The Art of Contract Management at CLM Simplified Academy 2023

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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've got something a little bit different for you. The conversation you're going to be listening to is from the CLM Simplified Academy that took place earlier this year in New York City. During our conversation, we speak with Mary O'Carroll of Ironclad, Laura Frederick of How to Contract, and also Debbie Hoffman, who is an authority from the Albany Law School. Now, let's get into the episode. Hello, everybody. My name is Marc Doucette. I'm the CEO at Koho Consulting. With me I have my co-host, Pepe. And, uh, today we're gonna be doing just a couple of interviews. You know, I, I really thank you guys for being with us during this lunch hour. I know there was plenty of other speakers to go listen to, uh, but you chose us, so I, I really appreciate that.

0:56So during this, these couple next conversations, we're going to be trying to stay as focused on, on CLM implementations as we can. That's, that's what our business is. We're partnered with a couple of vendors here. We, we do help them with implementations, help our customers to make sure that they get a system that they're actually going to be able to use, want to use, and, and have user adoption with. So we brought Mary up and, you know, we're gonna have about 10 minutes here to, to have a quick conversation. And the first question that I wanted to ask her was, you know, when it comes to your customers and folks that have, you've seen implementations done for, how do you see them being successful when, you know, taking a phased approach instead of trying to do everything all at once? Yeah. We, we talked about this a bit this morning already, but it's just the idea of getting all your stakeholders aligned at the same time and trying to roll out one solution and saying, "Hey, this is gonna be good for everyone," is, you know, honestly a bit unrealistic. You're never gonna have everyone on the same page. You're never gonna have everyone focused on the same set of features or must-have requirements as the top things for the whole company.

2:04Everyone's got their own, like, "This is what works for me and what, you know, what I want for my day-to-day." And change management is hard. This is something that affects so many parts of the company. So instead of trying, I, I think, to get everyone aligned and to spend a year doing that, you know, stakeholder alignment, business requirements gathering, change management process, is to just start small. And even if it's a pilot with just find the group that is willing to work with you, that trusts you, and roll something out that is successful. Start with something simple. I can, from personal experience, we've tried, like, "Let's do the most complicated template and contract and then everything will be easy from there." Well, big mistake, 'cause you're gonna- It doesn't work that way. Yeah. You're gonna have to learn from, you know, starting small and then increase the complexity as you go along. That's definitely... It, it's all a learning process. It's all bringing people along.

2:53So if you're successful with something to start with and other people can see that, what you will find is another team, or even that team itself, will be like, "Oh, our NDAs are so much better now. Yeah, I don't have to deal with it. Hey, this other contract is also really annoying. Let's get together and templatize that and put that into a workflow." Yeah, I, I think that's, that's a fantastic place to start. And, you know, another question I have is, is, you know, when we talk about departments, right? And do you see, you know, more success when we, you know, with, "Hey, let's start with legal. Let's start in the legal department," or, or if the, maybe the bigger issue is, is with procurement contracts and trying to focus in one of those areas before trying to do both at the same time? Contracts are not necessarily owned by one team anymore. A- and we see that it's organized in every possible size and shape. There's a center of excellence, it's owned by procurement, it's owned by legal, it's owned by everybody, it's owned by nobody, honestly. And I think it's less about, like, who needs to own it.

3:47And, and Lucy said it really well, it's defining the roles and responsibility. If you're working with a legal team, if you're part of a legal ops function, you know, that is your clientele. You wanna understand what their needs are. But it, it, it's really about finding the right place to start. So within legal, let's say they have a really good relationship with the procurement team, and the procurement team is really hungry for a better solution, maybe that's the place to start. On the other hand, maybe procurement's like, "Hey, you know what? We have our own procurement solution and it's our repository and it works fine. Go away." And sales is like, "Oh my God, we would love to accelerate revenue." Well, then start there. You know, find what works best for your company. Yeah. And from the implementation side, I would say that, well, for the so- sole reason that everybody's here, everybody knows why, I mean, why the, a CLM is important for an or- organization. But being working for over 150 im- implementation projects, like we've seen that some companies, that they have decided they have the budget to implement a CLM, but I cannot s- stress how important it is to work with a consultant that can, can help you with the pre-implementation process.

