Streamlining the impact of the recession on Legal Process Outsourcing (LPO) to achieve higher demand of scrutiny and focus...
<ul><li>“ In the middle of every difficulty lies an opportunity.”  </li></ul><ul><li>By Albert Einstein </li></ul>
Recession In the Legal Sector Source: www.lawshucks.com 340 229 July 2009 347 134 June 2009 866 338 May 2009 795 393 April...
Growth of LPO <ul><li>200 per cent in revenues in the last 12 months. </li></ul><ul><li>NASSCOM expects a growth of 60 to ...
<ul><li>During recession key points to be looked in </li></ul><ul><ul><li>Retain existing customers- achieve more from the...
Outsourcing Contract <ul><li>The legal basis of any outsourcing agreement is the  “outsourcing contract ”. It determines: ...
Reducing costs through optimizing existing outsourcing contracts and entering into new contracts <ul><li>Identify ways to ...
<ul><li>Exercise audit rights to find overcharges and identify cost reduction opportunities.  </li></ul><ul><li>Renegotiat...
Comprehending your contract rights and contract management tools <ul><li>Contract Rights </li></ul><ul><ul><li>Obligation ...
Contract Management Tools <ul><li>Contract Management Tools are most important when service delivery based on the contract...
Enforcing liability caps to safeguard outsourcing contracts during current economy climate <ul><li>The liability cap is a ...
<ul><ul><li>Balance between single cap liability of customer and multiple caps liability of service provider. </li></ul></...
Ensuring proper contract drafting for outsourcing arrangements during tighter economy times   <ul><li>A well drafted outso...
Key Points to consider while drafting an “Outsourcing Contract” <ul><li>Pricing mechanisms and index-based price review cl...
Reviewing exit strategy as organisations need technical and legal means to recover outsourced services  <ul><li>Balance be...
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Contract Management

