Conversations with the Author: "CLM Simplified

Contract lifecycle management is often confused for the technology, and CLM systems are core to optimizing contract lifecycle management, but they're just a piece of it.;
-Lucy Bassli

Welcome to the Contract Lens Podcast, brought to you by Malbek. In this podcast, we have conversations with contract management thought leaders and practitioners about everything contracts and its ecosystem. In today's episode, we are joined by Lucy Bassli, founder and principal at InnoLaw Group, to uncover key insights from her new book “CLM Simplified: Efficient Contracting for Law Departments”. Lucy is an attorney, author, and a former assistant General Counsel of Legal Operations and contracting at Microsoft. So now it's time to relax, grab a glass of wine and let's talk contracts.

Becky:
Well, welcome back to the Contract Lens Podcast, Lucy. It is wonderful to have you. You were one of our earliest guests early in 2021 when we launched the podcast. You were talking about this book, I think at the end of that podcast, sort of alluding to it. So it's wonderful to actually have you back to talk about CLM Simplified.

Lucy:
Thank you so much. I am delighted to be back and to talk about my favorite topic, CLM.

Becky:
Oh, wonderful. Well, for those who are not familiar with your book, can you give us the quick rundown of what it's all about and why you felt compelled to write it?

Lucy:
Yeah, absolutely. So the title of it, which is one that it's surprisingly hard to come up with a title, I didn't realize it until I embarked on this journey. This is actually the second book I wrote. One was more generally about legal innovation and this one was really on my core favorite topic I've lived and breathed for two decades now. So CLM Simplified: Efficient Contracting for Law Departments really does a pretty good a job of summarizing what it's about. I wanted to make sure that every in-house lawyer, especially, not just the legal operations professionals or perhaps other paraprofessionals inside of corporate law departments who are critical to success in any CLM project.

Lucy:
But I really wanted to have the attorneys have something that they can pick up and easily digest as they think about conquering their contracting problems. So the purpose of the book is really to break down all the different aspects of CLM, being that contract lifecycle management is often confused for the technology and CLM systems are core to optimizing contract lifecycle management, but they're just a piece of it. They're an important piece, but they're actually something that should come a little bit later on in the journey.

Lucy:
The purpose of the book is to walk corporate law department and their leaders, and then the attorneys through those different aspects of things that need to be addressed, considered, refined, streamlined, optimized, all those great words, in order to have a successful technology implementation, or even if they choose frankly, to forgo the technology for a while and make other changes. So it really tries to break down all the different things that go into contracting.

Becky:
I really liked that you drew that distinction in the book about CLM being confused for the technology or the software solution. I think I have fallen into that to trap over time. I've been in this space for a long time, and I know that contract lifecycle management actually isn't the tech, but I think in my mind, because I work for a tech company, I sort of equate it with the tech. So I found that to be a really helpful distinction that you made.

Becky:
I want to start off by asking you about this concept of over-functioning. So one of my favorite authors, Brené Brown, writes about how people under stress tend to either fall into two different categories. They either under function or they over-function. And you begin your book by talking about how legal teams tend towards over-functioning. Can you share some examples of what over-functioning looks like and why do you think legal teams tend towards this way of operating?

Lucy:
Absolutely. It's kind of simple. Lawyers find themselves in-house very quickly falling into the, "Oh my God, well, somebody's got to do this," mentality. It is very much a "What do you mean? How's nobody watching after this? Well, okay, we'll do it." Lawyers are obviously perceived as trusted advisors. They're a trusted team organization inside of a company. And they are deferred to often for judgment, for decisions and guidance, and so it's easy to fall into that role of, "Well somebody's got to do this and why not have the attorneys take care of it?" Now, especially in contracting, contracts are so quickly defined as legal documents. I love saying they're business documents. Yes, they have some legal obligations in them, but the purpose of the contract is a business goal.

Lucy:
It is usually a business goal, especially in the world of commercial contracting. The work that's being done inside of corporate law departments is to achieve business goals. That's why lawyers go in-house. They love being part of the business. Well being part of the business means you feel a sense of responsibility to help push that business forward. So if that means I need to help get this contract signed, literally the physical signature or the digital signature and make that happen, I will make sure it happens. That is my favorite example of over-functioning, lawyers spending time chasing down signatories, physically running down offices, maybe two years ago, not so much lately, but certainly digitally sending emails. "Who's signing this? Where is this? Why don't you have this signed? What's the update?" All of those are questions that lawyers shouldn't be asking and not in the position to be asking, but they often find themselves doing that.

Lucy:
That's my favorite example. It's probably the most egregious over-functioning of lawyers in the contracting life cycle, let's call it. So it does, it happens all the time. It happens regularly. There are many situations where lawyers, especially in smaller companies or startups, they're looked to for actually even signing the contract. Why would an attorney be signing these business obligations? Why isn't it the CEO or COO. That's really even more of a tactical problem for sure that we've seen, but even more philosophically beyond just these tactical chasing of signatures, over-functioning in negotiations, negotiating pricing, negotiating terms within contracts that really somebody in the business should be handling. I see it all the time, literally all the time. Every company I work with, I see some aspect of over-functioning.

Becky:
Yeah, and I think that over-functioning, there's that saying, if you want work to get done, give it to a busy person. And I think that lawyers often fall into that category. They're very busy. They can be very efficient with their time in some regards. And so it's sort of like, "Oh, we'll just give it to legal." This is sort of a default that we give it to them.

Becky:
So let's dive into this distinction that you draw in the buck. You just talked about it a moment ago, but that legal teams don't own the business goal of contracts. They own the legal language that governs those goals. That was a real light bulb moment for me as I was reading the book. Can you dive a little bit more into that distinction of why is it that a contract is actually a business document and that the legal team really needs to be focused on the legal language, not of business goals per se?

Lucy:
Sure, absolutely. So it gets a little bit blurry. I'll be honest and I will confess, it gets a little bit blurry of how do you draw the line between using the right legal words to accomplish the envisioned business goal? That's a hard line to draw. The legal words standing on their own, an absence of the business goal makes very little sense and the wrong business goal can of course lead to the wrong legal words being used. But in a very tactical perspective, what I see happening as corporate law departments are faced with increasing volumes, increased complexity, globalization, remote work, all the things that are happening and are very real today and have been for a couple of years, at least. There's a very tactical thing that happens.

Lucy:
And the paper and the words on the paper somehow get confused as being the entire responsibility of the attorney, the legal team. You now have these words in front of you, they're on paper and the words look bad or wrong or uncomfortable, and the lawyers jump in to fix. And what I've seen happening, which is the worst case scenario, is that lawyers get so deep into fixing the words and the concept and the philosophy of what the words do or the worst thing that can happen if the most perfect words aren't used, that the business goals almost get forgotten in that process. That's a real risk to the business. That's a real problem, actually, for the business as well.

Lucy:
From there is where we hear the pain points about legal being a black hole or the department of no, or the voiding of legal all the time, trying to get around it, get behind it, to avoid it. It's because of the disconnect that sometimes happens between that legal function and how it is there to support and enable the business goals. It can't and shouldn't function on its own. The legal function doesn't exist but for the business. I think we forget that sometimes.

Becky:
Yeah, that's a really good point there. And I think you even mentioned in the book, you talk about how the in-house legal will refer to their business counterparts as the client, because they really are there to serve them.

Lucy:
Yeah, that's a funny one. I'll take just a little minute on this. What's funny is referring to clients, once you go in-house, is really a remnant of coming from a law firm. So most in-house lawyers spend time in at law firms, and then they come in and continue to function in some ways, unfortunately, very much the way they used to at a law firm. Between those is a very, very big difference when you go in-house. So it's funny when you hear the word client, because the business side is of course going, "I didn't know I'm a client of someone. I just thought we're all part of the same company."

Lucy:
So right there from that first introduction, the legal team sets itself a little bit apart in a way that may not always be good, let's just say. So even their terminology, it matters, and I think we're starting to see a little bit of a change in that, but it's funny, you mention that, because it's true. We go in-house because we want to serve the business, but we almost overdo it a little bit. We're here to serve the business, but we're part of the business. We just come at it with a different lens.

Becky:
Right, okay. A legal lens. So you assert that the goal should be to keep legal out of as much of the contract life cycle as possible, except for the negotiation phase. This is probably a foreign concept to many. Why do you see this as the optimal way to manage contracts?

Lucy:
I exaggerate a little bit. I probably oversimplify to make a point. Really, a very good in-house counsel is involved pre-contracting. A very good in-house counsel has developed templates and enabled and empowered the business. So I don't want anybody to walk away from this going, "What?" Well they're just going to get a bunch of crap and the lawyer, how are they going to deal with it? And I hope it's okay to say crap on a podcasts, but so yes, to be a little bit inflammatory, really once the pre-work has been done and a life cycle is put in motion with the right templates and playbooks and roles and responsibilities matrix, which are all my favorite topics in the book, then yes, we want legal to only be brought in the most complex negotiations.

Lucy:
We don't want them to be a part of the approval routing. They shouldn't be the ones going, "Hey, did you check with finance? Did you get the tax team to sign off?" That shouldn't be what legal spends their time on. And obviously you know how I feel about chasing signatures. Another one is post-signature obligation tracking and management. I see so many legal teams dragged into it. Maybe they're not the ones actually managing the obligation, but they're the first one that the business goes to. "Hey can you help me sign the contract? Hey, what does it say? Hey, is this an expiring soon?" Those should not be things that the legal team is involved.

Becky:
Why do you think there is often so little trust between legal and their business counterparts?

Lucy:
Wow, that's a really important question. Over-functioning, the core issue there is trust, to be honest. So besides a vacuum of functions, which is one reason legal over-functions, the other times they over-function, the example which actually I used earlier of negotiating pricing, checking basic small rather insignificant contract, is because there's a lack of trust. And so it's a critical topic. Why is it there? I have to be honest, there's a pretty high bar for the attorneys, for what they consider quality. We're trained as attorneys to mitigate risk 100%. The way we mitigate risk is we make sure that contract is pretty perfect. The words are written, the best possible use of the right words and the punctuation is such that there can't be any confusion in the meaning of the words.

Lucy:
And that is how we're trained. So to see a document come across our desk that is clearly below par or in some ways really incomprehensible, and I've seen them so I can validate that that trust arises from poor quality. And if that poor quality of contracts are coming in from the business, then that lack of trust, it perpetuates itself. You see over and over that a particular business owner can't add up the math in the milestone section of a contract. That's not okay. And that's where legal ends up over-functioning, that lack of trust unfortunately grows.

Lucy:
But the way to tackle it is not to keep doing that work on behalf of the business and becoming that crutch and continuing to over-function. But it is to do the training and force accountability back on the business, through auditing, through feedback loops and ongoing training. So yeah, it's solvable for the most part, unless there's a core capabilities problem, and that's a conversation for leadership, for sure. But before you get there, you got to do the training, got to put in the homework and the work to enable the business and empower them to do better.

Becky:
Yeah. So that perfectly tees up my next question, which is about jumping to technology too quickly. Too often companies, they go right to technology to solve their CLM lows, and you spend a lot of time in the book talking about how people and process must come first. Can you explain what happens when you jump right to a technology solution without doing that upfront work?

Lucy:
Sure. There's so many problems with it. I think it's always easier when I make a concrete example. Let's do one really finite, very crisp example, templates. People jump to automation and they get very excited and they're going to automate the entire flow of a particular type of contract from start all the way through to end. And some great systems out there do that, obviously Malbek's one of them.

Lucy:
Well, the first thing we learn on day one is there is no current existing templates to actually automate, or there's no clauses from which to draw in order to create an automated experience. And suddenly we're realizing, "Hey, we actually can't automate that aspect." It just simply doesn't exist. How often I see that is crazy, because you would think, how do they get through the sales process and sign a contract when at no point was that connection made, that they actually have nothing yet to automate? That's homework that needs to be done.

Lucy:
That's a process thing that specifically, again, if we go back to the book, I put that in a templates section, it gets its own chapter because it's so core to any kind of efficiencies and automation. So that's one very tactical, very crisp example. But let's go more generally on the people and process. So we light up a system and in the CLM system, part of it is approval routings. Okay, well, sure. That sounds great. And during the implementation, what we discover usually is that hey, the company doesn't actually have anything documented on the approval routing, it's all very organic or it's all in people's heads. It's very hard to automate that. Suddenly you're trying to extract rules and ask questions about things that people don't have crisp answers on, who usually approves this kind of contract.

Lucy:
If the answer starts with, "Well, dot dot dot," that's a problem technology doesn't do very well with "Maybe sometimes, well," it can actually do better with, it depends if it depends is followed in with very clear rules, black and white rules. But I've heard everything from, "Well, usually Sue approves them unless Bob is out of town and then Bob's out of town he doesn't like it to go to Sue. He has Joe follow up." I don't know what to do with that from an automation perspective.

Lucy:
So that is another great and crisp example of automation that just doesn't work with the process. So you need to define the process, approvals, exactly who and exactly under which context, and it has to be black and white. So that's the kind of stuff we see all the time. And then there are flavors and variations of these kind of misses that we see along the way, that it's very hard for me to over-exaggerate here. It is truly shocking how much automation expectations are misaligned with what the readiness is of the business of the law department.

Becky:
Yeah, and what's going to end up happening is the solution will become shelfware. People won't end up using it, they're just going to default back to the more manual systems they used previously.

Lucy:
That's right. And the saddest part is of course they'll blame the technology. That's a loss for everyone. That's just a terrible outcome, but yep, that's what happens all the time.

Becky:
So where can CLM technology have the greatest impact for organizations from your standpoint?

Lucy:
So what I love to do is start with the basics, what I love to call problem zero, is that corporate law departments can't find their stuff. They simply can find their contracts. So a good repository that is easy to search is such an easy win. Now, as we just discussed, there's still a process problem that needs to be resolved. You can't open up a great repository and say, "Here I am, put stuff in me, let's go file away." There has to be a process, there's got to be communication internally, there have to be expectations said, people have to understand what they're going to be accountable for, and then taught, of course, how to appropriately store a document. The right inputs, metadata, all of that stuff.

Lucy:
But the short answer really to your question is it can be most impactful in easy baby steps, in small winnable scenarios where they can gain followers, gain sponsors, and actually demonstrate improvement. So I don't really care which feature set you start with, but make sure you're clear on that feature set, because that whole big bang approach to contracting automation, I've rarely seen it successful. And by big bang, I mean I try to divide CLM tech into three core buckets. One is, as I just mentioned, repository, good searchable repository that makes it easy to find stuff. On the other end of the cycle, I would say contract creation. How do we help automate, piecing together the right clauses to spit out a beautiful document that is ready to go to the other side?

Lucy:
That's a contract creation bucket, and then in the middle is this workflow. Intake, workflow, automation, tracking the progress. Where does stand in the negotiation cycle or general life cycle. And it's nice to have all three. I've very rarely seen it done successfully, unless you're going to scope it down to one contract type. NDAs, my favorite. You want to fast forward in the podcast and say, where should we start if we want to experiment with automation?

Lucy:
Pick an NDA, do one NDA type from start to end, from contract creation, enablement of the business to create their own contracts, to route them through a workflow, escalate them to legal only if necessary based on certain defined parameters in the system, and then get it electronically signed and stored. Beautiful. That is the only scenario in which I can see a really successful big bang implementation, but it's a one contract type and a very simple contract type. So very long answer, but please start scoped, narrow, and the small wins. That's my best advice, I think.

Becky:
Yeah. You talk about right-sizing the solution to whatever it is that you're experiencing the most pain around. And I think that gets to the core of what you just described. I want to wrap up here with kind of a rapid fire. I'm going to say a word or a phrase from your book, and if you could just give me a really brief one-sentence response, I'm going to go a little bit out of order here from what I originally put. So we're going to start with playbooks.

Lucy:
And hold on, when you say put, just for everybody's listening, I've not seen anything. So this is truly rapid fire, and trying to hold me to one sentence is like, it's a miracle, but we're going to do it. So go ahead.

Becky:
So playbooks.

Lucy:
Playbooks. You got to know who your audience is. They look different if it's for legal versus for empowering the business.

Becky:
Okay. Contract owner.

Lucy:
Somebody's got to be accountable for getting that document from start to signed and stored, and it shouldn't be legal.

Becky:
Okay. NDAs.

Lucy:
Easy peasy. First place to start in any sort of automation journey.

Becky:
Okay. Templates.

Lucy:
This is the substantive area where we want lawyers to spend their most time. But also remember that the audience shouldn't be the lawyer. The drafter's a lawyer, but the audience should be the business.

Becky:
Okay. Simplicity and readability.

Lucy:
Oh, back to contract templates. Contracts are way too complicated. They've got to stop being written by lawyers for lawyers. They've got to be written for the business.

Becky:
Okay. And last one, and it's a good one, AI.

Lucy:
Hype hype hype. It's out there, it's good. It needs to evolve. There's some really good solutions and they need to be given the patience from their customers to evolve and get better. And try to please stop reading all the hype.

Becky:
Well, Lucy, this has been a real pleasure. We're so glad to have you back on. And do you have any writing plans coming up or are you taking a bit of a break now?

Lucy:
I think I'm good. This one's like, ah, I got it out there feeling. I'm really proud of this little book. It really is meant to be a little pocket guide. So I hope people benefit from it, really just trying to enable the whole CLM community to get a little bit more substantive, to get our feedback on the ground and help corporate law departments do better, stop with a little bit of the over excitability that's going on out there and let's bring it down to basics. So I think this is it for now, just busy helping corporate law departments do it right.

Becky:
Well, keep doing that great work, always a pleasure. We will link to the book when this podcast publishes, so you can check it out yourself if you have not already. Highly recommend for anybody who spends any amount of time in contract lifecycle management.

Lucy:
Thank you so much. Thanks Becky, for having me. It's a pleasure. Again, favorite subject, so appreciate the time.

Becky:
Wonderful.