contracts, you know, the clauses that we were putting inside of them just seemed to be so lengthy and have all these legalese and, and not able... The, the, the standard, you know, business units were not able to understand what was in these contracts, and that's why organizations had to leverage, uh, their legal teams or their outside counsel to, to manage these contracts for them. Uh, I mean, I, I, to be honest, don't think we've done a great deal, a great job on this. Um, and you know, I think l- legal industry has a lot, uh, of responsibility for this. Um, uh, but I, I think, you know, it is massively and easily improvable. So the starting point for me is that contracts should be short, clear, reasonable, and relevant, right?

4:55And they should be understandable by people who are gonna be using them. Uh, and they should be focused on making sure that people know what they're buying and what they're selling, right? And there's this kind of an deeply embarrassing survey that's done every couple of years by, used to be IACCM, but now World Commerce and Contracting, um, uh, where, uh, they keep going around the world and asking people, "What are the things that you spend all your time negotiating? What goes wrong?" Right? And everyone spends all their time negotiating indemnities, caps on liability, termination rights. Basically, all the stuff to cover you if in case it goes wrong. And what goes wrong is no one knows what they're buying and what they're meant to be paying, right? So we have kind of sucked the oxygen out of the room, uh, uh, in the negotiations, just focusing on all the things that could go wrong, all the implications of things that could go wrong, uh, and thereby making sure that there's more chance that they will go wrong, because we're not talking about the basics of are we all clear What we're selling, what we're buying, does it meet our needs? Is it deliverable? How's it gonna be paid for? Real bread and butter boring stuff, that is the stuff that matters.

6:13Um, and instead we're dealing with these tertiary issues. So we kind of create a rod for our own backs, and the, the terrible statistics across the industry, you know, go, uh, gain, while CC talks about a 9% value leakage on contracts from the bottom line. Um, uh, you know, they have another study, they do great studies. Uh, another study where it was costing best part of $7,000, I think, in 2018 to put a sinc- simple contract in place, right? Um, uh, and then the legal teams who, um, I think have been pushing all of these complex contracts because they're scared of people finger-pointing at them and saying, "Why didn't you cover us?" Right? Are themselves drowning in the amazing amount of work that's being generated by sending out unreasonable contracts. Uh, they are having to negotiate them, and so we have this kind of ritualized dance of unreasonable terms begetting unreasonable reactions.

7:15I think there was one study, uh, last year, in the last year, something like 69% of in-house lawyers are drowning under the contracts, right? Simple contracts. Right. Um, and no one is happy, right? I don't think anyone in this is happy. Right. And in the end, complex contract make complex negotiations, right? Yeah. And when the commercial teams, either if you're on the selling side or in the buying side, if they don't understand what the hell is saying on the contract, they always have to knock the door of the legal dep- department asking for, uh, their help to try to negotiate a clause that maybe not, is the not, uh, most important one, right? When the commercial team- Sure... should be able to be... Well, maybe in, in some cases, I think this is a trend in the industry, like really, uh, self-service, right? Especially with non- Mm-hmm... uh, risky contracts where they can just close the deal faster and which makes it, uh, save money and, and, and time, right? Yeah. And, and we got a lot of data. We, we love data at Radiant.

8:14We got a lot of data about the simplest way of speeding up your contracts, and that is make them reasonable, right? And by reasonable, I don't mean give everything away. I mean, if you had, you know, two, uh, purposeful clients well lawyered up who had as much time as they needed to go into a room and beat each other up so that the clause finally is acceptable to both parties, uh, that is what I call reasonable. Middle of the road. In other words, it respects and reflects both parties' priorities and needs, right? And if you go out with a short, clear, reasonable and relevant contract, uh, you suddenly notice two things happen. One is, a lot more often than not, it just gets signed, right? And secondly, it gets signed fast. The average time to turn around a contract in an in-house team, because they're all drowning, is 30 days. 30 days, right? Radiant, we're like 80% in half a day. We're like, that's 30, 30 days out there.

