Contract Playbooks. Diane Flyer L.A. Care Health Plan December 11, 2013
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1 Contract Playbooks Diane Flyer L.A. Care Health Plan December 11,
2 Contract Playbooks What is a contract playbook Who will use it Why create one What does it look like Keeping it current 2
3 What is a Playbook? A notional range of possible tactics in any sphere of activity A scheme or set of strategies for conducting a business campaign or a political campaign ( 3
4 What is a Contract Playbook? A guide to: Managing the contract negotiation process Business context for legal terms Business and legal risk management/ allocation 4
5 Why Create a Contract Playbook Training Guidance on completing templates Understand contract terms Adhere to corporate risk positions Risk allocation management Pre-established fallback positions 5
6 Why Create a Contract Playbook Delegate to other departments Dollar threshold Use of standard terms Best practices Industry standards Incorporate lessons learned 6
7 Why Create a Contract Playbook Consistency in contracts Terms approved by legal/business leadership Promote business objectives Improved risk management Ø More certainty 7
8 Why Create a Contract Playbook Ad hoc arrangements Expensive to create, manage Greater risk exposure Ø More uncertainty 8
9 Who will use it? Legal Procurement Contract management Project management Sales Business development 9
10 Tailor the guidebook to the user Legal More robust discussion of legal and business issues Limitation of Liability Are you the buyer or seller What is the business context Is it enforceable given choice of law What is the corporate policy 10
11 Tailor the guidebook to the user Procurement/Contracts Focus on business issues and corporate policy Limitation of Liability Are you the buyer or seller What is the business context What are the risks; can they be mitigated What is the corporate policy 11
12 Tailor the guidebook to the user Sales/business development Discuss business issues and corporate policy Focus on what can/can t do Limitation of liability What is the business context What is approved What requires higher-level approval 12
13 Training Tailor to user Scope Focus Depth May vary by contract type 13
14 Training Provide business context for legal terms Use of real life examples, war stories Explain why terms change as a result Compliance with policy, approvals What is the policy Business rationale 14
15 Training Simple Easy to follow/understand What to escalate When to escalate Ø If too complex will ignore 15
16 Training Guidance on completing templates Use of simple forms Limited What to complete 16
17 Training Consequences of unauthorized External Use of real life examples, war stories Internal Failure to adhere to policy 17
18 Training Understanding contract terms Risk management Legal risks and alternatives Business risks and alternatives Negotiation fallback positions 18
19 Preparing the Playbook Can take many forms or formats Which contract forms One per form, or multiple forms in one Which form to use Dollar thresholds Other party s paper Different playbooks based on users 19
20 Preparing the Playbook All terms, or select terms For each term discussed What is the standard What alternatives are pre-approved What needs to be escalated To whom Legal, business decision-maker 20
21 Example Which Form to Use Purchase Order vs. Contract Factor Purchase Order Contract Term Up to one year Over one year Dollar value Up to $XXXXX Over $XXXXX Software No Yes Intellectual property No Yes Risk issues Business critical requirement Disclosure of trade secrets, proprietary data Disclosure of protected health information, personal information No Yes 21
22 Example - Simple Term Standard Acceptable Alternates Choice of Law California Delaware New York Limitation of Liability Fees paid Multiple of fees paid, not to exceed 3x Unacceptable Alternates Texas Unlimited liability Escalate Deviations to Legal Vice President 22
23 Example - Detailed Termination for Convenience Company, by written notice, may terminate this Agreement, in whole or in part, for its convenience. If this Agreement is terminated for convenience, Company s sole liability shall be for payment under the payment provisions of this Agreement for Services delivered and accepted before the effective date of termination. General Intent. This clause sets forth the basic right to terminate for convenience. Because this is not a right inherent in a contract between commercial entities, we also include a limited remedy for the Subcontractor, so this is not considered a breach of contract. Principal Elements. The first sentence denotes the right to terminate for convenience, in whole or in part. The second sentence is an abbreviated damage/ settlement calculation for convenience termination. Approved Fallbacks. The following clause may replace the Termination clause upon approval by the Project Managing Director when a Subcontractor requests either the deletion of, or rendering mutual, the termination for convenience right. 23
24 Example detailed (cont.) The Termination for Convenience clause may be replaced by one of the following alternate clauses upon approval by the Engagement Managing Director when a Subcontractor requests either the deletion of, or rendering mutual, the termination for convenience right. Alternate 1 Notwithstanding any language in this Agreement to the contrary, Company may terminate Subcontractor, in whole or in part, for Company s convenience to the extent Subcontractor s scope of work under Company s Prime Contract is terminated by the Government and such termination renders continued performance under this Agreement wholly unnecessary. In such a case, Company's only liability to Subcontractor is to pay amounts recovered on Subcontractor s behalf from the Client. 24
25 Example detailed (cont.) Termination for Convenience (cont.) Alternate 2 Company may terminate this Agreement, in whole or in part, at its convenience, but only to the extent that the Client terminates the Prime Contract, or otherwise makes changes to the work to be performed under the Prime Contract. In such a case, Company's only liability to Subcontractor is to pay amounts recovered on Subcontractor s behalf from the Client. No other changes or additions to the above clause are permitted without Legal Department review. 25
26 QUESTIONS? 26
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28 ACC Resources Produced by Huron Legal Top Ten: Top Ten Considerations when Creating a Bring-Your-Own-Device (BYOD) Company Policy Top Ten Roles of the Law Department Business Operations Director QuickCounsel: Regional Distinctions for a Global Records Management Policy Document Management, Contract Management, Records Management, and Knowledge Management Systems: What Are they, What Do they Do, and What are the Differences? Legal Project Management
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