Category Archives: Legal

For Successful Sourcing Sometimes You Have to Listen to a Lawyer

the doctor is always on the look-out for good articles on (strategic) sourcing and its importance to overall procurement performance in today’s stressful supply environment. Especially if the article isn’t yet another seven steps to sourcing success article. This article by Chris Eastham of fieldfisher was really close, as it provided nine tips to improve sourcing efficiency after telling you that

  • Sourcing is a Live Wire
  • Geo-Political Drivers cause Chaos
  • Technological Drivers cause Complexity

and these collectively compound your struggles, which are exacerbated enough due to organizations taking approaches that don’t serve their overall strategic objectives such as:

  • an insufficient focus on business drivers
  • only seeking piecemeal advice from Legal
  • a lack of project management (that results in key activities happening out of order)
  • a lack of early stakeholder engagement
  • an unsuitable project team (that doesn’t have the right subject matter experts)

And the author is dead on here. These are common mistakes. The author, as noted in our introduction, also had nine tips that included the following six:

  • early engagement of all stakeholders
  • realistic (not overly ambitious unrealistic) plans
  • core team with (enough) subject matter experts from day one
  • the desired results and a business case up front
  • do multi-round tenders that include detailed RFIs
  • define rules of engagement for stakeholders and vendors

But it was the following three that need to be highlighted because the doctor doesn’t see this advice enough in seven steps to successful sourcing articles.

  1. document all key requirements for the project in advance
  2. document all key product and service requirements, including any necessary terms and conditions that must be agreed to for the vendor to engage with the business
  3. get the right Legal team on board before the event is launched

Why are these three tips so tantamount to triumphant sourcing events?

  1. multiple reasons to document all key requirements for the project
    • if you don’t document all key requirements, you can’t be sure you know them
    • you can’t get the project right if you’re missing key requirements
    • you need to make sure you don’t invite any vendors that can’t even meet the key requirements
  2. multiple reasons again to document all key product and service requirements
    • if you don’t document all key requirements, will you buy the right product or service for you and, more importantly
    • you can’t share all the key data with vendors, which is important to ensuring they quote on the right products or service and
    • they can’t self select out if they can not meet any of your core business requirements, which means you could waste time analyzing their bids, optimizing the perfect award, only to start over when they figure out they’re not right for you (or, even worse, when they deliver the first order and nothing works)
  3. multiple reasons to get the right Legal team (which might just be one in-house counsel, or might be three hot-shots from an external firm for a complicated, 100M purchase that can make or break the company)
    • they know the key requirements that need to be addressed and in the contract to minimize internal risks
    • they know the risks of the dealing with companies in other geographies and what you have to consider for the suppliers you are planning to invite to the event
    • they know what should be in the contract, and communicated as such up-front, what should be in an appendix, and what is not crucial
    • they know the data you have to collect to meet the different regulatory (reporting) requirements that your organization has to adhere to, and which requirements you have to communicate with suppliers to make sure they can, and agree to, give you the right data

In other words, Legal, especially for any buy that is financially significant, strategically significant, or risky, is key to get involved in the right aspects up-front. (And note that if you build a team with the right stakeholders, and document the right requirements, Legal will be able to work quickly and efficiently, and even more so if you are willing to use standard templates and insist that vendors agree to your standard contracts and standard terms.)

Source-to-Pay+ Is Extensive (P13) … But I Can’t Touch The Sacred Cows!

In our last installment (Part 12) of this series here on Sourcing Innovation (SI), we provided you a list of forty-plus (40+) vendors that could potentially meet your spend analysis needs and help you identify the cost savings, reduction, and avoidance opportunities you have in your organization as well as the best modules to achieve those cost savings, reduction, and avoidance opportunities. The right spend analysis tool properly applied will generate returns that are many orders of magnitude greater than the cost of the tool and will surprise you.

However, some of those best opportunities will be in the “sacred cows” of Marketing, Legal, and SaaS subscriptions. And you probably think you can’t do anything because you don’t have the data, Marketing and Legal won’t let you touch their spend (or give you the detail you need to even analyze it, often because they didn’t collect it), and you have no idea on what SaaS is actually being used and how much you overspend.

the doctor knows this, and knows that you might need custom solutions to manage, and analyze, this spend, so, before we move on and tackle the next module in the Source-to-Pay queue, we’re going to take a brief sidebar and provide you with short lists of vendors that specialize in each area that will collect the data you need — and sometimes even provide you with deep, customized, integrated analytics that provide you with the insights that matter (including the insights that matter on your matter spend) — to enable deep spend analysis, benchmark creation, and opportunity identification.

