3 reasons why contracts are broken.

Contracts are broken: they fail at the core task of relationships (which is creating clarity and bringing people together). Those are the symptoms. What is the diagnosis?

In this new campaign we’re going to be breaking down the underlying causes, how to fix them, and how Majoto will help you to do that.

The symptoms

Contracts are the lifeblood of commerce. But despite all the tech, process know-how and money thrown at the problem, contracting continues to be frustrating for users (businesses and lawyers) and a top priority for fixing - as demonstrated repeatedly by surveys of GCs and businesses.

A recent survey by Big Four firm EY found that an astounding 90% of business development leaders reported they face challenges working with their procurement, legal and commercial teams on contracts, with 57% saying that inefficiencies in the process result in lost business. World Commerce and Contracting found that 87% of businesses are dissatisfied with their contract processes and that poor contract management can cost up to 9% of revenue.

Such results, the anecdotal evidence on the ground and our own experience, show that contracts and the entire contract journey are highly dysfunctional and even fundamentally broken.

The diagnosis

In our view, the cause is that contracts are about relationships (a human problem) yet are treated as process (a problem of efficiency, risk and data).

This results in dull documents that nobody understands, that are overly focussed on risk, which don’t truly reflect the relationship between the parties, and which are built and negotiated in an uncollaborative way around minutiae instead of the big picture. The contract remains a static record of a lawyer’s view of the relationship, not a journey reflecting and supporting the business relationship. Efficiency gains and enterprise data dashboards will not help with that problem (important as data and process efficiency are).

Much of the technology and contract improvement effort out there is designed to address only some of the symptoms - and entirely fail to address the cause.

The cure

We believe that solving the problem needs a different approach to how contracts - and the entire contract journey - look and work. We’ll be exploring this in upcoming posts.

If you can’t wait and would like to see how Majoto addresses the problem - differently - get in touch for a demo.