How To Start Your Contract Management Journey With Osama Hussain

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

0:00Welcome to another episode of Contract Heroes, the show where our guests, and sometimes us, provide best practice recommendations on all things related to contract management. Hello, everyone, and welcome to another episode of Contract Heroes, where we're not the heroes, our guests are. Today, we have a good one for you. Uh, Osama Hussain from Ordetto is gonna be joining us. We're gonna be talking a lot, a, a lot of, uh, things revolving around contract management. Before I flip things over to Pepe to give you a more of a high-level overview of what we're gonna be discussing, I'd like to flip things over to Osama just to get a better understanding on his background. Uh, so Osama, thanks for being here, and, uh, take it away. Yeah. Thanks, Marc. And, and let me, let me start by saying thank you for having me on the show. You know, I've- Absolutely... listened to the podcast.

0:55It's, it's a great show- ... w- you know, one that I think it really needed in our community. Uh, and just, it's just good to hear that there's a podcast focused on commercial contracting and, and establishing a link, you know, with the in-house teams who manage it, right? So, like, so who am I? I, I am Osama Hussain, general counsel at the Ordetto Group. It's headquartered in Amsterdam. It's a subsidiary of a global top 10 video entertainment business named MultiChoice. So here, I have the privilege of running all legal matters and strategy, and that includes corporate governance and policies, intellectual property, risk and compliance, privacy as the data privacy officer, and of course, our contracting management program. So I joined Ordetto in 2012 and before that, I was counseling a VC in Silicon Valley. Otherwise, I'm a registered US patent attorney and accredited privacy professional. That's awesome. So Osama, before we get a little bit deeper on about, uh, contract management, I would like to ask you, like, how does it got important inside the, uh, uh, a company?

1:57Like, why, why people should start paying attention to contracting processes? Yeah. Pepe, that's, that's a great question, right? Look, companies are, they're here to generate value for their shareholders, right? Not like I, I'm generalizing, right? But if I brute justice statistically, no one will disagree with me, right? A- but they can't do this without preserving cash flows, protecting assets, and engaging within their markets. So legal departments clearly play a fundamental role in this and, and they do that by owning the contracting program for the company. But if you think about it, when do you get to the contracting phase, right? In many companies, it's become normal to believe you don't enter into this phase until the end of the transaction, right? The colloquial, "Now the deal is done. Let's get it papered," right? But at the same time, too often you hear about slow contracting processes from in-house teams, uncertainty about who's responsible for certain aspects in the process, and really a lack of ownership when issues arise that, that need to be cleared.

2:59A- and what happens? So when these problems fester, right? Uh, then they're not addressed appropriately, oftentimes what can be good tools and platforms are hastily adopted in hopes that this will automatically fix our problems for us, right? Well, they don't. In fact, this just leads to teams who are frustrated further and a tool that's badmouthed because it didn't fix the problem. That's just not fair. It's a lose-lose situation if you think about it. Mm-hmm. And it just doesn't need to exist. A- and I think it happens because contracting is treated as an afterthought or rather a let's get it papered exercise, right? I think we should all be asking ourselves, why is it that this program th- that's so fundamental to a company's success is not being instituted as a core function? Yeah. Yeah. And, and Osama, I think, you know, we're, we're seeing very similar things over here in, in a lot of the organizations that we work with, you know?

3:51And, and I think, you know, now though, I, uh, I think more and more teams are really starting to, to understand that, that, um, you know, this process is, is something that's core to their business, and they really need to, to be able to get a handle on it to make sure that they can, uh, understand what is, is coming in and what is going out of the organization and really get a bird's eye view for, for each of the departments, not just the legal team. Uh, so that they, you know, have a grasp on exactly how their business is being run, and if there's any roadblocks that are coming up, uh, in the near future. Right. Right. Yeah. And, and, and also, i- it's very important to understand that contracting process is not, uh, independent of department. Like, contracts are the exact place where all the commercial relationships of the contract are described. They have all the nitty-gritty of, of, of any kind of agreement, and there's a lot of things that people should pay attention before starting to look for a technology software, right? Mm-hmm. Because it's not...