But first, we have to repeat our disclaimer that, as per the lists of e-Procurement vendors provided in Part 7 and the list of Spend Analysis vendors provided in Part 12, this list is most definitely in no way complete (as no analyst is aware of every company, and neither Marketing nor Legal are the particular domains of expertise of SI), is only valid as of the date of posting (as companies get acquired and go out of business, often without notice), and does not include the broader range of offerings that are available for SaaS Management (including provisioning and cloud management), Marketing (including agency management pure-plays, although DecideWare, for example, does this), or Legal (including contract authoring, management, and clause analysis — although we will cover some of these players when we get to Contract Lifecycle Management [CLM]).

Again, and we can’t say this enough, not all vendors are equal and we’d venture to say that this most definitely applies to the lists below. The companies below are of all sizes (very small to very large), offer different functionality (focussing in on different aspects of Marketing, Legal, and/or SaaS Spend Management), different levels of customization and integration, different types of companion services, focus on different company sizes and/or company types, and integrate with different Source-to-Pay and Enterprise ecosystems.

Do your research, and reach out to an expert for help if you need it in compiling a starting short list of relevant, comparable, vendors for your organization and its specific needs. For a few of these vendors, you may find a write up in the Sourcing Innovation archives, Spend Matters Pro, or Gartner cool vendor write-ups, but for many of these vendors, you’ll have to look beyond your typical sources of information as they are highly specialized and don’t fall into the typical Source-to-Pay bucket. But if you have enough Marketing, Legal, or SaaS spend, they can be highly valuable.

Note that, due to the newness of SaaS spend management, the different marketing and legal needs of every organization, and the high degree of differentiation between many of the solutions below, we are not (yet) defining baseline functionality and instead advising you to do a detailed analysis of your spend, processes, and needs and judge potential solutions based on that. If you need help with that, seek out a pro who can do the (gap) analysis and RFI creation for you.

SaaS (Software-as-a-Service) Subscription Cost Management

Company LinkedIn
HQ (State)
Beamy 60 France
BetterCloud 305 New York, USA
Cledera 63 Colorado, USA
Flexera 1026 Illinois, USA
G2 Track 792 Illinois, USA
Hudled 8 Australia
NPI Financial 410 Georgia, USA
Productiv 139 California, USA
SaaSRooms 9 United Kingdom
SaaSTrax ?? North Carolina, USA
Sastrify 166 Germany
Setyl 14 United Kingdom
Spendflo 70 California, USA
Substly Sweden
Torii 114 New York, USA
Trelica 12 United Kingdom
TRG Screen 179 New York, USA
Tropic 240 New York, USA
Vendr 404 Massachusetts, USA
Viio 18 Columbia
Zluri 111 California, USA
Zylo 144 Indiana, USA

Legal Spend Management

Company LinkedIn
HQ (State)
Apperio 48 United Kingdom
Brightflag 150 New York, USA
(LexisNexis) CounselLink 28 Ohio, USA
Fulcrum GT 158 Illinois, USA
Mitratech TeamConnect 1119 Texas, USA
Onit 339 Texas, USA
Ontra 421 California, USA
Persuit 100 New York, USA
Thomson Reuters Legal Tracker ?? Ontario
Tonkean LegalWorks 76 California
Wolters Kluwer (TyMetrix 360) ??? Netherlands

Marketing (Procurement) Spend Management

Company LinkedIn
HQ (State)
DecideWare 27 Australia
HH Global ?? United Kingdom
Mtivity 15 United Kingdom
Promost 68 Poland
RightSpend 23 New York, USA
SourceIt Market 6 Australia

Onwards to Part 14.

AI Can Certainly Identify Relevant Case Law, But Can It Predict Judge’s Decisions?

We are all familiar with the use of AI in contract (lifecycle) management to scan contracts, decompose them into clauses, identify the type of clause, index the contract against the clause types, and identify entity and attribute types in those clauses. This is common practice for best-of-breed CLM providers like Icertis and Exari and standalone best-of-breed contract analytic providers like Counselytics and Seal Software.

But not all of these are designed to evaluate a contract, and more precisely, a contract dispute against existing law and case law to determine the likelihood of a ruling in a party’s favour. But that is apparently what the new AI entrants are shooting for.

As per this article in The Globe and Mail, a new AI entrant is offering simulation software that predicts how a court might rule in a given case involving tax law. The software, which takes client details, arguments, previous case law, and current law into account, crunches this, and other inputs, and delivers a simulated judgement claimed to be 90% accurate.

And now the company in question is turning its attention to labour law and hoping to offer a product soon that will offer the same type of predictive accuracy in this legal area. This will obviously be more difficult than tax as there are more grey areas as to what is a violation, but it may be achievable.

But is 90% accuracy enough? That’s 1 in 10 wrong predictions. But maybe it’s enough. If the software predicts that the plaintiff will lose, with 90% or more reliability, a case that could easily cost hundreds of thousands of dollars, and the damages for pleading guilty are less than a million, the right legal strategy would obviously be to seek out a good deal and not risk losing it all in court.

