Streamlining Contracting Processes for Efficiency and Transparency

1. Session 201Engineering Change in Your Contracting ProcessMonday, April 11, 2016 – 10:45am - NoonSpeakers:Lucy Bassli - Assistant General Counsel, Microsoft CorporationMargo Lynn Hablutzel - Assistant General Counsel, Lands’ End Inc.Mark Ross - Global Head, Legal Process Outsourcing, Integreon

2. TOPIC 1: Best-In-Class Contract negotiation Playbooks PART 1: Critical Playbook components Part 2: Benefits of Playbooks

3. PART 1: Critical Playbook components • Process Mapping • Template Management • Documenting Negotiation Practices • Articulating ‘must-haves’ versus ‘nice-to-have’positions • Formulating fall-back positions • Explaining negotiation positions • Enabling continuous improvement

4. Structure for NEGOTIATION Playbook Documenting processes and workflows Capturing templates Standard Negotiation Positions – Issue Based Standard Negotiation Positions – Clause Based Articulating Fall-Back Positions Explaining Negotiation Positions to Counterparty Assigning Weight to Negotiation Positions (risk scores) Continuous Improvement

5. Business Owner Sample Procurement Contracts Process Map Business owner initiates a procurement action Contract Administrator LEGEND Review Committee Associated Document Is contract>$10kor>1 year? Terminate Process No * Yes FREQUENCY • Per contract • Selected contracts Document threshold for initiating a phone call with legal to review overall deal Initiate call with legal / risk to discuss proposed contract • † CRRF Submit contract Complete and submit with each contract a CRRF * * Turnaround Time Target (Days) Playbook / Review Guidelines Review contract, propose language changes, and then route to appropriate Review Committee members per routing guidelines.See routing table. Is routing info complete Standard Rush No 2 1 * Yes Review Committee Conducts review.[Consult business owners as necessary?] Monitor review committee TAT. Review completed within target TAT? Escalatewhen necessary * * Yes 3 1 No Contract administrator consolidates all changes from review Committee, checks for completeness. Are all reviews complete? Generate review-status report and circulate to stakeholders Weekly * Consult and Edit Terms and Monitor TAT No Yes Negotiate any changes with providers Negotiations Complete? 4 2 * No No Yes Authorization matrix Route revised contract for execution per authorization matrix, then collect signed agreement. 1 1 * Send for counter signature and storage Input key terms to tracking database * * End Process

6. QUESTION 1: To what extent has your legal department centrally documented processes and negotiation practices for your commercial agreements? • Little or not at all (most knowledge resides with individuals) • Lightly documented (for example, we have general guidelines for certain issues) • Heavily documented (we have thorough guidelines on processes/workflow, and on negotiation positions and tactics across agreement types, including fall-back positions)

7. Part 2: Benefits of Playbooks • Process Efficiencies • Improving turnaround times • Eliminating bottlenecks • Optimizing Negotiation Practices • Consistent and transparent results • Reduce negotiation cycles  • Enabling delegation of negotiation to lower level legal resources or even to non-legal resources (self-help) • Template & Guideline Improvement • Updating content based on continuous improvement

8. Topic 2: Analytics in Contracts PART 1: INTRODUCING ANALYTICS PART 2: PULLING DATA FROM YOUR CONTRACTS Part 3: Benefiting from Analytics

9. Part 1: INTRODUCING ANALYTICS • Insights into Process/Workflow Management • Insights into Contract Compliance (conformance to company standards/regulations) • Insights into Contract Performance • Service Levels | Milestone Triggers | Discounts

10. Sample Process/Workflow Management METRICS • Progress: In 8 weeks - reviewed 352 contracts (i.e. 3,861 pages in 182 files) • Average Review Time per Contract: 0.63 hours • Accuracy: 99.59% • The new QC regime as per the final ratings given at the Review Meeting has been put in place • We received error report for combined steady state week 6 to 8. The team’s accuracy has been more than 99% in these weeks • 100% uptime Week 8 Operational Issues Technical Issues Performance Statistics

11. Contract Compliance: NDAS – Most Frequent Clause Modification

12. Contract Compliance: NDA Fall-Back Utilization RATES

13. QUESTION 2: What is the most significant barrier to your use of contract analytics? • Contractual data is disorganized and not easily available • Lack of Subject Matter Expertise • Perceived prohibitive cost • I don’t know where to start

14. Part 2: Pulling Data From Your Contracts • Using structured data (metadata) • Building analytics into your process flow

15. Part 3: Benefits OF ANALYTICS Improving Negotiation Practices Risk Management (real-time deviation analysis) Template Improvement (feedback loop) Risk Review Optimization (improved compliance)

16. Topic 3: Mastering workflow/contract triage Part 1: DESIGNING TRIAGE-BASED PROCESS FLOW Part 2: Benefits of triage

17. Part 1: DESIGNING TRIAGE-BASED PROCESS FLOW • Contract Risk Scoring System • Differing levels of contract review • Resource Right-Sizing (mapping resources to risk levels) • Process Design

18. Illustrative LPO Contract Management Workflow Sample Triage Process map “Bridge” Associate Bristol Foreign Language? Front Desk Urgent? Complex? Austin Beijing Boston Johannesburg London Mumbai Noida New York Washington D.C. Fargo Manila

19. Sample authorization matrix for purchasing

20. QUESTION 3: Does your legal department triage contract negotiation based on risk? • Yes – we have a comprehensive and formal process • Yes – we have a partially formulated, basic process • Yes – we have an informal approach (common sense) • No – any and all contracts can be dealt by any given legal resource

21. Part 2: Benefits of triage • Efficient Resourcing • Cost / Time Savings • Case Studies: triage success stories

22. Questions