Defining Contract Principles - Jerry Silber

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 the Contract Hero podcast. And in this show we got Jerry Silver. He is the vice president and deputy general counsel of Verizon Business Group. So glad to have you here, Jerry. Thank you very much for inviting me. Appreciate it. Uh, thanks to you. And Jerry, uh, for the people that don't know you, can you tell us a little bit about yourself and, and some about your back- background? Sure. I'll try to be brief, and if I drone on for too long, please interrupt me and just ask me to stop, and I will. So, um, I'll, I'll start with where I grew up really, and I'm not gonna go through every single thing, but it's important, I think, to understand kind of person that I've become by understanding a little bit about where I grew up.

1:04I grew up on the Lower East Side of Manhattan before it was really a cool place to live. It's now a super cool place to live. Um, but it wasn't back then. It was a pretty tough area back then. And, you know, it didn't take long for me to realize that sports was not gonna be my ticket out, if you will, right? Had the height for basketball, but not really a whole lot else. Um, so I, I realized that my ticket out was gonna be education. Um, and I had to work really hard to gain acceptance to a, uh, an academic-type high school, Stuyvesant, that required an entrance exam. And I got there, um, and I realized there were a lot of other smart people out there also, you know? Um, and so again, I realized I'm gonna have to work even harder if I'm going to compete with, with these people. Um, anyway, uh, it was a good experience in, in high school. Go on to college, and I take some classes in college on, uh, broadcasting.

2:08I found I liked working the cameras, and, uh, the soundboard and everything, but I also enjoyed the business of broadcasting and really understanding the legal issues around the media, First Amendment. Um, and I actually did very well in those classes. Certainly better than I did in bi- uh, in the biology classes, as an example. Um, this whole idea of one of the concepts we learned was, uh, the marketplace of ideas John Milton founded. It's really a precursor to social media these days. You know, the idea that everyone has the ability to get his or her voice heard in the marketplace of ideas. Um, uh, so I had a thesis due my senior year. Um, I did that on an area of regulation of broadcasting. Probably the first sign that I may have an interest in the law. I say may 'cause I certainly was not sure at that point. Right after undergraduate, um, I applied both to law school and graduate school.

3:14I chose to go to graduate school at Penn State because, frankly, the courses in grad school just seemed much more interesting to me based on my interests at that time. Um, a mixture of practical courses. You go out and you cover the city council meetings. You come back and you write your story. Um, but a- again, there were lots of classes on the, the business issues of media and the legal issues. Um, one of the professors I had was a non-lawyer, but who taught all the law classes there. Um, and, uh, he became a mentor of mine, uh, helped me get my thesis done. Uh, and actually it was published. And, um, for what it's worth, he told me go, go on and get a PhD and not to become a lawyer, uh, which I found really interesting since he taught all the law classes. Um, brief aside if I can. Um, at Penn State, uh, it's located in State College in Pennsylvania, same place where AccuWeather, the forecaster, is located, and AccuWeather was looking for someone to teach their meteorologists how to write for broadcasting. One of my professors recommended me for that job.

4:31It was a really cool gig, uh, for someone who was still in grad school. That's, you know, money out of it. But also it was a good opportunity to learn a new writing style. You're trying to explain science, weather forecasting to a mass audience. Not something I had done previously, and working with these really interesting scientists and trying to explain to them how to get their points across, something that lawyers and legal professionals always do. Uh, you need to figure out how to get your point across to whomever you're writing. That was really my first experience there. Um, worked for ABC Radio News for a little while after that, after grad school. Um, really enjoyed knowing the news before anybody else did, right? You're in the newsroom. There's a level of excitement. There's always some kind of a disaster happening, whether it's a train crash or, you know, a, a disaster of some sort. Um, but I still wanted to explore the law.

5:40I wasn't quite sure that this was where I wanted to be. Um, but after a while, I applied to a number of, of law firms. I think 50, as a matter of fact, on a broad scale, sending out unsolicited resumes. Um, and I, I landed a job as a paralegal, uh, at a law firm, a small firm, about eight lawyers altogether, and we represented TV and radio stations. Um- And, um, that, that was a pretty good introduction to the law. Um, eventually became a partner there. Went, went to law school at night, I should say first. Um, they encouraged me to go there. Um, and, um, became a partner there, and we tried cases before the FCC, uh, some appellate work, did some M&A work. Of course, we handled all the regulatory work for our clients. Um, I wanna get back for a minute, if I can, about writing style. So there were two main partners in this office, um, and each one would ask me to draft memos for them or draft letters for them, write briefs for them.

7:00And I discovered very quickly they each had a very different writing style. I don't know if it's because one went to Harvard and one went to Yale, but their, their s- their writing styles could not have been more different. One was very crisp in his writing style. The other, much more flowery and used rather arcane words that I had to look up all the time. Um, and I, I mention it because, again, it reminded me of different writing styles, reminded me to, uh, think about my audience. Um, and again, that's really a talent that we in the legal world still use. You write, you write differently if you're writing a brief for a judge or an email to your team. Uh, but either way it's usually important, because I truly believe that you're judged by others based on how well you write. Are you approachable? You can tell that from the tone of your email. You know, are you empathetic? Are you kind? So, um, a- again, just knowing, um, your audience and knowing who you're writing for, really, really important. Um, at that small firm I also began something that I do to this day, which is I teach, uh, as a s- as a side gig.

8:18Began teaching a class on media law, modeled in large part on those classes I took at Penn State. Um, and, uh, these days I teach a class in marketing law and ethics. Yes, we combine law and ethics in the same class. Um, this is to students who are pursuing a degree in, in marketing. Um, so that's the early years. Right, um... Right. And, and I, I really like when you, when you said that you have to focus on your, uh, audience when you need to write something, right? And that's exactly, uh, what takes me to the next question, because, like, the interaction of the legal team, a lot of, a lot of the people think about the, the legal department as, like, uh, as independent want, right? But then, but in the real life, it's like legal team interacts with everybody, and especially when we're talking about contracts, right?

9:18And one of the things that we've been, uh, talking about with our most recent guests and during the event in the, in the, in the World CC is the importance of having very, uh, first of all, reasonable terms, because that, that's gonna help you during the negotiation process, but also how, how you write them. Because at the end, if you want of the, some of the departments to start, um, having a playbook on how to ne- negotiate terms without having to knock the door of the legal team every time somebody makes a small red line, uh, inside, uh, in- inside the, the, the contract, I think that's one of the most important things when you want to, uh, you know, m- make this, uh, business deals more fluent, uh, without having, uh, legal be, uh... O- of course, they need to get involved in the, in the contracting process, but there are some contracts that, uh, we, we've seen that can be like, uh, contracting, uh, self-service, where the departments as p- p- procurement, sales can, can work on their own.

10:20And, uh, so Jerry, can you describe a little bit, uh, like how this, the work of, uh, legal ops team inside a company, like how do they interact with the legal department and with the other teams inside the company? Yeah, I think that's, that's a great question, because most companies of any size these days are matrix, right? And you need to work with very disparate groups. Um, look, as far as I'm concerned, the number one requirement has gotta be some kind of trust between legal ops and the general counsel, right? Um, because without that trust, I don't think you're going to get a, uh, good result. Um, that trust comes, in my opinion, from an acknowledgement that the legal ops team, those professionals who are working there, have skills that you as a lawyer, for example, might not have, and th- that's a hard pill for lawyers to swallow. I mean, yes, some people are better at some things than you are. I know you haven't been told that your entire life, but it, it's really true. So you, you, you're paying the legal ops people good money, hopefully. Get out of the way and let them do their job.

11:40Um, now get me wrong, you know, the legal ops person has to understand the priorities of the general counsel, um, and explain to the general counsel how their plan's going to accomplish those goals. But once the green light is given, once they align on that, I really think the general counsel has to just get out of the way. Um, legal ops has to be sure that their plan, uh, was going to bring about the desired result. Whether it's a decrease in expenditures or increasing the diversity of employees or increasing the diversity of the vendors that you work with, improving the analytics, what- what- whatever the particular job is. But at the end of the day, it's about trust and relationships, and we could talk for another hour about the importance of those.

12:41Um, but that really is the most important way, or the most efficient way, to get things done in a matrixed organization. You need to build those relationships with the people with whom you collaborate with. And you just need to figure out how to get that done, right? You know, maybe it's, maybe it's having a drink after work. Maybe it's working on a major project, uh, requires you to work late hours into the evenings together. Maybe it's a pro bono project. I don't know. Maybe, uh, you just need to show you care by asking your colleague about a family member. Um, but you know, it's super important, in my opinion, to build those relationships and keep them up. You know, in prepping for, for this, uh, this podcast, we're talking a little about how, how difficult it is for people who have joined new organizations during the pandemic to develop those relationships.

