Contract management: minimising risk, maximising efficiency – an interview with Andrew Stewart

A business using multiple contracts for multiple purposes is a lawyer’s worst nightmare. How can processes be streamlined to improve efficiency and consistency and to minimise risk? Sophie Gould talks to Andrew Stewart, who was until recently Managing Attorney for Global Technology and Sourcing in BP Legal, about how he transformed their approach to contract management and its impact on the business’ ability to self-serve.

Tell us a little bit about your role and your team …

There are over 300 lawyers in the BP global legal team and a presence in more than 40 countries. I came to the role of Managing Attorney eight years ago. I ran a team of nine people, split between Houston, Sunbury and Budapest, supporting three key internal business functions. There is Global Business Services, a back-office process-driven organisation that does largely execution-only work, such as finance and accounting, invoice reconciliation and order entry. Secondly, there is Indirect Procurement, which buys things the BP Group needs strategically, or which are shared by everybody (for example, IT equipment and professional services). The third group we support is our IT organisation.

Contract management has been one of your biggest challenges – how did you approach it?

When I came into the role and started working within procurement, one of the first questions I asked was: what documentation and templates are you using? Different groups had their own templates and precedent banks in different places –  I counted over 40 documents which had official or unofficial accreditation as an indirect procurement template. There was no consistency in approach to risk, structure or terminology. It was really confusing as to which document to use for which purpose. It became obvious that we could get rid of a lot of them and rationalise the remainder.

We started a process of analysis to see which templates were being used in which context, by which people and the output they needed to achieve. We didn't want different templates for different categories and types of suppliers. The template needed to be as category or context free as possible – that was the most challenging part of the whole process. How do you design a suite of templates which everybody can use, whether they’re buying software services or contracting someone to water the plants?

We had to find a way to introduce category-specific content where it was needed. We did that with content, such as pre-set service descriptions and pricing schedules, that could be added to the modular vanilla suite of templates as required. All our contracts became consistent. The idea was that you bolted on any sector specifics as part of the schedules.

From four base templates we were able to cover all bases, ranging from a very slimmed down purchase order for one-off requirements through to an international, risk-averse complex services agreement for use in outsourcing and big complicated IT deals.

How did you sell the value of the new approach to contracts to the business?

The process manager and I took the indirect procurement leadership team through a long session to propose the positions we wanted to take across the entire template estate. We emphasised that these were their documents. Although prepared and owned by legal, they were their documents for use by the category managers and procurement professionals in their deals. It was very important for the leadership team to understand and sign-off on the risk positions and the attitudes that we'd adopted.

Once the leadership team had given their sign-off, it sent a strong message to the rest of the organisation. These weren't just documents mandated by legal – these were documents created by legal for the benefit of procurement.

Our interaction with procurement became easier because we weren't having to interpret and interrogate multiple templates. We created a standard set to work with and we could be a lot more efficient in our service delivery. We could also start to track the clauses and issues that were being negotiated most frequently and look at whether changes needed to be made to the templates or negotiating guidance.

The new process won't necessarily suit all purposes and it can't be all things to all people. Where you can get bogged down is trying to please all people for all purposes. You get into this constant cycle of assurance, reassurance, checking, approval and internal negotiation of the clauses. Getting the senior leadership team’s endorsement at a principle level allowed us to do what we needed to do without having to get buy-in at every level.

To what extent can the business now self-serve?

What made a big difference was the creation of our contracting know-how wiki – a wealth of information made available through a wiki-based platform, 24/7. It's editable and fully searchable and ties in precisely to all the templates. For example, if you go into the termination page, you'll see an analysis in the wiki of why BP needs certain termination rights and which rights are preferable rather than absolute must-haves. It also provides an understanding of what additional termination rights might be needed in different circumstances.

If someone has a contract query, they must go to the wiki first rather than coming to legal. The exception is when a contract is non-routine or complicated or high-risk.

By keeping the wiki continually updated, people have access to our current thinking and can maintain a consistent approach when engaging with suppliers. Fundamentally, it’s about risk. It’s about helping the procurement team, who are at the sharp end negotiating the deals, on the risks they should be thinking about. It allows them to conclude deals more effectively and efficiently.

What’s your long-term goal for contract management in the business?

The key goals were less reliance on legal, a faster and more efficient process, more consistency across the board and a more robust approach to understanding risk. In addition, there is an absolute determination to keep our contracting estate as small as possible so that we don’t have too many documents to maintain. We've been quite ruthless so far and have knocked back a lot of requests for new templates and documents.

What are the next steps?

Ideally one would automate the contract creation process and build legal’s negotiating guidance into the tool. It could track all the negotiations and make sure that whoever needs to know about a deviation from our standard approach does know about it. There's a much greater level of consistency to be achieved through automated workflow tools. If legal’s intellectual input has gone into the tool, then there is no reason for the business to come to us for routine enquiries which saves time for real value add or difficult work.

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