4:49If you don't have a clear contracting process, it doesn't mean that once you hire a piece or, uh, a software or a, or a platform, it, it will automatically solve all your problems. So there's a lot of things that, that you gotta do before starting to look for a software. And my next question, uh, Osama, would be, like, who do you think is responsible to set up a corporate contracting program? Yeah. And Pepe, by, by just echoing what your comment is w- with respect to adopting of tools, right? I, I fully agree. I think, um, you see that not just in contracting, but in multiple aspects of, of just corporate life. You often see people say, "Hey, we don't do this well enough. Let's go get a third-party tool to fix that." And that's just the wrong way to go at it, right? So, but going back to your question here, I think from my perspective, it's likely the audience of your podcast, right? Those responsible for the contracting, the legal department, and, and it should be that way, right? O- on the topic of what's needed to get a contract completed, they are the smartest ones in the room. But also- Right... the legal team is the only one who knows what's it's going to take to run the program, right?

5:59As they're, they're trained in contracting. They have the necessary education and the professional degrees. They have the experience and- They're the only organization in the country, uh, the country, the company that truly has, or should have, access into all aspects of the business that are relevant here. Right? And, you know, I'd like to make one tangential point on what I've just said. Right? In the, in the corporate environment, a common reaction to stating where responsibilities lie is to, is to react to say, "Well, I'm not empowered to take the actions required." Right? And, and my response to that is, "In this case, I don't think that's very, that's likely true." And it's, it's, if you propose taking ownership of trying to make the right improvements in this area, there's no responsible business manager who will oppose your ambition. Everyone wants legal departments to start behaving like other business units in the company, and that's to interact and coexist with the rest of the company. Yeah. Yeah.

6:57And, and again, I mean, that's something we're seeing too, is, is the legal part, department becoming more active in, in other parts of the business. It's not taboo to reach out to them anymore and, and, you know, interacting with them is something that needs to get done to make sure that, uh, the whole team is, is working as a unit to, to close opportunities faster. Um, and, and Usama, you know, I'm curious, I mean, in any of the, the organiz- organizations that you've, you know, worked with either now or in the past, I mean, have you been a part of this process, kind of building stuff from the ground up? Or, or has there always been a, um, a contracting process in place w- you know, when, when you got into the organization? I often was put into an environment where we needed to p- put one in place. Mm-hmm. Um, often what it was being thought of as a afterthought and done as a paper exercise, a- as I, as I said previously. A- and I think, I think it's just a, the wrong way to go at it, 'cause it often led to, to two outcomes, right?

7:52One is a negotiation that went on a- or became, uh, hostile, or you ultimately ended up agreeing to a transaction that really didn't capture the risk profile that you want it to, nor the, the benefit you were hoping to. Um, because y- you've ultimately hadn't thought through, what is it gonna take for me to get this on paper when I thought about the transaction? And that's because you didn't think about the paper at the start of the transaction. Right. Yeah. And so Usama, we also talk about that there's a lot of things that you gotta do before starting to look for a software, but in, in your experience, is there any place that you think, uh, companies should start, uh, looking for, or, or where sh- where should you begin, uh, when building a contracting program? So, so from my experience, there's five principal components in setting up any con- contracting program, right? And the first is establishing relationships across the organization.

8:59A- and then it's understanding your business, its products, its services, the solutions. Like, what is driving its revenue? Right? Right. Third, define expectations with top management preemptively. Right? And that's a, that's a very pr- that's a very important one there. Um, fourth, build the necessary components of your agreements, and of course, lastly, have your advisors and tools ready, but to, for the purposes of making everyone's life easier. Right. And also, we've seen also, uh, this trend in the industry, like, uh, becoming like a self-service contracting. Like some procurement teams in some companies have asking us that, have you, can you help us to build a s- a self-service plat- platform where we can use contract templates that we shouldn't be, uh, modifying at all, just agreeing on the, on the commercial terms? But have you seen any other stakeholder inside a company that, uh, the program should build a relationship with better, besides procurement or maybe compliance or maybe other de- department?

10:07Well, I think you need to have a strong relationship, uh, with a number of individuals within, within the, the commercial entity, right? Um, I think the reaction of sales individuals or any business development individuals coming to say to you, "We wanna know whether we can come up with a system whereby we don't need to do any negotiating. It's just a standard agreement." Right. Uh, uh, I think that's either because you're in an environment that'll allow you to do that, so you know, take for example end user license agreements for a very popular platform, for example. You're just gonna click, expect the user to click through it anyway, right? But if you're, if you're doing any, uh, any strategic selling, if you will, or, or, um, matters that require you to, um, r- really try to sell to the customer and then, and then just get a contract in place for the purposes of finalizing that transaction- Right... I think the reason the salespeople would be asking for that is because they've already felt burnt with respect to how they've had to deal with those situations previously.

