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Your company makes extensive use of contract managers – how did this come about?
As a company, Lucent used contract managers since the early 1990s. Initially, they were recruited on an ad-hoc basis. Around 10 years ago, the concept of having contract managers became more widely accepted within the company. A special contract management team was established, reporting to one of the company’s senior financial managers.
Following Lucent’s merger with Alcatel, the role of the contract managers was decentralised. They are now part of the company’s legal department, and report to its regional heads of legal. I currently have six contract managers in my group. In addition, the contract managers will typically work alongside the heads of local business units on specific projects.
What are main advantages of using contract managers rather than qualified lawyers?
Using contract managers makes a material difference to our overheads. On an annualised basis, a junior contract manager may cost up to US$50,000 less than a junior qualified lawyer. The savings become larger when compared with more senior in-house lawyers.
There is also a clear distinction in terms of the career options open to non-legally trained contract managers compared to my company’s lawyers. Contract managers know that the most senior roles within the department will always be reserved for qualified lawyers. This knowledge helps the contract managers manage their career development expectations.
What kinds of matter do your contract managers typically deal with?
Because they only allowed to negotiate contracts where there is a proven business case, our contract managers are authorised to negotiate the main points of all client-facing contracts – whatever their size. In many situations, they will be facing lawyers on the other side of the table. Unless there is no contract manager on the ground, or the issue is very serious or the project is significant, our in-house lawyers would typically not be facing the other side during the negotiation process, until it is time to finalise the details. The contract managers are not permitted to self-approve any contracts they negotiate for signature.
It helps that Alcatel-Lucent makes use of contract templates and boilerplate clauses, which can guide the contract managers in their negotiations. They don’t negotiate from a blank piece of paper. In addition, because Alcatel-Lucent has a policy of doing most of its legal work in-house, our contract managers mainly work with our company’s corporate lawyers. Apart from obtaining legal opinions, M&A transactions and litigation, they don’t generally get involved with external law firms.
Do your contract managers have any specific skills or qualifications?
None of the contract managers in my group are qualified lawyers, although in other groups there are legally trained contract managers. It’s not always necessary for them to have specific industry experience before they are able to negotiate contracts – the skills set of a contact manager is pretty portable between industries. It’s more important that a contract manager understands how the contract works as a project, and what the risks and costs are likely to be. You don’t need to know what the nitty-gritty of the law is – that’s what the lawyers are for – but you do need to know what questions to ask.
For example, one of my contract managers who negotiated the roll-out of a telecom project previously worked as a procurement director in India. It didn’t take long for him to work out what the issues involved were.
In terms of training, we generally expect our contract managers to learn their skills “on the job”. Once the merger between Alcatel and Lucent has “bedded down”, I would consider reviewing the possibility of formal accreditation and training, such as that provided by The International Association for Contract & Commercial Management.
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