Almost 66% of businesses are putting themselves at risk of missing deadlines, wasting money on outdated commercial agreements, or being forced into expensive litigation because they are not managing their contracts effectively, a survey by Brodies, Scotland’s largest independent law firm, has revealed.
The study, which comes as Brodies promotes its new online contract management service BOrganised, canvassed the views of 138 organisations across Scotland.
Despite the finding that 94% of respondents believe their organisation manages contract risk ‘very’ or ‘reasonably’ well, when asked how frequently they review the terms of their commercial contracts, 36% said once a year or less frequently, and 10% said they didn’t know.
The survey found that over a fifth (22%) of organisations have no system in place to manage contracts with suppliers and customers. Of those that do, more than half (57%) rely on spreadsheets, online calendars or paper-based filing systems to keep track of business-critical agreements. Only 42% use a contract management system.
Grant Campbell, head of Brodies’ commercial division, said: “Twenty years’ experience of advising clients on contracts has taught me that organisations often spend far less time and effort on managing contracts than on negotiating them in the first place.
“I have often heard it said that a good contract is one that you can put in the drawer once it has been signed without the need to look at it again. To my mind, this is not only untrue but also very dangerous, as it suggests that there is no need to manage contractual relationships once the document has been signed.”
Brodies launched BOrganised last year, promising a secure central location to store contracts and supporting documentation that is available 24/7 and e-alerts so deadlines are not missed.
The firm stands out among its peers for having weathered the downturn in the Scottish market and this year won Legal Business’ UK National/Regional Law Firm of the Year, based on the firm’s strategic management and sustained financial growth – over the past ten years Brodies has increased its turnover by 214%.