13:47You know, we're working, most of us at least, are working either at home full time or in a hybrid role right now, where we're, we're not seeing the same people in the office on a regular basis. Um, so, uh, you know, that, that is something that I'm concerned about. In my company, we're working on, uh, moments that matter, bringing people into the office, uh, for moments that matter. Uh, but I just think it's really important to find a way, whatever works with your style, to build those relationships up, whether it's with legal ops people or with your, your, your subject matter experts in tax or information technology, wherever, because, you know, you're not gonna be able to do it alone. You're gonna need other people to help you get that deal done, and the best way to get that done is to have the relationships. And Jerry, when, when do you see organizations... When's the right time, uh, to bring in somebody to handle that legal ops role? Is it when you purchase your first piece of legal technology?

14:57Is it when you have a certain number of lawyers on the team? Yeah. I- is there anything that's kind of a, you know, a green light that says, "Okay, hey, we, we need to bring somebody in to, to run the legal ops department now"? You know, I don't know there's a bright line, but, but certainly I would do it prior to purchasing that equipment, you know? Not afterwards. Uh, I, because they, hopefully the legal ops folks have that expertise. Um, but, um, I, I think when whoever is performing those functions now find that they're spending more time on that than they should be, and not able to spend time on the legal work that they should be spending their time on, that's probably a sign, uh, that it's time to bring in someone who really specializes in this stuff, who's a professional in the legal ops area, uh, and can help to, to drive us towards success. Yeah, that makes a lot, a, a lot of sense, because now you have a team that knows, like, the processes and all the pre-work that you need to do be- before doing an, an implementation, uh, work with, with any vendor, right?

16:11So, um, yeah, we've seen, we've, we've seen in our previous episodes that there's, uh... Well, well, right now people in org- org- organizations are, are more aware that you need to do a lot of work, uh, a lot of homework before, uh, uh, you know, purchasing a new piece of technology, especially because you, you need to know your processes. And people who are, like you say, are not u- usually lawyers, they are, like, engineers that have more experience, uh, handling claim management, um, uh, tasks and, and this, these type of skills that, that we don't get them in, you know- Right... like in school or, uh, or in l- uh, working on a law firm. So it's, it's very good to bring somebody that has some experience there to understand, get the trust of the team, and then start looking for a piece of technology that can be, uh, useful for the company. And, uh, Jerry, it's any, uh... How, how has any, uh, l- legal tech tool or piece of technology, uh, has helped, uh, the operation of the legal team that you, uh, that- Yeah... that you work with?

17:22Yeah, so look, I'm, I'm not an expert on, on legal tech, but I could talk about it from the standpoint of a user, right? Yes. Um, it's clear to me, uh, that the technology has advanced a lot in the last few years. Um, a number of vendors out there is through the roof. I mean, you know, I can't tell you how many emails I get a day. Um, so I think the adage of buyer beware is appropriate here. Um, I do know situations where, um, CLM systems have not lived up to their potential. Um, and I think that's probably because the expectations were set too high in the first place, right? Um, you're expecting the expectations all the way up here, and they don't quite meet here, then you're a disappointed buyer, which is not a good thing Um, the, the other point that, that I'll make is that what has become clear to me as, as we've dabbled in the area is that whether it's contract life cycle management or artificial intelligence, machine learning, uh, it's never going to replace the need for some human interaction.

18:38You know, I think the initial reaction of anybody when they hear that, you know, a company's going to be bringing in AI is, "That's it. Everybody's gonna be out of their jobs." It seems to me that these tools actually make our jobs easier, um, allow us to focus on more important things. Um, and, um, everything I see really has indicated that humans who understand the deal and the needs of the, the counterparties are still gonna be needed to act on the information that we get from these tools. So, um, you know, I think that there's, there's a hell of a lot of opportunity out there certainly, but it's gotta be the right tool for the right situation, the right use case. Um, and just keep your expectations appropriate. Don't think that it's gonna be the, the end of the world or, you know.

19:36Uh, because usually, um, th- there's, there's just a lot of work that has to be done when you acquire a tool like that before you begin to get the benefit out of it. Yeah, I... You know, that's definitely something that we, we've seen and that we talk about is AI is not the... It's not at a level where some folks think it is yet. Yeah. And, and you s- definitely still need people and processes to make the most out of either, uh, whether it be a piece of software or AI technology. You know, you're always gonna need folks in certain positions. Uh, but like you said, Gerry, it, it definitely can make your job easier to do, and I think that's, that's what it's capable of right now. And, you know, wh- when we talk about people and we talk about processes, you know, Pepe and I obviously were just at the World CC event in Phoenix, uh, last week, and, and, you know, something that, uh, we wanted to talk about was the contracting principles and, and how they can improve on the e- efficiency of an organization. So could, could you give us an understanding of, you know, what those are and, and how they can help an organization? Yeah, sure.

20:37Um, and unlike, uh, an area of legal tech, this is actually something I, I do know something about. So, uh, tha- tha- thanks for the question, Marc. Um, well, why don't we start with what the contracting principles are, presuming that your audience has different levels of understanding of it. Um, the, the principles really are, are voluntary suggestions, right? Uh, my, my colleagues at Antitrust made that very clear to me at the beginning. These are voluntary suggestions, um, based on conglomeration of experience, experience of buyers and, and sellers and consultants and academics and others about where two parties to an agreement most likely will land on a particular issue after the dance is over.

21:35So after weeks of negotiation back and forth and some yelling and screaming maybe and red lines going back and forth, we, we, we all know pretty much where we usually are going to land on a particular issue, give or take 10%, say. These principles are across industry guidelines that have been deemed to be fair by people who do this for a living each and every day on both sides, buyers and sellers, consultants, as I said. And so the, the value proposition really is, why don't we save our respective clients some time here and just agree to craft language that aligns with these principles? We, we started, I'm gonna say about, um, six years ago, maybe eight years ago now, with about six principles. I was involved in helping to craft those. Um, now World CC has just published a latest edition.

22:44Uh, I don't have the number of principles, but I can tell you there are 83 pages in the document that I've got, um, on the side to read at some point. So it obviously has evolved, has exploded. As I mentioned, I got involved at the beginning, uh, at the suggestion of my general counsel. Um, and though I haven't been active, as active as I used to be, I continue to evangelize for their adoption because I just think it's, it's low-hanging fruit. You know, everyone's looking to, um, shorten the deal cycle. How can we get this done more quickly? Um, the telecom space, I know World CC research show that complex agreements in the telecom space take an average of 31 weeks to complete. I'll let that sink in. 31 weeks for a complex deal to be completed. So really anything that we can do to reduce that time is a win for both sides, right? The, the vendor gets their revenue more quickly.

23:53The buyer gets the solution that they're buying more quickly. Um, and so I just think, and anyone, um, who's looking to simplify their contracts and who isn't being told by their businesspeople to simplify their contracts, right? Everyone. And who isn't being told by their businesspeople to shorten the time it takes to get to yes- I think the principle should be looked at for, for each of those reasons. Um, and I, I'll just say a shameless plug here, even though I'm not as involved as I used to be, there is someone on my team who's picked up the mantle, Lita Ball- Ballinpolly, who was at the Phoenix conference, was there, um, and she's picked up the mantle, is working with others, including Hal Britton as well, who really has taken this on as a labor of love. So, um, it just seems to me the principles are something to be looked at. You don't have to adopt them all. Uh, adopt three, four, five and see how they go.

24:58See if you're really able to spend less time negotiating an indemnification clause, right? Uh, or an audit clause. Um, because as I said at the beginning, we all know pretty much where we're going to land at the end of the day, so why go through this whole dance and spend everybody's money? Anyway, those are my views on the principles. Any... I'm happy to expand on them. Have, have any other questions or we can talk about something else, whatever you guys want. Great. So, uh, Jerry, so we talk a lot, uh, about people, trust, processes and, and, and now, uh, well, the contracting principles, like how you can voluntarily involve those principles into your contracting progress, right? Process, I mean. And, well, and let's say that's like for the pre-signature or pre-award space. But now that we have these pieces of technology and, and, and, and, uh, I like your approach as a, as a user.