4:52Because we've seen a lot of the times that there's companies, they already want to kick off, but then they, they reach out to us and it's like, "Okay, you tell me what should we implement?" Right. And it's like, it doesn't work like that. You know, like you gotta have your processes and... Because if, if you don't have that type of work, it's gonna be hard to, you know, have somebody that he doesn't know how your, it works inside the company- Certainly... to know how it's going to be more effective, right? Yeah. I think it's a balance. There's certainly, you can over rotate to, like, trying to be over prepare and getting all your templates harmonized and everything all ready and cleaned and metadata tagged before you're ready to move. I think that is also the same mistake of, like, trying to boil the ocean and doing all the same contracts, you know, all at once. You do need to just jump in and get started at some point and learn from that, 'cause you'll be like, "Ugh, I wasted all this time doing everything when now we learned we have to change it all." Oh.

5:46So- Do you see any, you know, like how can organizations ensure that they are effectively Monitoring and managing their contracts to ensure compliance and maximize value. Like, there's any other kind of recommendation, like common elements that or- or organizations can start monitoring? Well, we're here at a CLM conference, so clearly you need a CLM. I mean, it's very, it's very difficult to do otherwise, right? Someone said earlier, "You have to review everything. You have to monitor everything if you don't have controls in place." And the best way to have controls in place and to get human error out of it is to put systems in place. Oh, and I remembered your original question, which was, can you have systems in place without taking the time to figure out your processes? Well, you know, it- it's kind of impossible. You, you can't just say, "Come in here, Koho Consulting, and help me automate this process." And you're like, "Well, what is the process?" "Oh, we do it 15 different ways to Sunday."

6:39Well, you can't automate that. You have to think through in that process map. What's the journey? What should it look like? What's the decision tree? You gotta do a little bit of work. Yeah. I agree. And, and, you know, that's something that, you know, obviously we can help with from a certain perspective, but it's fantastic that InnoLaw is around and, and doing things to, to really help organizations make sure that when they do decide that it's time to implement a CLM, that they can really hit the ground running and, and have everything ready to go for that implementation, and that helps dramatically. And Mary, I think the last thing that we wanted to, to just touch on here was regarding AI, right? And we know that Ironclad is, is rolling out something that's, that's going to be new, it's going to be innovative, and, you know, how do you see that helping customers from, uh, an immediate impact? The AI that is, that is here today is very different than the AI that was here a year ago. It is impacting your actual day-to-day work, and I think that is a really significant difference, and it's, there's substance behind all the hype that existed in the past.

7:37So when it changes the way that you're working day to day, and we're not talking about, like, every so often I need to find something, and the AI is helping me do that, but you're negotiating a contract. Like, that's the 80% of the role and responsibility that you should have, and if that's changing, that's made easier, that's facilitated, you're not doing mundane work, the expectations that you have for your day job immediately go way up, and you start taking that for granted, frankly. You know, all the technology we have in our day-to-day consumer lives, we can't imagine going back to a life where you can't just look up the weather or, you know, I don't know, all the things that just happen easily now. Think about then going to a new job, though, you know, and someone says, "You're used to doing all this with tools and with process and with AI. You don't have to do all this copy-pasting and maintaining stuff in email and, and on Excel spreadsheets anymore." And then you go to your new job, and they go, "Oh, yeah, we don't have tools for that.

8:30We do things, it works fine the way it is." Would you tolerate that? I mean, our expectations are so high right now that people wouldn't, wouldn't be okay with that. And so that's putting so much more pressure on our industry to modernize and change because it's going to be, that's gonna be the bar. I mean, that's what people expect when they come to work, and that's what your clients, your internal business partners will expect. Thank you. Thanks, Mary. All right. Thanks, Mary. And next, uh, that's going to be joining us is gonna be Laura Frederick, and she is the founder at, uh, at How to Contract. Also had a, a wonderful event a few weeks ago. So, you know, maybe we can kinda kick things off, and, and you can give everybody a little bit of background on, you know, what that event was about and, and, you know, what you're actively working on. Yeah. So I'm Laura Frederick. I started a company called How to Contract about two years ago, after 25 plus years being at large law firms, at, in-house. I was, uh, commercial contracts at Tesla. That was my last job before I left in 2019. So I lived a life of commercial contracts, and now I focus on helping people learn.

