Historically, contracting was a documentation activity-recording deals in written form and outlining dispute mechanisms.

Today, the contracting function is a strategic business system: it expresses corporate policy in binding agreements, aligns risk allocation to the Group Legal Policy, and converts commercial intent into enforceable, value-protecting outcomes.

Contracting is the wrapper that secures operational stability (supply chain, facilities, funding, staffing), revenue enablement (sell-side contracting), and growth (new markets, collaborations, product launches). Optimised contracting compresses time-to-close, protects margin, prevents value seepage post‑award, and provides data visibility across the contract estate.

Far from being a “documentation service,” how the contracting function performs is a bellwether for corporate performance-it can lose a Business money as easily as it can make money. Its optimisation directly influences legal team perception and ROI.

The Contracting Function is important to the Business for the following reasons:

◼️ Deal Generation & Conversion: turns pipeline opportunities into signed, enforceable deals with predictable closure timelines.

◼️ Revenue Capture & Cash Assurance: embeds pricing, invoicing triggers, acceptance criteria, and payment terms to accelerate cash and reduce disputes.

◼️ Risk Allocation Discipline: sets balanced, policy‑aligned positions (liability caps, indemnities, warranties, IP rights, compliance) to contain exposure.

◼️ Operational Certainty: locks in delivery conditions (SLAs, KPIs, remedies) for post‑award performance and escalation paths.

◼️ Supply Chain Stability: ensures availability, continuity, and resilience via termination rights, step‑in, dual sourcing, and force majeure handling.

◼️ Compliance Embedding: bakes in data protection, sanctions/export, ABC/AML, ESG, H&S to avoid regulatory friction.

◼️ Market Entry Enablement: de‑risks new geographies/products via localised templates and jurisdictional playbooks.

◼️ Decision Governance: clarifies approval workflows, risk sign‑offs, and DoA to prevent defective authorisations.

◼️ Stakeholder Experience: creates a predictable, fair‑dealing posture that counterparties trust and prefer.

◼️ Data & Insight: provides contract‑level analytics (cycle times, deviations, margin leakage) to steer improvements.

◼️ Scalability: standardisation and automation allow the Business to scale deal volume without degrading quality.

An optimised Contracting Function delivers:

◼️ Time-to-Close Compression: faster negotiation and approvals through standard templates, playbooks, and SLAs-directly impacting quarterly revenue recognition.

◼️ Margin Protection: policy‑aligned clauses (indexation, caps, price adjustment, limits of liability) reduce value dilution and defend pricing power.

◼️ Value Seepage Prevention: stronger post‑award governance (KPIs, remedies, change control) curbs scope creep, write‑offs, and leakage.

◼️ Dispute Avoidance & Cost Reduction: clearer obligations and evidence reduce disputes, external counsel spend, and management distraction.

◼️ Cash Acceleration: unambiguous acceptance milestones and payment terms increase DSO discipline and forecasting accuracy.

◼️ Operational Predictability: repeatable outcomes and clean escalations lower disruption risk and increase delivery certainty.

◼️ Better Negotiation Outcomes: RPLV framing and deviation controls improve leverage, speed, and settlement quality.

◼️ Portfolio Insight: analytics expose bottlenecks, risky deviations, supplier/counterparty trends-enabling prune/maintain/grow decisions.

◼️ Scalable Throughput: automation and tiered reviews handle higher volumes at lower marginal cost, without sacrificing control.

◼️ Reputation & Trust: consistent, reasonable positions enhance market reputation; preferred‑partner status wins more deals.

The best practice features of an optimised Contracting Function include:

◼️ Contracting Policy (GLP Aligned): expresses a range of permissible outcomes (preferred / acceptable / exceptional) for key risk positions and commercial terms.

◼️ Template Library & Clause Bank: harmonised templates with jurisdictional variants, standard clauses with approved fallbacks, and redline guidance.

◼️ SMART Schedules: pre‑built commercial schedules for scope, KPIs, pricing, milestones, acceptance, change control, and termination-plug‑and‑play.

◼️ Negotiation Playbooks & Checklists: point‑by‑point tactics, concession ladders, and deal hygiene checklists to keep negotiations disciplined.

◼️ Tiered Review Protocols: risk‑based routing (self‑service, paralegal, counsel, specialist) with clear SLAs to avoid over‑lawyering.