9:19And, um, uh, so if you are sending out unreasonable contracts, the other side's not just gonna look at it and go, "It's fine," and sign. They're gonna put it on their pile, it's gonna take 30 days. You're gonna come back, they're gonna have made a whole bunch of changes that you don't wanna live with, right? 'Cause now they're marking it up. They're gonna mark it up, and suddenly you gotta deal with that, and back and forth it goes, and that's why this whole thing takes so long. Whereas if we had reasonable terms, I think the self-service stuff is utterly possible, right? You'll always find somebody out there in a grumpy mood and, you know, they're gonna make a thing of it, right? But suddenly that proportion massively decreases, and then you've got kind of legal support on an exception basis rather than the rule, and that makes everyone's lives easier. Yeah. And, and I think, you know, something else that we wanted to touch on and, and I think something that's gonna be very actionable for folks out there that probably are in this situation, I would say most organizations that we speak with are, are definitely at that, you know, 20 to 40-day mark for when it comes to, to negotiating contracts and getting them pushed through is, you know, Alex, what, what is the three-step process that Radiant has put in place to, to help organizations push their contracts through, uh, through the life cycle and, you know, hours or, or maybe a, a small amount of days instead of weeks or even worse than that? Yeah. Well, it's a three-step program, like you said. Simpler than AA, but um, uh, it's, it's basically repeatable, robots, refinement, right? 'Cause you, you gotta have alliteration.

10:47So the repeatable stage is just get the basics right. Before you start worrying about tech, get the basics right. You know, this is real motherhood, apple pie stuff. Get your standard terms shortened. Short, simple, you know, clear and relevant. Uh, reasonable and relevant. Um, uh, get, uh, your playbooks in place, right? So you actually got standardized positions about, you know, how to deal with negotiations, right? Rather than everyone just making it up on, you know, uh, depending on their mood that day. Um, uh, having some, uh, you know, simple intake process and, and triage and so on. So there's kind of... That's the repeatable stage, right? Which is basically moving from, uh, art to craft, right? I'm not gonna say engineering. We're talking about generally legal world we have, right? But going from totally bespoke, we're making it up, everything's an exciting adventure, to nah, we're doing pretty repeatable stuff here and, you know, the, it, it's generally the same.

11:44There may be some exceptions, and we're gonna treat it like that. It's an improvable process that we will keep improving. Um, and we're gonna have things written down, and we're gonna have service levels, and we're gonna, you know, actually run this, you know, sensible- And that's stage one. Stage two, the robots, uh, you gotta put a bit of tech in place, right? But my strong recommendation is simple technology, ideally using stuff you've already got lying around your company, which, uh, turns out to be a remarkable amount of stuff lying around the company. You know, you'll probably have already got DocuSign or the equivalent in place now, right? But there's a whole bunch of other stuff people aren't using, such as document automation, uh, a simple place to store your contracts, simple way of, uh, asking for help, et cetera. Uh, but I, I again would emphasize simple technology. This does not need to be a big tech project. And then refinement is never-ending improvement, right? This is not a one-shot project. This is not something where you're just gonna fix it and move on.

12:44You need to kind of get the basics in place and then keep iterating and improving it, because that's how we add the most business value, by knocking off all the edges and just making it, frankly, a delightful experience for everyone involved, including the other side, because we're in the relationship business and actually want to, you know, them come away feeling good about this. Um, and just keep iterating and improving and tweaking. That's how to do it. Right. And I think that, w- well, I, I totally agree, right? With- because I think at the, at the beginning, you have to work first on your processes, right? You had it first on your contracts, your templates. And then maybe once you know what, uh, and, and you have identified all the, all those bottlenecks, then you can move to technology to see, okay, maybe I need something here that can do it, a computer instead of spending a couple of hours a week, right? Something that, that can save my time. But taking one step back, like you said, uh, how to work together with commercial teams. And, um, how...

13:43So, so, so Alex, uh, most of the companies, I mean, they, they, they have heard about having playbooks in their organization. But in your experience, what would be like the best way for organization to start working on your playbooks? Or how do you work with your, with your clients to, to, uh, create playbook for their commercial teams so they can work on better negotiations? Yeah. Well, there are two ways of doing this. There is the normal way and the easy way. So the normal way is we start a major project, and it gets kind of handed around everyone and, um, uh, you know, everyone adds their, their, uh, rules and all the rest of it, and it becomes an unusable, turgid, impossible document that basically is just a new way of killing negotiation stone dead. The easy way of doing it, which I would recommend, but it's slightly more unusual, is you get someone who's been doing this for a bit to sit down and just write down the rules for the big issues they care about, and then go back over a few deals that they've seen before and just make sure they've got how to deal, respond to, uh, the main points that come up in those contracts.

14:51Because if it's, you know, and then you got something, and then you just keep iterating. But the trick with playbooks is to try to end up getting them shorter and shorter, because you keep updating your terms so that there are fewer and fewer points to be negotiated, right? The game is not to create a massive, really comprehensive playbook. The game is to create a really short, simple, reasonable contract so that there's virtually nothing in there that needs to be negotiated, right? Um, but the, the, there's very easy to quickly knock out a playbook, but it's also very easy for it to turn into a massive, you know, enterprise-level exercise. A- and you know, Alex, I mean, when you're saying bring somebody in to, to help with this, um, are, are you suggesting somebody inside the organization that's always working on those- Yeah... documents or, or somebody that's, you know, external? No, I'd do it, I'd do it internally. I'd do it internally. Uh, and you just need someone... It's, it's going back to that thing about finger-pointing, right?

15:55Um, I, I, I think that the reason why we get ourselves into such a pickle is not because lawyers are bad people. It is because, um, I think there's actually quite a lot of fear in the organization about finger-pointing later on, right? And I think that organizations therefore need to have a more grown-up conversation at the senior level between all of the relevant stakeholders, which is much broader obviously than legal, but includes legal, to talk about, you know, how are we going to deal with risk, right? And isn't it better to have a fast contracting process without having an ex- if we don't have an expectation that every single point in the contract will necessarily be massively in our favor, right? Which means that there are situations that may happen in the future where the answer to the question, are we okay under the contract, will not be a perfect answer, right? My argument is that you can get more contracts done faster, that you can manage your way around those kind of disputes, that my definition of reasonable is not giving the farm away, that you can actually manage all that through.

16:56But that is an internal senior conversation, right? And so if you really wanna get things done, I think those kind of stakeholders need to be involved in it. So, yes, there are people out there who can come and help you. Um, but, uh, I also think that a lot of this stuff needs to be done internally, because it, it's much more joined up than having some consultant with PowerPoint telling you the answer. Yeah. Yeah, I, no, I think that's a great place to start, and I think that those internal conversations are something that needs to happen regardless of if you are going to try to just do it internally, or even if you're bringing other consultants in. You know, you still need to, to understand where you're at in those processes. Mm. Um, a- and you know, something else that I wanted to touch on a little bit was, was, um, around, uh, the number of templates that organizations are using and, and trying to harmonize them, bring them together, you know, minimize the number of, of those so that you don't have five different NDAs, you don't have five different MSAs- Mm... things like that. So, I mean, any tips around, um- How to, how to minimize those so that your team is always working, again, o- on a repeatable process that's, that's easy to push through, um- Yeah...

18:06approval workflows, generation, things like that. Yeah. Um, well, I mean, it requires just unreasonableness and bloody-mindedness, right? I mean, this is a, this is fundamentally a people and political problem, right? Because everyone's got their favorite, everyone's got their example. You know, these didn't come out of nowhere. There's all this history and so on. Uh, so I think a certain level of, uh, ruthlessness and bloody-mindedness will go a long way in saying, "No, we're just gonna have one NDA, and it's gonna be reasonably re- re- really reasonable, and it's gonna be one page long." Right? Or even better, we're gonna use the BOND terms or the one NDA, NDA, and that's it, right? We're done. Um, but that is about, I think, force of personality, right? It's having the people who can push through just going, "Nah, this is the way it is." Because otherwise our experience is that everyone just gets completely stuck and bounces off.