11:11And what they wanna do is find a way to come to a business transaction closure and a contractual transaction closer, closure without any hiccups. Right? But that's, that's, that can't be done if you haven't thought about what needs to be in the paper in the first place, right? So from a commercial contracting perspective, I think there's a group that you clearly need to have an obvious relationship with, right? That's finance, procurement, tax, and compliance, right? But from a more expansive view, I think you should, you should consider, you know, firstly, who will be assisting you assess risk practically within the business, right? So for example, if you're selling physical widgets- Yeah... then you likely will be asked to give warranties for those widgets. So who in your company will be able to best explain to you the, you know, the physical integrity of those widgets and, and make a call on the requested warranty, right? But then also- Another group is, is to consider is those teams that will help you understand what's coming in the pipeline and what to look out for by way of transactions that will need to be addressed.

12:17And, and those are the often the revenue-generating teams, right? Sales, business development, and the like. And I think it's very important to create strong bonds with them, and so you can rely on those strong relationships when you're in aggressive negotiations. And, and they'll help you better gauge your workload and place, place attention in the right place, um, as, as transactions are coming, coming forth. Right? I th- I think that lastly is if you, if you aren't already doing so, consider installing a, a business partner relationship within business units of your organization a- and become a member of that team, right? This is to, like, get yourself in the same mindset of what the business is trying to achieve. So, so you can understand not just a particular transaction, but really where does it fit in the business strategy of that business unit? And, and it's not, if not the corporate strategy itself, right? The more you're ali- able to align those activities with your, with the shared goals, the more successful your contracting program will be. And what do you think about automating NDAs?

13:25I think you should a- automate any and all agreements that you can. Okay. And I think why I like that w- for NDAs is oftentimes that's one that doesn't need much negotiation- Right... if you've set up a template that's fairly, well, fair, right? Perfect. If you, if you s- if you set up a- For both sides, of course, because when you- Right, right... put it, like, uni- unilaterally, it will always bring some problems. E- exactly, right? Who, who's gonna go i- into a one-way NDA, except for somebody who's not paying attention. Mm-hmm. Right. Yeah. And, and, you know, while we're on the topic, you know, of, of salespeople and legal teams kind of, you know, putting their heads together, I mean, do you think that there should be more collaboration between these departments as far as maybe, like, at least a monthly meeting to make sure that everybody's on the same page and are working towards the same goals? Yes, all of that, and ab- and, and the above, right? I, I think you need to build s- and establish relationships across the business, right? It's, it's, um, like if, i- if you don't establish relationships, I don't think you can have a successful contractual, uh, program, right? Mm-hmm.

14:38In fact, that one step, I think, will give you so much more clarity that even if you don't do the other four that I've mentioned, you can still, I think, achieve a successful contractual signature and closure, right? And so let me tell you why. When you're looking at a contract for your own personal reasons, right, whether it's buying a car, or getting services done at your home, or even, you know, to a certain degree, signing your own will and testament, right, bringing the end of your life, you are in control of the subject matter. That influences what will be, what will be agreed to in that document. But when you are in the legal department looking at a contract for your business or, you know, or your employer, uh, the company is that person, right? And that's the subject matter that influences what can be agreed to. In that scenario, it's impossible for you to individually know the subject matter. And when I say individually, I mean, you know, as, as a person, but, but with respect to the legal department itself, r- or as, as an entity within the organization.

15:36To do your job as the owners of the contracting program, you've got to build those relationships with the other entities in the organization and, and, and where they will have any influence whatsoever with what is gonna be agreed to in the contract. And you need to do this before the transaction is before you, right? So that's why I say anything and everything that you need to do by way of building relationships, I think that's a significant part of the job of in-house counsel, right? Or in-house contracting teams. Yeah. And, and that it's also i- important, right? Like, uh, when you are building a negotiation playbook, like, uh, it is always good to have these kind of reunions with other departments of the company, because if you're using the, the playbook too much, that means that's that there's something in your contract, the design, that maybe you could fix a little bit so it will be easier to go through the negotiations, right? There are some, uh, particular clauses that are usually one of the most negotiated. There's also, uh, uh, an analysis from the World Commerce and Contracting, and I totally agree that some of- Mm...