◼️ Approval Workflow & Risk Sign‑Off: DoA matrices; mandatory risk sign‑offs for exceptions; escalation paths for out‑of‑policy positions.

◼️ Performance‑Based Contracting: measurable KPIs, credits, remedies, and continuous improvement provisions to protect post‑award value.

◼️ Contract Administration: post‑signature obligations tracking, variations/change orders, notice management, and obligation calendars.

◼️ Quality Assurance & Auditing: sample reviews, deviation analytics, and lessons‑learned loops informed by disputes/claims data.

◼️ Deal Memory: capture of negotiation rationale and exceptions for future leverage and portfolio learning.

◼️ Authorized Signatories & E‑Signature: robust signatory control and secure e‑signature workflows to prevent defective execution.

◼️ Policy Library Integration: privacy, sanctions/export, ABC/AML, information security, IP-embedded cross‑references.

◼️ Contract Analytics: dashboards for cycle time, deviation frequency, margin impact, dispute trends, supplier performance.

◼️ Value Seepage Recovery & Dispute Detection: triggers, alerts, and early intervention protocols; preventive playbooks.

◼️ Self‑Help Resources: FAQ, quick guides, training modules for front‑line users to reduce low‑value legal requests.

◼️ Legal Tech Contracting Tools: CLMS, document automation, intake/workflow, clause recommendation, e‑billing integration.

◼️ Records & DMS Discipline: authoritative repositories, version control, metadata, retention schedules, audit trails. 

A poorly optimised contracting function will give rise to:

◼️ Excessive Closure Times: unclear templates and ad‑hoc workflows extend time‑to‑signature and miss revenue windows.

◼️ Inconsistent Risk Profile: unmanaged deviations create portfolio volatility and weaken negotiation posture.

◼️ Revenue Leakage: weak schedules and post‑award governance cause scope creep, credit exposure, and write‑offs.

◼️ Dispute Incidence: ambiguity and poor evidence discipline drive claims, escalations, and legal spend.

◼️ Defective Authorisations: broken DoA/signatory controls result in invalid agreements and remediation costs.

◼️ Rework & Bottlenecks: non‑standard drafting and over‑lawyering clog pipelines; stakeholder frustration rises.

◼️ Poor Tech Adoption: CLMS and automation fail when offline processes, data, and policy discipline are weak.

◼️ Audit Pain: missing deal memory and weak records create long, costly audits and diligence delays.

◼️ Brand & Counterparty Friction: unpredictable positions damage reputation; preferred partner status evaporates.

◼️ Legal Value Undercut: activity‑only metrics obscure outcomes; perceptions of legal effectiveness decline.

The contracting function is mature and ready for tech‑enabled productivity interventions:

◼️ CLMS: electronic platform for generation, negotiation, approval, obligation tracking, and archiving; integrates with playbooks, clause banks, and workflows.

◼️ Document Automation: rapid assembly of templates and schedules; data‑field governance to minimise drafting errors.

◼️ AI Contract Reviews: issue spotting, deviation detection, fallback suggestions; emerging auto‑redlining remains nascent-use within policy controls.

◼️ Workflow & Intake Automation: request classification, routing, SLAs, and escalation visibility; links to risk sign‑offs and DoA.

◼️ E‑Signature & Identity: secure execution with audit trails; signatory validation and seal/affix requirements where applicable.

◼️ Analytics & Dashboards: cycle‑time, deviation rates, margin impact, dispute trends, value seepage indicators-management‑grade.

◼️ DMS Integration: authoritative repository, retention schedules, metadata, and search-supporting audits and discovery.

◼️ Golden Rule: If the contracting function doesn’t work offline (policy, templates, playbooks, workflows), it won’t work online. Tech magnifies discipline; it doesn’t create it.

Feel free to explore each of the critical resource enablers that are comprised of an optimally performing Contracting function by clicking on the interactive map at the top of the page. 

Visit each Station for in-depth analysis of what it takes to make this in-house function really perform. Or you can go back to the overall GLS Legal Transformation Tube Map. 

In most cases, the GLS Legal Operations Centre contains everything you need to effectively optimise your Contracting function yourself – or feel free to reach out to us – and we can do it for/with you. 

Feel free to contact GLS to book a consult to discuss your Contracting function optimisation needs right here.