25:59Like, any kind of recommendations on, on, on how data has, um, helped your work or, or, or any other kind of data that is, that is helping you to, uh, to, you, you, you, you, you know, um, manage those contracts? Yeah. Post-signature. Like- Yeah... how have it helped your team? I actually was asked a similar question by my boss not too long ago, because l- let's face it, with budgets being tight everywhere these days, we kind of need to pick and choose our battles, right? So he asked me to, you know, pick one or two, um, items like this that, that, that we ought to be focusing on. And I think that, you know, post-signature contract obligation extraction, I, I know that's a mouthful, post-signature contract obligation extraction and monitoring would probably be my answer. Um, it seems to me that that is the most effective way to plug the value leakage from contracts that World CC says is about 9.2%, right? Um, that we know of.

27:11Which means that there are some contracts where the value leakage is even more, right, which is a scary thought. Um, but it needs to be systematic, it needs to cover both parties. Um, one party fails to perform a contractual obligation, I think it's really incumbent on the other, on the counterparty to call it out in the spirit of partnership. It's equally important, it seems to me, whether you're the buyer or the seller, if you agree to do something, you need to live up to that obligation. Um, where the contract is signed and put in a drawer and never looked at until there's a major dispute, that's where you run into problems, it seems to me. But by keeping everybody, you know, on board and in line, um, I, I think that being able to extract these obligations out, you know, every four months you're gonna have a meeting, and these are the people who are gonna be at the meeting, and the agenda for that meeting will be one, two, three, and how close are we meeting...

28:17how close are we to meeting our objectives? Um, so there are no surprises and, you know, if things are beginning to go off the rails, isn't it better to catch that earlier in the life cycle of a contract than wait for the lawyer letter, right, that you're now in default? Nobody wants that. So, um, that, that, that I think is the, um, the, the, the data, um, challenge that I would seek to alleviate. Make sure that we extract the obligations out, assign an owner to each of them, follow up with them, make sure that both parties are doing their thing. I, I also spoke to Tim about this, um, about a year or so ago. Uh, we had a call from World CC. I told him, "You know, one area of this I don't think people have been addressing really, is think about the impact it has on the deal team," right? These deals are never easy.

29:21Um, take a lot of effort, oftentimes evenings, people having to work on the weekends, um, to get a fair deal signed, um, that both parties feel are good for their respective companies. And people work hard to get a concession or to figure out a scheme that's going to work. Um, think about the impact to the deal team when their work isn't even looked at, where, you know, the contract should say, "Here's what you do," and no one even does it. At some point, the deal team is going to lose confidence, lose their enterprise, lose their desire to do a great job if they think no one's reading the contract, right? So I think that's another area to think about, you know, the impact on the deal team, on the pursuit team of not extracting the obligations, following up on them, making sure both sides abide by what they've agreed on.

30:29Yeah, and I, I think, you know, and it, it's a, a theme that we've been talking about a lot when it comes to the, the data that's inside of contracts. And if, if a system is put in place and all you're doing is throwing your contracts in it, and you're not tracking any of the obligations or meeting with the team to review that information, y- you're really not getting all of the value that you could be out of, out of that w- you know, in this case, probably a CLM tool. And, and I think, um, you know, what it allows you to do is it gives the legal team the leverage that all other departments have, because they're already tracking all of this information on, on the info that they need to store. And now the legal team is able to go into these meetings with other departments and show that they also have this information, and show that they're not a cost center, and they're actually one of the, the backbones of the organization. So, you know, Jerry, I love, I love what you said about that. I think it's fantastic. Um, hey, and I, I, you know, this has been a great conversation.

31:24I, I think we, we could probably talk about this all day, but, um, w- I think we're gonna go ahead and, and wrap up here. So Jerry, if folks wanna connect with you, uh, to, to have a l- a conversation, go more in depth about this, uh, w- where's the best place to do that? Sure. Um, uh, my email address is jerome.silber S-I-L-B, like boy, E-R, @verizon.com. I'm on LinkedIn as well. Um, those are probably the two easiest ways to reach me, but, um, hap- happy to con- to continue the conversation with anyone who has an interest in it. I think this is fascinating stuff, and I think it, it helps to define, uh, what we do as a profession as well. That's why I love the work that's done by World CC. It really takes it to the next level. Um, and so I want to thank you guys again for hosting me. Appreciate it. Um, and I hope you got something out of it. Awesome. Well, thank you, Jerry. We appreciate having you on as well. And thanks to everybody that's listening. We hope to have you back here soon for another episode of Contract Heroes.