9:32And not from an academic perspective, but really, like, what do we actually do every day when you work as in-house counsel, when you work as contract managers. So our big event was Contracts Con, which was just a fun celebration. We called it an extravaganza 'cause it was really about, you know, coming together, networking, people connecting, having just a great time for all of those of us who love contracts. So Laura, we know that you are a expert in negotiation contracts, right? But I'm pretty sure that you've seen some, you know, commercial lawyers talking about CLM. Like, what do you think are, like, the things that, that they're asking you, or, or maybe what's, like, the main questions that commercial lawyers have regarding CLM? Yeah. What I see is it's this unknown. It's supposed to help. It's gonna automate, but how do we go from here to there, where it's gonna be protecting the company? 'Cause I think as commercial lawyers, that's our job.

10:30We protect the company, and we use risk management to protect the company. We use our knowledge and expertise, whether we're in-house counsel or contract managers. And so I think there's a promise of it helping, but it's s- being able to see the vision of, well, then, how are you gonna manage risk because everything is, it depends. And how can a system know the hundred factors I consider in whether I'm gonna give this limit of liability or not, or whether we're gonna do this kind of indemnification. Right now, that's a real soft knowledge base that is... And so I think th- that's what I usually hear is, like, how do we get from here to there on the CLM? Right. And I think this is going to be make a lot of sense since we've been discussing about law review, legal re- review policies. But do you think s- companies are over-contracting? And if you do, like, what do you think will be, like, the best way to reverse this? Yeah. And I think there is a lot of, that's those 20-page NDAs. That's the 100-page document.

11:32I mean, those are representative of over-contracting, or during negotiations when companies just have to, like, we trade template versions of a limit of liability. You know, somebody sends their form. We redline it based on our playbook. We send that back. You know, and then we're kind of at the same spot. Like, okay, what do we do? How are we gonna come together? And that's where, I mean, my bias is always about training because I think training Is the key to be able to negotiate these things. And so I think, you know, as lawyers, as contract managers, it's a little bit like deer in the headlights sometimes, that we're asked to review things, we're asked to do things that are beyond our expertise. Especially as we're moving things away from the lawyers to the sales teams or the contract managers or whatever other internal teams, you know, asking them to do that without the same foundation is just gonna create a lot of fear. And when you have that fear, you have that resistance. So I think offering training, assuring the teams that they're not gonna be expected to do more than they're capable of, because I think that...

12:42I know if that was me and I didn't, and you know, I'm a... Graduated law school a year ago, and I'm gonna be thrust in the middle of contract negotiations, and the counterparty says something, you know, when I was a new lawyer, it was always like, "Well, let me think about that," you know? And then I'd go run and find somebody who knew the answer. And so I think the speed of contracting with c- CLMs getting implemented, it's that human factor we have to remember, and especially not necessarily the lawyers, but the other people who we're shifting all this work to, those are the people that it's, you know, it's gonna take more than just, "Guess what? You're now in charge of this." We really need to focus on that training, making sure they're comfortable. Yeah, and, and I think, you know, something else when you say being comfortable, right, I think that there's two parties that are, are negotiating contracts. It's, it's always been done the same way, right? It's in Word, you're saving it somewhere, hopefully not on your desktop. But now with these, these CLM tools, you know, we're starting to see or have seen that there's a lot of automation that can take place.

13:38So when it comes to negotiating, how should companies look at that, and, and, and what can be automated during that negotiation process? Is it, is it simply just, you know, having a system that can keep that audit trail and show you the latest versions of the documents? What does that look like, best practices? You know, is there somewhere you should start and maybe try to work towards, or does some of that need to stay manual? Yeah. I think it's... A lot of it depends on your leverage, because if you're able... For example, a lot of companies won't negotiate their terms if it's under X dollars. I love that, because it's really saying to the... I mean, even though in the... We wanna be nice, we wanna help the customer, we wanna give them what they want, but I think having bright line rules that, like that really do help. And then in terms of, like, the manual, there'll always be manual. Because w- at the end of the day, there's, it, you know, lawyers' favorite phrase is, "It depends." And how... There's too many factors. It doesn't depend on five factors, it depends on 100 or 200 factors.