19:08So I think there is, uh, definitely a place for top-down initiatives on this stuff. Uh, the other thing is that the more you simplify and shorten your contracts, uh, the more you will, uh, actually realize that the vast majority of terms in there, um, uh, aren't adding much value. And in fact, you can create safer contracts by making them shorter because you tend to have more general statements rather than dealing with really, really particular points in great detail and actually missing large amounts of terrain. Uh, and the process of simplifying agreements, actually you'll find over time that it becomes much easier to reuse some of the terms and just add behind, you know, s- specific terms for a particular type of service or type of product or whatever it is you're buying or selling. Uh, and, and therefore simplicity, which is hard, again, you have to, like, fight for it, um, uh, is, is your salvation. Right. Comes...

20:07It, it's a lot of also about the personality of the lawyer that works inside the company, how, how, how they like their contracts, right? So- Yeah... uh, Alex, uh, yeah. So we've been discussing a lot about the, the processes and the, uh, templates and how to make, um, well, the, the wording of those contracts to be more understandable to the commercial team so they can know what they are, uh, uh, working or negotiating, uh, with a, with an outside party, right? Mm. But what other steps would you recommend, uh, for organizations to take before immediately looking for a CLM tool to fix, uh, some of their issues? Well, now I'm gonna be controversial. I don't think you should go near CLM, right? And it's, that's a, it's a terrible thing to say for someone who loves technology and so on, and I know everyone's just talking about CLM and how we should do it, use it, and it's the, you know, the hot thing and topic right now because we all got bored of blockchain, legal project management, AI, big data, all the other hot topics that everyone's completely forgotten about.

21:14Anyway, CLM's a hot one right now. I don't think you should do it for two reasons. Uh, first of all, I hate big technology projects because they are pretty much guaranteed to fail, right? They almost inevitably go, uh, over budget, uh, uh, and massively disappoint everyone. Uh, so that's reason one. But there's actually a more important reason, and the reason is that if you bring in a CLM, and by w- CLM we mean here, to be clear, a system that tries to cover all the different life cy- uh, so all different stages of the life cycle of a deal. It's not just a contract database, uh, what's called a CMS, contract management system, but a contract life cycle management, which is the marketing term that CMS companies came up with to say, "We're gonna cover everything." If you put a system in place that covers everything, despite all of the obvious attractions of it's integrated and everything else, um, it will end up massively slowing down your refinement stage.

22:14In other words, you will not be able to quickly make the kind of tweaks you will turn out to need to make in order to keep improving things, and so you will therefore ossify your contracting process and completely freeze it, right? Which is why I think you should be focusing on simple technology that's readily available in your environment, or heaven forbid, is even free, such as Docassemble, an amazing open source document automation system, which we recommend to everyone. Um, so, uh, all of the simple technology out there is good enough, uh, to just get going. It means your IT department doesn't have to be sold. Uh, it means you don't have to go and ask for a massive budget. It means you can actually get stuff done now. But most importantly, you'll be able to keep improving in the future, right? And I think that is actually where the real wins come from. Uh, yeah, and I, I think, Alex, I mean, it, obviously it's, it's definitely a different take than, than most folks have in the industry. It's a little different than obviously what we do on, on a day to day, right?

23:16Um, but, but hey, no, I, I think this is a great conversation to have and, and, you know, we've spoke w- with organizations that are, are definitely not even close to ready to, to really be looking at, you know, a full likel- life cycle tool. Um, a- a- and that's when we try to, to show folks that they can take a phased approach, that they can start with just a repository with maybe some alerts in there to, to track, um, what's going on with their contracts, and, and hey, maybe we're still gonna do manual template generation. Those workflows are still manual for now. Um, you know- Yeah. And that's the truth, isn't it, out there, that a lot of these CLM re- uh, implementations are absolutely fine as I would define it, 'cause they are just using one module and one piece. Um, and I think actually the end to end stuff's pretty much the exception, but you'll have much better data than me Well, I, you know, again, I, I really think it, it, you know, it depends on where an organization is, again, i- in their maturity stage and, and what they, they need to implement.