16:41these clauses are like limitation of liability, right? When you see a clause when it has no limitation at all, it's always going to, to raise a red flag, right? Or indemnity obligations or, uh, reps and, and, and warrants. But how would you recommend to define the expectations with top management before all the stress starts with, uh, while you're negotiating a contract? You know, a- and I like the way you, uh, set that question up because I, I think w- w- what I would highlight here is that limitation of liability is clearly the first thing everyone thinks of- Yeah... when you think, "What do I need to talk to my top management about with respect to setting expectations?" But, uh, you're, I think you've failed what your job is meant to do if you start with that without explaining to them, to them that risk management does not start there, but actually ends there. That is the backstop, right? Mm-hmm. You need to identify all the things that need to be in your agreement with respect to mitigating risk such that the limitation of liability is truly just the backstop.

17:49Like, you've already built in so many things that, that need to be, uh, considered by way of understanding the product. So if I give... Go back to my physical widget, uh, example. If I give a warranty, uh, to a customer that says, "This will uphold, you know, certain amounts of stress a- and, and whatnot for 120 days"- Right You can tell management, even if you accepted a higher cap of liability for the purposes of that warranty, we've spoken to the teams that are building this on behalf of our company, and they are willing to stand behind that warranty without any concern, right? And that's how you should be managing risk and, and how you set expectations with management. It's if you tell them, "I'm continuing, continuing to run the paper exercise," you've not built any trust or faith with them with respect to what needs to happen when you're working on a transaction itself, right?

18:48And, you know, this... I think you, you should think about indem- indemnity obligations, representations and warranties, like I've said. Mm-hmm. I think matters of guarantees that are rather unique, right? A- and so you understand what their expectations are for that. It's just any of those things that need to be cleared by them that are a bit siloed. But I think if you, as you set expectations with top management, I think the takeaway is to start to build a relationship of trust with them so they understand when you approach them in the middle of a transaction, that you've done what you think is appropriate to their understanding with respect to mitigating risk, and it's not based on just the limitation of liability. Right. And now going a little bit more technical and talking about contract management platforms, right? How would you, or what kind of features would you expect for a system in order to, uh, use a playbook or a negotiation playbook more efficiently?

19:50For, because what I, what I can think about is, like, having a clause library where you can have, like, different kind of clauses, so any time, uh, the, the vendor or the client asks you to modify a little bit some of, some of those clauses, you can have the other ones, like, just, just right away and, and, and you can offer a, a different kind of wording. But in your experience, what do you think would be useful on a system to use a negotiation, negotiation playbook? So I would take one step back and ask, "What are, what are my workflows?" Okay. And who, who's ultimately making the decision on the playbook, uh, clauses and whatnot, and the selection of those, right? Because that needs to ultimately define how you ultimately im- implement within the system. And your job as in-house, you know, contract program manager, whatever, needs to be how do you empower the business, maybe through the tool or whether I use the tool only for my department itself.

21:02It just, it really depends on the workflows that you've established. And if you empower, you know, just as an example, if you empower other departments to make calls on the con- contractual playbook, well, you better ma- have made the playbook, set up the playbook in such a way that it isn't incrementally adding significant risk for the, for the clause that's being negotiated as you go, 'cause otherwise you wanna think about it from a perspective of, "Well, shouldn't I have an attorney actually looking at this when I go through my playbook?" Right. So it really depends. So if I go back to, again, the, the physical widget example, if it's a, if it's a playbook that says somewhere between 60, 90 or 120 days for a warranty, I should have talked to my, my product team and my engineers to understand how comfortable are you with this? I know you're, you're fine with 60 days.

22:00What if we allowed the business managers or the transaction team to go up to 120 for a... You know, perhaps it's for a engagement that is gonna bring in a significant, a significantly higher amount of revenue than your other deals. Would you be open to that? Right? So if you formulate it based on, uh, risk and reward and an understanding of what that risk actually is, I think there's multiple ways to slice this pie. Right. You just have to think about what's, what's proper for you with res- as, as a company by way of workflows. Mm-hmm. Uh, yeah, and, and it's definitely gonna vary, you know, depending on, on where your organization is in that, the h- how big you are. You know, what, again, what your workflows look like. You know, how many different, uh, types of, of widgets or services are you offering? You know, those, those workflows are gonna vary, and I, I think, you know, when companies are ready to start looking at, uh, applications, they need to keep this in mind, and they need to make sure they're working with their implementation team to make sure that everybody's on the same page so th- at the end of the day, when each of these different roles, uh, a- and departments get into the system, you know, they're, they're, everyone's happy and, and user adoption is staying high.