Plus, if both sides of a pending legal battle had access to simulation software that always showed one side losing with significant confidence, then at least one side will always be up for negotiation, and that’s almost always cheaper than a costly court case. Plus, it gets a resolution quicker, and sometimes the biggest cost of a dispute is the lost time.

So while it will never be truly accurate, as you can’t truly predict how a judge will rule in any given situation (as a human interpretation of a grey area can always be different than what might be the typical interpretation), this might just be the software that lawyers, tax accountants, and, soon, HR professionals need to come to their senses and resolve the dispute before wasting time in court.

And if it works in these areas, maybe soon it can ingest global law and treaties and be applied to Procurement disputes …

Organizational Sustentation 56: Legal

While Legal is often out of sight, out of mind, Legal can be quite the thorn in Procurement’s side, especially when Procurement wants to do something that Legal doesn’t think is a good idea. Chances are Procurement has done its research, and due to extenuating circumstances (a supply line went down, an operational centre was damaged by a natural disaster, etc.) knows that the organization might not have a choice, but that doesn’t mean that Legal is going to agree, or sign off.

But that is only one example of how Legal can be an Organizational Procurement Damnation. As per our original damnation post, Legal is run by the Chief Consul who reports to the CEO, a Chief Counsel who will order his organization to do what he believes the CEO wants done, even if that’s not what anyone else wants. If the CEO says to get standard contracts in place, the Chief Consul is going to order standard contract templates for all direct materials and services. If the CEO is worried about child or slave labour in the supply chain, Legal is going to order each and every supplier vetted, immediately.

And while this insistence on onerous clauses or tunnel vision can be bad, the minute you want to obtain a “Contract” Lifecycle Management solution, a whole new level of damnation emerges. Legal is going to immediately insist that “contracts” are their domain and they need to be the owners of the contract solution. And this is very bad from a Procurement perspective because all Legal typically cares about is contract creation (drafting, authoring, and signing), contract archival, and contract retrieval and their definition of a Contract Management solution is one with strong drafting and authoring capabilities, version control, audit trails, clause repositories, Microsoft Word integration, etc. This is only a very small part of the 3-phase CLM process that starts with a need identification and ends with a proper post-mortem, and a process that depends heavily on a successful sourcing exercise (to identify the right buy) and a successful supplier management process (to insure the right products and services are obtained at the right price at the right time at the right location in sufficient quantity and of sufficient quality). While a good contract is critical, as it must accurately capture everything leading up to the creation and spell out what will happen after signing, it is a very small part of the process and the best contract in the world is useless if you can’t execute. Plus, Legal can continue to use whatever they use now to create contracts, so it’s not like lack of a strong contract authoring solution is holding them back.

So what can you do to prevent Legal from being a thorn in your side?

1. Consult them early in a strategic project or one with urgent timelines.

Let them know what is being sourced, why, what the critical requirements are, and when the contract will be needed by. Ask them for their major concerns, standard organizational requirements, and any issues they will be looking out for. Some of the requirements Legal says it will insist on might be ridiculous and might require some internal negotiation, but the last thing you want to be is blindsided during what you believe will be a cursory review and signature from Legal. Get ahead of any issues and everything will go smoother.

2. Meet with them on at least an annual, if not quarterly, basis to identify operational or emerging concerns that they would like Procurement to be on top of, and get on top of them.

If they are worried about child and slave labour, potential payments to terrorist organizations, poor environmental reputation in the supply base, Procurement can present a solution (such as a CSR monitoring platform) and get them to help Procurement get the funding it needs to monitor such issues (and reduce operational risk). Which recommendation is going to carry more weight with the C-Suite when money is involved — the CPO’s, or the Chief Counsul’s?

3. Regardless of what the vendor calls it, you want a “Sourcing Execution Lifecycle Management with Strong Contract Support” solution.

Legal will still stick their nose in, especially since they will have to use the contract module, and try to sway you towards a solution of their choice, but a properly framed request will increase Procurement’s chance of obtaining the right solution. Make it clear that Procurement needs a solution to manage the Source to Pay lifecycle effectively, to ensure that it not only negotiates good deals but realizes them, and that Procurement would like that solution to revolve around the contract. Indicate that you have identified a few vendors with the key capabilities required for Procurement to identify, negotiate, and capture great deals, each of which appears to have a strong contract module, and ask Legal what they are looking for, indicating that their requirements will be included in the evaluation of the contract module and will influence the overall weighting, designed to bring the best value to the organizational overall. Also, if each affected organization is allowed to have one stakeholder representative review the components that affect them, and those reviews are averaged with Procurements, Procurement will have an easier time getting buy-in, as it will be able to say “if all things are equal, we will get the system with the contracts module better suited to Legal”. When the need, rationale for, and expected benefits of a solution are clearly communicated, it will be easier for all parties to work together, Procurement and Legal included.