24:11And I think that is the other nice thing about some of the, the applications that we do work with is that they are scalable. You don't have to start with the whole thing. Um, y- y- and, you know, like we see every day, if you, you d- if you try to implement something too much at once, you're not gonna gain user adoption, right? You're gonna scare everybody inside the organization. What are they gonna do? They're gonna go back to doing things in a way that they have always done them, which leaves you, uh, or somebody in the organization probably looking pretty bad because you just purchased, you know, maybe a 30 or, or $70,000 application and, and now nobody's even leveraging it. Yeah, and there are a lot of stories out there of the $5 million applications, right? Yeah. You know what I mean? This, this, this happens. Uh, it's pretty wild. Uh, so yeah, keeping it, I think we can definitely agree, keep it simple. Start with, you know, small stuff and build on from there. And I'd, I'd certainly throw in, uh, uh, try to find the most flexible system you can. Yep. Because it is inevitable that you'll wanna keep tweaking it, so it's not a one-shot event. Yeah. And, and I think that's something we could agree upon as well.

25:12Or, you know, at the very least, I mean, you need to find an application that, that is no-code or low-code, and you get trained- Right... on it properly so that you can make those changes. Or, you know, as, as I'm about to ask, you need to find a partner out there that you really trust that is, is agile and is willing to work with you on an ongoing basis, and, and that your organization is okay with working with somebody to make those changes for you if, if they are required, which I think we can both agree that, you know, l- like we've been talking about this whole time, any, any process, any templates, uh, any, uh, I mean, approval workflows, everything is always going to be evolving because organizations continue to grow and, and move in different directions. And, um, if the pandemic showed us anything, it's, it's that you need to be able to shift when, when it's required. So that, you know, that, that's, that leads me to my, I, I think my next and final question here is do, one, do you need a partner to help you with these processes?

26:09Um, and two, how do you go a- about evaluating the, the, the many organizations that are out there to, to help you, uh, whether it's to change your processes, implement a software product, or, or be that ongoing support for your ag- organization to use so that you can always continue to leverage whatever processes and whatever technology you're using? Yeah. Very interesting. We actually got out of that business because I think you need to choose. Uh, and, um, uh, uh, we were doing projects for companies, you know, rewrite their term or automate something and so on. Uh, and I just got incredibly frustrated because I felt like we weren't adding as much value as we would like to be able to add. Uh, and we were in particular, the people who'd come and ask us for help were typically trying to tick the box on doing their innovation for the year, right?

27:08So they get to work with Radiant, it's really cool, get some nice short-term, small terms, yada, yada, and then they're done for the year and they'll come back next year. And so we would rather work with companies on a long-term basis where we actually take it over. Uh, typically we take over like the simpler, uh, uh, volume contracts, and then the in-house team can focus on the sexy stuff. Uh, and we like doing that because then we've got real skin in the game improving it. Uh, and so that's why you'd, you'd use Radiant. Um, but, uh, I think, you know, the companies that try to do all things for all people actually get into a bit of a pickle, so I'm really glad that there are experts like you who can actually come in and do it on a, probably on a more, well, you have a relationship, but a more project initially focused and so on to do that. Uh, uh, how do you, how do you select people?

27:56Uh, I think that, uh, if you've got a strong idea that you want a particular tool in, in, in mind to implement, you're gonna wanna know that they've really worked with that and so on. Um, uh, and I guess that's one area. Uh, but secondly is, is I think a lot of this is about philosophy and philosophical match, right? It's, it's the people who, uh, uh, I would be looking out for who are really interested in actually improving the whole experience and the whole problem, and not just whacking in a single solution. Because, as I argue in the book, there's just no silver bullet in this area. There is no one single solution that will solve everything. Um, and it, it requires a much more holistic approach, in my view. So that's where I've been. Great. No, Alex, I, I think that that's, um, that's great and, and, you know, it's, it's, uh, it's eye-opening to see a little bit of a different perspective, um, than what we usually talk about. So I, I think this was a great conversation.

28:54We really appreciate you having you on. Um, you know, if anybody wants to connect with you, learn more about Radiant, uh, where's the best place to do that? Uh, you know, LinkedIn, uh, uh, Alex Hamilton, Radiant Law, or Twitter, AlexHamiltonRad. Um, delighted to talk to anyone. Thank you both, Marc and Pepe. That's fabulous. Yeah, absolutely. Thanks for joining us, and thanks everybody for giving this episode a listen. We hope to have you back here real soon for another episode.