23:09Because I think that's, you know, as we said, stated at the beginning of the conversation, I mean, that's, that's gotta be the, the key to, to all of these, you know, implementing anything, you know, whether it's a, a software application for sales or legal or, or any department. You know, you need to make sure that your users are happy and understand how to use it, or they're just gonna go back to the old ways that they know how to do things. And never use the system. Yeah. Right. Right. No, gentlemen, that's absolutely right. And, and, and look, I don't... I hope my explanation isn't, isn't coming across as if this is a very complicated scenario, but my point really is that if you set up a program that's, that's part and parcel to what's, what's appropriate for your company, the adoption of a tool is gonna make your life so much easier. You just have to understand what the workflow should be and what everyone's comfortable with. Mm-hmm. If you set up the baseline with respect to the program, add the tool, and evolve. Yeah. Right, and that's also one of, one of the big reason of bringing stakeholders while you're doing the implementation. And that happened also, uh, with, uh, with a client of, of, of ours, right?

24:11Because, I mean, the legal team is, of course, they are specialized in certain kind of contracts, but sometimes they, they need to bring people from other departments like, I don't know, IT, governance, that, uh, in case that they need some kind of assistance on very technical points of the contract, such as service level agreements, or you wanna bring some- somebody from the risk department on which kind of insurance will be better for this kind of agreements, right? If you can have a playbook where you can use those workflows and ask these people what do you f- how they will feel more comfortable about, uh, uh, on the wording of a contract, that will save so much time. Because in- instead of going back and forward with these, the department, they, the legal department or the contract manag- management department will know this in advance, and it will make the negotiation even, even, uh, or more smoothly, right? Right. No, absolutely.

25:08You know, and, and when you're looking at it from a perspective of overall transaction closure, you know, the other, uh, uh, the other thing I would add to that is, is to negotiate with your internal teams, right? Uh, to understand, look, we all know the m- least risky approach is an easy document to get behind from one side, but you're gonna have to negotiate that with the other side. And so if you're not coming in starting from a fair, uh, stance already, you're only adding cycles to a contract that ultimately is gonna bring it down to a fairness approach anyway. And what about post-signature obligations, Ossama, like compliance, such as data privacy or export control or, uh, sanction countries or, or entities? How do you think that will ha- or, or how a contract management system will bring value to those departments? Well, I think all of those items need to be considered when you are thinking about what your templates and documents need to have by way of components when you're setting up your program, right?

26:21And you can't forget those compliance requirements, you know, the data privacy teams, the export control issues that might arise, and as you said, the sanctions count- sanctioned countries. You know, there's also, you need to think about it from a IP program perspective, an insurance program perspective, and there, there's also those things such as payment terms, which- Right... why does that become an afterthought, right? This is probably, hopefully after the contract's signed, the most important thing with respect to bringing in the revenue anyway, and the tax obligations and whatnot. It's the, I- I- I think these are all things that need to be ironed out and thought about as you set up your templates. Templates, of course, feed into your contract lifecycle management tools and workflows, and, and are ultimately how well you establish those templates and playbooks, um, and you know, planned responses, if you will, within the system, is how well that system is gonna ma- how much easier your system is gonna make your life. Yeah.

27:21Yeah, and, and I think, you know, if, if we could take one thing away, Ossama, you know, as we wrap things up, I mean, usually we ask a, a final question here about, you know, what, what are your top one thing or your top three things, you know, from a takeaway from this conversation? But I think we've reiterated it, you know, uh, enough during this conversation and, and it seems like, uh, that, that, that is, that you need to have your processes in place before you go out there and try to find a piece of software to put a Band-Aid on, on, uh, you know, your workflows or, or anything else inside the organization. Yeah. No, that's, that's spot on. That's exactly right. Yeah. Yeah. Well, hey, Ossama, this has been a great conversation. We love, you know, getting different perspectives on these processes. You know, we've, we've talked about it with a few of our guests, but I think that, um, you know, being able to, to see things in a different lens and, and through what different organizations are doing is, is absolutely wonderful. So, uh, you know, we, we thank you for coming on today to chat with us and, and if anybody, you know, wants to connect with you or, or learn more about you, uh, w- where's the best place to, uh, to do so?

28:20I, I'd suggest LinkedIn. It's probably the easiest way to go. Um, and you know, so universally available, so. Yeah. Right. Yeah. All right. Well, hey- Well, thank you very much, gentlemen. Yeah. I appreciate it. Hey, thank you. Thank you. This was a blast.