Responsibility for contract management and the size of contract portfolios

More often than any other function, the corporate legal department manages contracts once they are executed. The following findings that elaborate on that statement come from Exari, which compiled data from more than 100 corporate respondents at the ACC Annual Meeting in 2008 and LegalTech New York in February 2009. Three quarters of the respondents were from Fortune 1000 law departments.

According to Figure 5 in the Exari report (at 10), the legal department manages contracts at 46 percent of the companies who responded. Next most commonly the lines of business had this responsibility (25%), followed by a “contract management team” (17%), a “vendor management team” (17%) and someone else, such as finance or accounting (2%). I have taken the position that contract administration is not a responsibility the legal department should willingly take on (See my post of March 19, 2009: business units should assign a contract coordinator.).

One reason law departments should not enmesh themselves in contract management is sheer volume. The Exari study found that almost half the law departments manage about 10,000 active contracts. A quarter of the departments manage about 1,000 contracts (at 11).

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