United States: LPO And The Future Of Contracting: 4 Tips

For many corporations the traditional staffing model for procurement contract drafting, review and negotiation is based on a method that is both labor-intensive and cost-prohibitive through reliance on expensive in-house legal resources. Many of these resources are over-priced for the task of reviewing and negotiating a company's repetitive, lower-complexity contracts. Given the unrelenting need for these services, however, in-house lawyers and contract specialists are finding themselves overwhelmed with unrealistic demands on their time. The time investment required to negotiate high-volume, routine contracts can adversely impact the ability to review and manage more important, higher-risk contracts. The potential consequences to the business as a whole are clear: either incur increased risk resulting from the business avoiding the legal department in order to expedite purchasing, or suffer delays in the procurement of goods and services.

As far as workflow is concerned, often there are no formalized processes, standard templates, accepted language, back-up provisions or guidelines for turnaround times. Over-burdened in-house lawyers are unable to meet the tight timelines demanded, creating a conflict between the business client and the legal department. Often, the legal department will engage external law firms to help on an hourly rate basis—leading to an unpredictable and potentially inefficient use of internal legal resources, and an overpriced dependency on outside counsel.

Microsoft Corp. was not immune to these challenges. In 2009, the company realized that the existing paralegal resourcing model for procurement contract review was unsustainable. The legal department resources were contending with a growing volume of procurement contracts while concurrently seeing a spike in demand for their involvement in more complex transactions. The turnaround time for review of a standard statement of work was averaging three days. And this actually represented an improvement, since there was at least a measured baseline. But managing the growing number of paralegal resources was becoming overwhelming, and there was no hope to scale the model globally.

Tip 1: Understand Your Processes

Before engaging in contracting transformation, take the time to understand your "as is" process. Map this out and identify areas for improvement. Only then are you in a position to decide what activities if any are redundant and can be eliminated, what can be outsourced and what needs to be kept in-house.

Microsoft took on this challenge and initiated a dual-track effort to study their internal procurement contract review processes while assessing the opportunities afforded by legal process outsourcing (LPO). They quickly understood that contract review involved repeatable steps, and that the high-volume and low-risk nature of these contracts made the work ideally suited to LPO.

Tip 2: Create a Comprehensive Playbook

Outsourcing contract review effectively is predicated on successfully transferring knowledge from internal stakeholders to the LPO provider. Integral to this is the playbook—an outline for best practices that includes approved templates, negotiation positions, and sections outlining standard operating procedures, escalation protocols and decision matrices.

So in May 2009, following a rigorous selection process, Microsoft selected Integreon as its LPO partner. The relationship started with a team of seven paralegals in Fargo, N.D., supporting procurement contract review. Integreon and Microsoft worked together to define the key performance indicators that would underpin the engagement and created a playbook—an extensive manual—that documented the entire process.

Initially, Microsoft outsourced only the legal review of vendor contracts, but as the Integreon team gained familiarity with Microsoft's processes, the engagement expanded to other types of contracts. The expansion also included Integreon becoming the first point of contact for Microsoft's internal business clients. Whether an issue should be escalated followed a process documented in the playbook. The result was a dramatic reduction in the time spent by Microsoft's in-house legal team reviewing contracts and answering basic questions, freeing them to focus on higher-value work. The collaboration and integration of the Integreon and Microsoft teams ensured that the engagement realized short-term successes and laid the groundwork for growing the program.

Tip 3: Innovate Through Automation

Understand what platform is the best fit for your environment, budget and tolerance for change. Enterprise-wide, multifunctional platforms may be just what the doctor ordered for some, whereas others may find such systems far too complex (and expensive) for their needs—especially if the end result is that only a fraction of the tool's functionality is used.

For Microsoft's lawyers, in addition to realizing the benefits of lower-cost LPO resources and the process improvements that result from working with an LPO provider, they understood that the technology underpinning contract lifecycle management (CLM) played an equally important role in driving further efficiencies. While ahead of the pack in many respects, true transformation would still lie beyond Microsoft's reach without revitalized technology supporting the process.

Microsoft already had some experience automating a contract process when it launched a nondisclosure agreement tool to its global employee population of more than 100,000 several years earlier. This offered a streamlined way for employees to create an NDA quickly, and without the legal department's involvement. The tool's success was dependent on a good and simple template and efficient electronic signatures, and was a perfect smaller step in the larger contract automation journey.

In April 2013, Microsoft embarked on an effort to select a scalable CLM platform. It understood that to reap the benefits of a new contracting system, it would need to scope precisely the functions to be automated and control the input of data into the system. After selecting the new platform, Microsoft asked Integreon to provide the ongoing administrative support for the platform: managing the intake of contracts for storage and ensuring the consistency and accuracy of information. In essence, a new contract "help desk" was born.

Concurrently, Microsoft focused on automating other aspects of the process. It leveraged its own Office 365 capabilities and Azure scalability to build a sleek yet simple online intake system for its employees, allowing for collection of critical contract data and visibility to the business on the status of their legal requests. This way, Microsoft could keep track of how many requests were pending, what types of requests they were and where they came from. Expanding on the help desk managed by Integreon, Microsoft now had a one-stop shop for a variety of contracting services—from legal review to electronic signature and storage. By leveraging a combination of technology, improved process and creative resourcing, Microsoft blazed the trail for the future of contracting in larger in-house legal departments.

Tip 4: When Everything Is Great, Stay Involved

Once steady state has been reached, the inclination may be to say, "Job well done," and call it a day. But this is not a recipe for success. Stay involved and continue to look for opportunities to innovate and work with the LPO provider to drive continuous improvement.

Although many corporate legal departments start the outsourcing journey with the best of intentions, over time the internal champions get pulled on to other pressing engagements and the level of involvement can wane. This can prove detrimental to the longer-term success of the relationship. With Microsoft and Integreon, it has been the opposite. The ongoing involvement of key Microsoft personnel and the continued focus on efficiencies within its legal department has encouraged the expansion of outsourcing in scale and breadth and enhanced automation. This has directly translated into time savings for legal professionals and faster contracting for the business.

Integreon supports Microsoft's review of approximately 24,000 contracts annually in 15 languages across 160 countries, and provides contract help desk services and administrative support for the new CLM platform from centers in the U.S., U.K. and India. The help desk also serves as a resource to which the in-house legal team can direct clients for general contracting questions. The results have been transformational, with the average turnaround time for legal review dropping from three days to less than one, and the percentage of contracts reviewed within the agreed upon turnaround time increasing from 86 percent to 99 percent. At the same time, Microsoft's costs for contract review are now predictable and the operating model optimized for future scaling.

The last five years have seen significant change in the sourcing and deployment of legal resources, particularly with growth in the adoption of LPO. It has become clear to Microsoft that the most effective model is a symbiotic ecosystem in which legal departments and LPO providers both play crucial roles. Under this new model, with legal departments embracing process improvements, technology and resource redistribution to providers like LPOs, efficiencies can be driven not only into the contract review process, but across the entire legal department. As this new model takes hold, Microsoft is challenging the traditional notions of how legal work should be done and positioning itself as a thought leader in the innovative, cost effective technology-enabled delivery of legal services.

Originally published by Corporate Counsel.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions