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Templates by jigordon
May 28, 2008, 9:32 am
Filed under: contract terms

In the last decade or so, I’ve written dozens of contract templates.  Software Licenses, Services Agreements, Consulting Agreements, Amendments, NDAs, Affiliate Agreements, etcetera.  Some of the templates are born from scratch, some are amalgams (the combination and smoothing of many other documents – ie: not reinventing the wheel), and some are minor tweaks from things I’ve done before.

But I have a love/hate relationship with these templates.  I love them and my vendors hate them.   With vendors who have a large presence (like Microsoft), it can be even more difficult to start from my paper – if for no other reason than they can simply respond “Look, if you want to do business with us, you’re going to use our document templates.”  And, as you might imagine, there’s not much wiggle room in that statement.

What bothers me more, however, is the internal debate. If my vendors don’t like starting from my template (they’re small, they’re vocal, or they’re already embedded in my organization) not only do I have to convince my vendor to use them, I also have to sell their use to my business owners, too.  Usually this isn’t too difficult, but it’s more than just saying “we’re going to use my document.”  My business owners like to keep up a great relationship with their vendors – and I like to help them do that, too.  But I’m not willing to sacrifice the deal simply for the sake of the relationship.  Which means that I sometimes find myself doing more internal convincing to help my business owner feel comfortable that I’m not trying to single-handedly destroy the relationship by the use of my behemoth template (my Software License and Services Agreement is about 60 pages long once you add in all of the exhibits).

There are even a few business owners who take the next step and want me to draft a custom agreement every time we have a new deal.  They may understand that we don’t want to sign the vendor’s paper – but they don’t want to force the so-called round peg into a square hole.  They believe that each relationship is unique enough to demand a custom document.  Perhaps removing acceptance language… or tweaking the confidentiality provisions… or removing insurance requirements, etc.

But frankly, I’m more of a kitchen-sink kind of guy.  My going-in position is that I wrote my templates to cover every conceivable related activity (ie: if the vendor is selling us software, it’s likely that they’re going to be also selling us consulting for installation/setup/training, maintenance on an annual basis, and will probably also need our travel and background check/drug screen policies as a result).  I try very hard to make sure that I start from the correct template (if they’re a services provider, but not providing us software code, for example, I have a Services Agreement that doesn’t include code-development-related language) – but I have neither the time nor the desire to customize the agreement more from the get-go.

Rather, I believe that I drafted my templates from experience.  And experience made me include each and every section in the agreement because either it’s contract boilerplate (stuff you find in every agreement, like governing law) or it’s important to the type of deal at hand (ie: acceptance testing for software agreements).  So I toss my raw template over the fence to the vendor and ask them to review it and make comments.

Guess what.  Most of them don’t have as much of a problem with my language as my business owners expect.  And what’s really interesting is that when they do have problems with certain sections or particular phrases, it’s almost never what the business owner expects the problem to be.

Now, if I was a bit more arrogant, I would say that it’s simply because I’m awesome at my chosen profession. 😉

But I’m not arrogant (ok, at least not too arrogant) – I’ve just got experience doing this sort of thing and I know how to write an agreement that is pretty balanced.  I do not like to write one-sided agreements as I  believe that both parties must have skin in the game to make the relationship work.  So I’ve got a pretty good idea that most vendors aren’t going to take huge exception to my template.  It’s long because it’s thorough, not because it’s onerous.

I also know that vendors are as unique as the buyers.  They have their key terms and conditions that they want written in a specific manner and they have certain terms and conditions that they barely read.  For me to try to guess what each of those will be before hand is time consuming and ultimately not worth the effort.  So my kitchen-sink approach allows me to save my time and only respond to those areas that the vendor finds problematic.

What do other people do?  Are you using templates?  Do you just review vendor paper?  Do you try to “build” a new document from scratch every time you have a relationship (the Chinese-menu approach)?  Perhaps you have some sort of document-creation tool (Ariba, Nextance, Emptoris)?


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2 Comments so far
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Nice writing style. Looking forward to reading more from you.

Chris Moran

Comment by Chris Moran

Jeff,

Contract templates are the single most important tool in a contract negotiator’s arsenal. And it does seem that, every now and then, my internal customers are squeamish about using my contract templates. In fact, I had a situation at my previous employer where the CIO said my contract templates were too long. Being the direct guy that I am, I asked–in a nice way–the CIO how he came to that determination (meaning, did he read it and find a lot of unnecessary language?). His response, after much probing, was that a vendor told him they were too long. Clearly, as the result of an unbiased and rational assessment… Alas, this CIO still insisted, without any rationale basis, that I reduce the length of my contract templates. Dutifully, I did–I expanded the margins and reduced the font. Ultimately, I have a responsibility to my employer, not a single irrational person in the organization, to mitigate risk for my employer. So I’m not going to compromise my values or my responsibilities. Ultimately I left that company because that CIO didn’t understand or value strategic sourcing, served as a sympathetic ear for vendors, and chipped away at my organization. Now, of course, the procurement organization that I had managed there, and that had received industry accolades under my watch, is now in shambles. But that’s another rant… Ultimately, where I work now, my internal customers have come to appreciate (over time) the use of my contract templates. There’s still a hold-out every now and then. As much as I want my internal customers to value the risk mitigating effects of my contract templates, that doesn’t seem to be much of a driver for them. What I’ve discovered the driver to be is the speed of contracting. In other words, when I use my contract templates, include them (in advance) in a competitive sourcing document (such as an RFx), I shift the burden of review and redlining on to the vendor (not my staff). Then I can legitimately say to my customer that we could get the deal done ASAP if the vendor would just sign our contract. Of course, the vendor pushes back on my customer saying that there are some issues with my contract (of course there are, like, it’s not 1000% in favor of the vendor?), but my customers–in their drive to get the deal done–don’t have much sympathy for the vendor and pressure the vendor to get the contract executed.

Jeff, sorry for going off on a tangent, but, in a nutshell, I couldn’t agree with you more.

Comment by Stephen Guth




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