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Contract Management

  1. 1. Streamlining the impact of the recession on Legal Process Outsourcing (LPO) to achieve higher demand of scrutiny and focus Mr. Rakesh K. Sharma CEO/MD Draft n Craft
  2. 2. <ul><li>“ In the middle of every difficulty lies an opportunity.” </li></ul><ul><li>By Albert Einstein </li></ul>
  3. 3. Recession In the Legal Sector Source: www.lawshucks.com 340 229 July 2009 347 134 June 2009 866 338 May 2009 795 393 April 2009 2345 1337 March 2009 1549 1119 February 2009 846 694 January 2009 No. of Support Staff laid off No. of Attorneys laid off Month
  4. 4. Growth of LPO <ul><li>200 per cent in revenues in the last 12 months. </li></ul><ul><li>NASSCOM expects a growth of 60 to 70 per cent in 2009 in the LPO business. </li></ul><ul><li>Recent report by Value Notes, the legal services offshoring industry in India expected to grow to about 24,000 people with $4.5 billion in revenues by 2010 </li></ul>Source: Forrester Research
  5. 5. <ul><li>During recession key points to be looked in </li></ul><ul><ul><li>Retain existing customers- achieve more from the same resources </li></ul></ul><ul><ul><li>Reduce Cost without impacting the delivery of services </li></ul></ul><ul><ul><li>Need of Hour : </li></ul></ul><ul><ul><ul><li>Improve efficiency, </li></ul></ul></ul><ul><ul><ul><li>Improve quality </li></ul></ul></ul><ul><ul><ul><li>Optimize operations </li></ul></ul></ul>
  6. 6. Outsourcing Contract <ul><li>The legal basis of any outsourcing agreement is the “outsourcing contract ”. It determines: </li></ul><ul><ul><li>The legal parameters of the services and responsibilities of each party. </li></ul></ul><ul><ul><li>It should be flexible enough to support the service level agreement, rather than conflict it. </li></ul></ul><ul><ul><li>Being a delicate area it should be handled with careful attention to details. </li></ul></ul><ul><li>Flexibility and balance are key characteristics that promote the chances of an outsourcing agreement lasting the course. </li></ul>
  7. 7. Reducing costs through optimizing existing outsourcing contracts and entering into new contracts <ul><li>Identify ways to reduce the cost of service delivery. </li></ul><ul><li>Reduce or eliminate the provider's risk in exchange for price reductions. </li></ul><ul><li>Initiate the renegotiation of some or all of the contract. </li></ul><ul><li>Verify that the provider is delivering all of the promised services at no greater than the promised prices. </li></ul><ul><li>Expand the scope of the contract to include more functions where savings are possible. </li></ul>
  8. 8. <ul><li>Exercise audit rights to find overcharges and identify cost reduction opportunities. </li></ul><ul><li>Renegotiate the timing of charges to defer payment. </li></ul><ul><li>Extend the term of the existing agreement either in return for cost reductions or as a means to facilitate financial re-engineering. </li></ul><ul><li>Entering in to new Contracts while re-negotiating existing contracts. </li></ul>
  9. 9. Comprehending your contract rights and contract management tools <ul><li>Contract Rights </li></ul><ul><ul><li>Obligation to minimize costs and achieve cost savings. </li></ul></ul><ul><ul><li>Right to make cost- saving proposals. </li></ul></ul><ul><ul><li>Exercising Benchmarking rights to ensure competitive pricing. </li></ul></ul><ul><ul><li>Right to change rights and obligations within the existing contract, for example: relax response time requirements. </li></ul></ul>
  10. 10. Contract Management Tools <ul><li>Contract Management Tools are most important when service delivery based on the contract begins. </li></ul><ul><li>Contract management principles play an intermediary between the supplier and the client side especially during recession to optimise deliverables and profits. </li></ul><ul><li>Appropriate control mechanism for measuring the effectiveness of output as against the agreed service level agreements stated in the Outsourcing Contract. </li></ul><ul><li>Fluctuations in the market can be identified in advance and addressed in a consensual manner. </li></ul>
  11. 11. Enforcing liability caps to safeguard outsourcing contracts during current economy climate <ul><li>The liability cap is a safeguard in all outsourcing contracts to guarantee the end user compensation if the supplier doesn't deliver </li></ul><ul><li>When resources are tight, it is important that end-user organizations have a clear and realistic view on what can or can't be achieved. </li></ul><ul><li>Points surrounding the Liability Clauses: </li></ul><ul><ul><li>There are certain areas where uncapped (i.e., unlimited) liability is routinely negotiated – for example in relation to IPR infringement (or other) indemnities, or in relation to liability based upon fraud. </li></ul></ul><ul><ul><li>In case of uncapped liability guidelines must be provided within the contract to determine the quantum of liability </li></ul></ul>
  12. 12. <ul><ul><li>Balance between single cap liability of customer and multiple caps liability of service provider. </li></ul></ul><ul><ul><li>For an early, relatively quick and cost effective means of getting the parties together for facilitated negotiations - The inclusion of mediation should always be given proper consideration </li></ul></ul><ul><ul><li>Consideration should be given prescribing an alternative to court litigation – arbitration. </li></ul></ul><ul><ul><li>Include timeframes for the alternate means of dispute. </li></ul></ul>
  13. 13. Ensuring proper contract drafting for outsourcing arrangements during tighter economy times <ul><li>A well drafted outsourcing contract should include flexibility provisions that allow the contract to adapt to different requirements, whether related to: </li></ul><ul><ul><li>Service Scope, </li></ul></ul><ul><ul><li>Volume Demand, or </li></ul></ul><ul><ul><li>Performance Standards </li></ul></ul>
  14. 14. Key Points to consider while drafting an “Outsourcing Contract” <ul><li>Pricing mechanisms and index-based price review clauses. </li></ul><ul><li>Volume-based adjustment provisions. </li></ul><ul><li>Technological advance clauses. </li></ul><ul><li>Savings clauses. </li></ul><ul><li>Contract review and change control provisions. </li></ul><ul><li>Service levels - to identify whether all contracted service levels are needed and whether the levels set can be adjusted down in return for a price reduction while still securing performance at an appropriate level. </li></ul><ul><li>Management reporting - to identify if the weight of management information can be reduced to focus on the data actually required for management purposes in return for a price reduction. </li></ul>
  15. 15. Reviewing exit strategy as organisations need technical and legal means to recover outsourced services <ul><li>Balance between the competing needs of the customer and service provider. </li></ul><ul><li>Things to consider while formulating the exit strategy: </li></ul><ul><ul><li>Clause allowing any party to end the contract early – to be specified separately. </li></ul></ul><ul><ul><li>Clause stating a contingency plan in case there is merger or acquisition of either party. </li></ul></ul><ul><ul><li>Clause stating an option to partially terminate the contract. </li></ul></ul><ul><ul><li>Clause elaborating on the post termination assistance, return of data and records, on-going rights to use the proprietary intellectual property etc. </li></ul></ul><ul><ul><li>Clause specifying how the services and the underlying assets will be transferred from the service provider - </li></ul></ul><ul><ul><ul><ul><li>Back to the customer or </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Successor service provider </li></ul></ul></ul></ul>
  16. 16. Thank You

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