14:38And lawyers being able to automate that through a system that is active and accurate, it's, is what I think we're not gonna be there anytime soon. I think we can make progress, we can automate, but I love automating low level contracts, I love NDA automation, things like that where at the end of the day, as long as it doesn't have terrible stuff, who cares? That's kinda how I feel about it. I love putting out forms and saying, "This is our form. You're gonna sign it if you wanna do business with us." In a fa- starting in a fair place, that's great, too. So those are the kinds of things I think we can automate, but again, it's you have to have people who know, who c- understand how to make those risk decisions in this process. Right. And I would say that in our experience building CLM implementations, we've seen that some customers, you can have the best technology, but when they want to automate complex contracts, you gotta start from there. Yeah. Right?

15:35Because a lot of the times, the commercial teams, if you wanna, to make them self-contracting departments, but they don't understand w- what a clause mean, it's gonna be hard, and it's always gonna go through, through legal, right? So I think, like, one way to start the implementation of your contract is just, like, work on the, on the, the, the sign of the contract so it's easier for the commercial teams to just, like, you know, use their playbook. So whenever they start doing a negotiation with a new vendor, so they can have a way on how to make it way easier, right? Yeah. And I think that's right, and I think that's again, you know, I think of when I've been able to strip down contracts to a s- shorter number of pages, it's because I know what's important, I know what the risks are, and not because I studied a class or somebody taught me some academic thing about how limits of liability should be. It's like, "Oh, okay. After my lifetime, I've seen this is where all the disputes happen." You know?

16:31They happen payment, they happen quality of product or service, they happen in termination, and then only then do we get into indemnity and limit of liability. But the operational things, and having people trained on the operational things so they know where the real risk is, that's, you know, gonna be so important. But if, if you can train the people who are doing the contracts and negotiating them on those real risks, not the academic risks, but what is this company with these products and services, what do we really worry about, then that's gonna be the, such an important step towards enablement and getting to shorter contracts, because they don't have to, you know, say in two pages all this extra stuff when it's not a big risk. No, I think that's great. And, you know, thank you so much. I know we've talked about this in more depth on the podcast before, but appreciate you coming up here and, and, uh, sharing your just crazy amount of, uh, knowledge that you have, you know, with everybody.

17:27Um, does anybody have any questions for Laura before we, we move on? Sorry, this is more of a soapbox than a question. It really, really irritates me when I hear somebody say we should have a cut-off based on how much the contract is worth, worth less. I've worked at Microsoft and I've worked at small startups, and my attitude was always the same. Never take advantage of your leverage. Yeah. Care about your customer. Think like a business person. Lucy said this earlier. Think like a salesperson. And, you know, now I work for a startup in the healthcare industry, for example, and I've been told this. Sorry, it's not worth this, you know, enough to us for us to negotiate this contract with you. And I'm like, "But I'm protecting healthcare data. I can't give you a right to use that data. I don't have that right with my clients." Mm-hmm. "I can't buy your product." Right. "Do you wanna at least negotiate that with me?" Yeah. And it's a frustrating position to be in.

18:21And I've said many times, I didn't treat people this way when I was at Microsoft- Yeah... because it was customer first. Yeah. And so I just don't want people to think, in your contract management program, that setting rules that make it difficult to have a win-win contract with your customer is, is smart. And if I were a business person, I would be like- ... "We need a different lawyer." Yeah. No, and I hear you. And I think it's, it's nothing that I've ever done where we always had lots of options and optionality. I didn't just have a straight. But I'm seeing it more, not that I'm advocating for it, but I see companies have numbers because it's the scaling. If they've got one lawyer who's processing 5,000, 10,000 contracts a year, how can they negotiate each contract? That's why you have playbooks, and that's why you push them out to business. Mm-hmm. And when you have some of these issues, it's like, "Hey, this is a $5,000 contract, but she's asking for three things, and these three things are required because she's regulated by HIPAA." Yeah.