Organizational Damnation 56: Legal

While not quite as many organizational damnations in our list as there are technological (which are enough to drown us on their own), there are still quite a few and Logistics, covered back in our post on organizational damnation 48, was just the beginning. Legal can be just as big of a thorn in our side as Logistics, if not bigger.

Everyone hates lawyers, unless, of course, we’re talking about their lawyers working for them doing exactly what they want and succeeding. In your organization, the lawyers work for the Chief Consul who works for the CEO and orders his organization to do what he feels the CEO wants him to do, even if it is not what anyone else in the entire organization wants him to do. So if the CEO has mandated the Chief Consul to get a standard legal template in place for all direct materials contracts, that’s what the legal team is going to try and do (even if half of the clauses are irrelevant to half of the categories or are so onerous that no supplier worth it’s weight in salt would ever, ever sign). If the CEO orders the Chief Consul to make sure the organization doesn’t get mud in its eye due to child labour in the supply chain like the competition did, you can bet the Chief Consul is going to order an operational review of each and every supplier you do business with and their suppliers and so on. And while neither of these are bad things, the Chief Consul and the legal team could get dangerous tunnel vision and make Procurement’s life very, very miserable in the process.

But it’s not just tunnel vision and insistence on onerous clauses or unnecessary deep supply chain reviews (on suppliers you already vetted over the last two years, a vetting process which included surprise audits) that’s the problem, it’s their definition of what a good contract management system is. If you’re a leading Procurement organization, chances are you’ve noticed the similarity between a good Category Management Process and Contract Lifecyle Management (CLM) and are looking to obtain a good CLM or Strategic Sourcing (SS) / Supply to Contract (S2C), or Supplier Relationship Management (SRM) solution with strong contract management capabilities. However, the minute you mention you want a solution which either has “contract” in the title or “contract X” as a significant module, Legal is going to insist that “Contracts” are their domain and they need to be the solution owner of the “contract” solution.

Why is this bad? Because, at the end of the day, all that Legal cares about is contract creation (drafting, authoring, and signing), contract archival, and contract retrieval and their definition of a Contract Management solution is one with strong drafting and authoring capabilities, version control, audit trails, clause repositories, Microsoft Word integration, etc. In a 3-phase, 22-step contract lifecycle management process that starts at the need identification and the production of a business case and ends with a proper post mortem, contract creation is one step — but they will ignore everything else, including all important workflow management, change management, performance management, relationship management, and risk management — among other significant features from a Procurement / Supply Management point of view. The best solutions will be immediately eliminated from consideration if they are missing one unnecessary bell or whistle that Legal wants in the drafting phase and the Procurement organization will end up with the best contract authoring tool on the planet — that does absolutely, positively nothing else.

But this doesn’t come close to the hell you’ll get the first time you try to help them with cost control. The minute you bring spend up they’ll get all defensive that the organization needs the best outside consul it can get, that talent doesn’t come cheap, but the extra cost is well worth the reduced risk that comes from having a high-risk contract drafted by a true expert or the best litigator defending your organization in what could be a very costly court case if the organization loses. They’ll do this even though you agree with them 100%, have no intention of reducing legal spend just to increase legal liability, and only care about getting spend under control for everyday cookie-cutter services and legal firm expenses.

For example, many real-estate transactions, franchise transactions, insurance transactions, etc. are templated, sold by nimble, specialist firms at fixed rates, and do not differ in quality or risk whether you pay $1,000, $5,000, or $10,000. However, many large organizations with a lot of local offices or branches will often pay significantly different amounts for the exact same service that should be a fixed price across the state, or even the country. the doctor knows a number of spend experts who have analyzed legal spend for large organizations and the differentials on some of these cookie cutter category are often a factor of 3 to 5! There’s a huge savings here, which can be used to insure that the organization always has enough in the legal reserve to hire the best talent for the strategic transactions and legal challenges when talent truly matters. Plus, allowing every law firm to choose their own e-Discovery firm and technology, their own business centre / copy house, and even their own messenger service / delivery carrier can lead to significant variations in expenses as well. If the organization takes control of the expenses and insists that it’s lawyers and outside law firms use it’s contracts, non-talent expenses can often be halved as well. Like the Marketing Sacred Cow, the Legal Sacred Cow represents a huge savings opportunity which, when approached correctly, does not increase the organization’s risk one bit. In fact, the increased control, standardization, and visibility reduces risk while increasing the funds in reserve for Legal in case of a law-suit or similar emergency. But Legal never sees it that way at first, and sometimes doesn’t come around.

Legal will drive you nuts. It really is the case that you can’t live with them, can’t kill them. Because, at the end of the day, no matter how miserable they make your existence, there will always be that big contract where you need them to make sure your behind is covered. And, just like the lawyer, you will have to take two sides.