Contract Review ProcessRound TableCorporate Counsel SectionApril 11, 2007
Why is a contract review policy important: Control measures • Identifies types of documents that require legal review • contracts, letter agreements, amendments, $ amount, etc • Communicates an approval procedure • Creates awareness of the need to have contracts reviewed by legal • Establishes signature authority • Limits the number of signatories • Sarbanes-Oxley compliance (public company)
Why is a contract review policy important: Other Benefits • Organization of documents • Centralize process • Tracking capabilities • Uniformity of legal terms • Minimize any potential legal risks and liabilities • Monitoring • inserting legal review into the contract process has a side benefit of being able to orchestrate other company review and approvals, like finance, tax, business operations, etc.
How to get it implemented • Everyone has a role • Can’t just be driven by legal. • Business, Finance and legal departments must work together • Executive Buy-in • Must have support of Executives • (CEO, CFO, Department Heads)
How to get it implemented • Get the word out • Announce the policy and disseminate it. • Part of new hire presentation • Educating veteran employee • Highlight signature authority area. • Train all signatories on the policy. • Confirm their understanding that they cannot sign a document unless it has Legal’s approval. • Remember - It’s a team effort
How to get it implemented • Draft a policy that works for your Company • Ensure your office is set up to handle the contract review workflow. • Manage turn-around time
The Policy • Identify the role Legal is to play in your Company • Lead role in negotiating • sign off on already negotiated deals • Review and comment on changes to form docs • It is all up to you.
The Policy • Elements to include in any Policy • Requirement of Legal Review for all contracts • Prohibit oral agreements • Describe Legal’s responsibility • Describe contracts that do NOT require legal review
The Policy • Describe logistics of initiating legal review • Describe Signature and Delegation Authority