19:24You know, let's be reasonable here. Yeah, yeah. And I mean, I've even been told, "Look, our board of directors passed a rule that we-" "... can't touch a contract if it's less than $50,000." Yeah. Okay, you're gonna be in business for a long time . Yeah, yeah. I, I just don't understand it, so sorry. No, I appreciate that. Yeah. No, for sure. For sure. My limits for little . I hear you. I hear you. Well, that was great, so really appreciate that. Thank you. Well, Laura, thanks for coming up, having a quick conversation with us. Thanks a lot, Laura. Our next guest is gonna be Debbie Hoffman. Hello. So thanks for joining us, Debbie. Maybe just- Sure... give a, a quick background on yourself. Sure. So, uh, been in-house attorney. As a GC as a company that got sold to a, in a, a global M&A transaction. I started my own blockchain technology consulting company, and then most recently, where all this really came into play, was at Western Union.

20:24Um, I headed up, among other things, uh, the procurement, the legal procurement side of things. Great. And at Western Union or, or any of your previous organizations, were you part of any CLM implementations? At Western Union in particular. Okay. The prior role that I had years ago, we didn't have such great CLM op- options. Yeah. And, and what, what is that process? What did that look like? Is it, is it still ongoing? Is, are you currently using the, the tool? Yeah, so it took about a year to get it up and running. Okay. Everything that's been said in this room, I've lived it and breathed it pretty much, except for the, you know, like the continuation is, is ongoing, and it's, it's never done, right? So that's kind of, I can talk more about that to whatever extent you have questions. Yeah. Yeah. Can you, like, just like give us some examples on like how was that vendor choosing process? Like, how do you know when a vendor met all your re- re- requirements, uh, for a CLM? So that's a great question. I wish I could have said, said to you, "We picked this vendor because they met all the requirements."

21:23A lot h- that has been said today is about partnership and stakeholders. And so in developing that relationship, basically, our procurement department said, "Okay, these are the three CLMs we want you to look at." I gave them one more because I had heard of one more, and they kind of, they looked at it, but they didn't really see it. So I had a choice of three, very expensive, fairly inexpensive, and probably middle of the road. And I'm just saying price 'cause I'm going to be practical for a minute. Because when it came down to it, I would've loved the ones with belts and suspenders and that had everything, of course. But my CLO said, "You know what? Debbie, we're not gonna pay for this right now." And we were like, "What? We need it." And everybody in this room knows how much we needed this. So ultimately, it came down to the procur- the chief procurement officer said, "Well, you know what? We'll pay for this." And it's a minimum investment for the cheapest one, so we're going with that, and that's what we went for. Now, it's fine, but to pick, I, you know, I can't say that I had a pick on, I had a lot of choices.

22:23Yeah. And do you think, you know, with the tool that you're using now, do you already see that you might be outgrowing that soon and need to, to look at something else? I think the, the biggest issue we have, the tool we're using now is wonderful, and I don't wanna- Yeah... say it's bad, but the biggest challenge with it is that it doesn't come with a lot of help. So when we talk about people to help you implement and to the, the IT aspects of it and the building the templates and the playbooks, we did all, we have to do all that internally ourselves. Yeah. And so that made it less expensive, but makes it much more challenging to continue to build it out. Time-consuming. Time-consuming. And having dedicated teams and having people in procurement or IT say, "Hey, I don't have time to build out this additional playbook which we need in here," or to, you know, to train. So when you do that all internally, it just takes, yeah, it takes time. And who internally owns the... Is there, is there a system admin that, that's on your team? Yeah.

23:17Technically, yeah, the law- the, the lead lawyers on, on my side, and then there's certain procurement people and from the procurement side. So the great news is, I would say this is one of the best partnerships I've ever seen in my career between, in, between legal and procurement because we both knew that we needed it. Mm-hmm. That's great. Yeah. Yeah. And I think, you know, something that we're starting to see in this space is that there is a need for managed services and, and having an organization that you can outsource the upkeep of these CLM tools to. And, you know, whether it, it be something, maybe a lighter application like what you're using or, you know, if you do go for that expensive option, I think it's more, even more important that you have somebody on your side to help you configure the tool because that cannot fall on the internal team. Right. You, there are more important things for you to be focusing on throughout the day than I gotta create this new template in the system, and, uh, you know, I'm the one doing it. No, 100%. And what I would tell, like the, all the CLMs in the room is, if you can tier your pricing so that those of us in-house could say, "Okay, well, we're gonna start with step one." Yeah.

