Our founder Harm Bavinck was last week on the expert panel at the annual conference of the IACCM. The topic was “5 Predictions for Procurement, Sales/Commercial, Contracting, Legal, BPO & Technology”.
Very interesting predictions were shared with the audience by the experts from General Motors and Microsoft. Harm Bavinck predicted that we will see a world of self managing contracts in the near future. New technologies will disrupt the way we create, approve and use contracts. Today, you can already see self driving cars in the streets of Silicon Valley. His prediction is not really science fiction.
Harm is manager of the computable contracts initiative at CodeX, the Stanford Center for Legal Informatics. The goal of the initiative is to help the world move from natural language based contracts into a world of computer readable contracts.
The International Association for Contract & Commercial Management enables both public and private sector organizations and professionals to achieve world-class standards in their contracting and relationship management process and skills. Once a year the IACCM organizes a global conference. This year the conference was hosted in Chicago.
Some interesting notes re the conference:
- The IACCM published 10 pitfalls to avoid in contracting. In general, there is 9,2% average value erosion of annual revenue.
- The legal department of HP implemented a very interesting clearing house pilot. Small teams perform an early assessment of contracts to minimize risks and to avoid mistakes further in the process.
- Contract management should be about measurement. If you can not measure it, you can not understand it. If you can not understand it, you can not control it. If you can not control it, you can not improve it.
- The perfect contracting process does not give any guarantee on the outcome of the contract. The structure of the contracting is the key to success.
- What is the value of a contract? A contract is more then a simple set of promisses. It is about the incentive effect of legal enforcement, net of the expected costs of dispute resolution and enforcement.
- The world uses an estimated number of 500 different contract types (i.e. loan, sale, escrow,..). An average contract has max 40 clauses of which just 20% is unique. This results in a total of 4,000 clauses. This is not big data 🙂
- Contracts are designed by lawyers for lawyers for a case of litigation. It should be designed to manage the relationship instead.
- A very bad contract can be easily managed by a very good relationship.
- Disputes are never regarding the contract itself, these are always regarding the facts regarding the contract