The "C" word is starting to catch up with law firms, it seems. Commoditisation, I mean. The process by which nice, profitable, bill-by-the-hour work becomes not-so-nice, unprofitable, fixed-price drudgery. Legal futurologist Richard Susskind has been talking about it. Some firms have retreated from it. And after years of ambivalence, any lawyer with a career horizon longer than five years is starting to worry about it. Is someone going to commoditise me?
Actually, "Best in Class" is the term they use in Aberdeen Group's report Contract Management Benchmark: Procurement Contracts. To make the grade, you need to have clearly defined and enforced procedures and policies, using automated systems company-wide as well as standard contract language. You also need to have 90% compliance between your purchases and your contracts. Does this sound like you?
What’s the price of an ambiguous insurance contract? About a billion dollars in the case of Larry Silverstein’s policy over the World Trade Center’s Twin Towers. That’s a billion good reasons to get the fine print right.
When it was discovered that only four out of sixty contracts signed with a pair of external consultants went out to tender, New Zealand MP Murray McCully accused the Health Ministry of “cronyism on steroids”. Now he reckons the Auditor-General’s report on the matter portrays a saga of “incompetence on a monumental scale”.
Apparently, 75% of US companies can’t find 90% of their contracts. Gone. Missing. Lost. This is one of the more sensational stats to be found in a recent article on post-contract management at SupplyManagement.com. It’s an interesting look at who’s doing what when it comes to managing contracts once the ink is dry.
According to a report in today's Australian Financial Review (In breach but in with a shot, 24/2/2006, p12) sometimes it's OK for a vendor to employ a serving Defence Force employee to assist with a tender for a multi-million dollar defence contract.
Talk about over-used and abused. SOX compliance is one of those buzz words that just about eveyone has a "solution" for. Google "Sarbanes-Oxley" and you get over 27 million hits. Google "SOX compliance" and you get just under 5 million hits. That's a lot of hits. But what does it mean for your contracts? Or more specifically, what does it mean for your purchasing contracts?
Contract certainty may be a major problem for the London insurance market, but Kinnect is no longer part of the solution.
When the blame game begins, ignorance is rarely a good defense. It does, however, seem to be a very popular defense. Which brings us to the third lesson in this series.
Don't offer a cushy job to the procurement official who just awarded you a contract at an inflated price.