24:13"But then maybe we'll get two and three later when everybody sees how great it is." Yeah, yeah. And that's definitely something that our partners do and are aware of is, is they wanna make sure we all, everybody always talks about, you know, having a phased approach, right, to this implementation. Like, let's get some quick wins. Let's get our foot in the door and make sure that we can get user adoption to get these teams excited about actually using a new tool that, that- They're not just gonna throw it in the closet and never use and try to email legal again. Right. Exactly. Um, yeah. Or fax. No, and, and when you talk about the, uh, adoption, you kn- you know, it's a lot of training is involved. And when you have a very complex system, training can take forever, right? Yes. So it's, it's better just to go with the low-hanging fruit, let's say, the central repository with all of your contracts. Then go with the workflows, then go with approvals, and then go to the contract post-signature, the con- the management post-signature, right? Right. So this question, Debbie, I would like to have your viewpoint from the customer side, right? Yes.

25:09Because I think, like, one of the main issues is to have, you know, unexpected surprises, and this is an art, right, when you work as a consulting company because you need to build SOWs. Yes. So this is what you're paying for, right? Yes. So what would you say, like, what's the best way for a consultant of the CLM implementation to understand the client, to know their needs? So that's a great question, and I actually have a lot of questions back about that. All right. Okay. So when we did this, we've been talking a little bit today with my table, we had our policy, which we talked about. So that was our baseline, and we, we, we built that out. It's building the playbooks to know what are your positions, and I think I'd love to know, like, know more about how others build their playbooks. And so we partnered with an outside counsel to help us, and we had to literally, like, work with them hand-in-hand so that they knew our internal positions. Right. 'Cause they didn't know.

26:05So I do think it's really challenging when you're in-house to have the bandwidth to build your positions, to build these playbooks. And I think the, so I, I don't know that I answered your question, but that's- ... that's kind of, I have a question back to your question. Yeah. Well, I would say that I think having pre-built models, I think that one, right now, like, one of the main trends in the implementation on the CLM is focusing on verticals, right? Yeah. Because it's not the same intake forms for a biotech- For the south, for the-... than the real estate company- Got it. Got it. Okay... and a finance company. Yeah. So it's easier because if you're getting all your contract requests by email or fax- Right... maybe you have no idea how you can make it more efficient. And but you have, like, models of different intake forms- Got it. Yeah... and the information that they need for different contract types. That's gonna make things easier. 100%. You have to have all the different... And so we didn't start with all of our different models. We started with, like, our basics, and then as we, again, over, actually over a year, then you realize, okay, your wish list of the specific, we, I mean, one of the things I'm gonna focus on here is it was contingent labor contracts.

27:08So we, where do we have contingent labor? We had it w- at Western Union all over the world. Yeah. But we looked at where did we have those contracts most often and started with that, and then later built out some of the other countries. But we didn't s- say, "Oh, we need to have contingent labor contract templates for every country." Some, you can't do that at hello. Yeah. Yeah. No. Well, we only have a couple minutes left. I think we could talk about this forever. But any questions for Debbie before we, we wrap up? Okay, I guess not. Okay. Well, thank you. Well, thank you. It- And for everybody, you know, that's out there, I don't know if any of you have heard of our, our podcast. We, we specifically talk, we have over 50 episodes that are just related to CLM. We've also had Laura on to talk more tactically about how to, to work with contracts and negotiate them and what should be a part of them. But everything that we're talking about today are, are things that we have discussed on the podcast. So feel free to, to scan our QR code over here, and it'll take you directly to the site and, and you'll be able to also find us on Spotify and Apple.

28:05But, uh, appreciate you all giving us your lunchtime to, to have a conversation with everybody and, uh, thank you so much. All right. This episode of The Contract Heroes is sponsored by Koho Consulting. Koho helps organizations of all shapes and sizes find, implement, and manage their chosen CLM tool. Whether your project is buy or sell side led, Koho can help you navigate the waters of the CLM space to make sure that you're getting a product that's going to fit like a glove for years to come. If you'd like to learn more about Koho, visit their website at C-O-H-O consulting dot com.