Andy Nurumov

Author: Andrew Nurumov

Till the moment a CEO has 100 employees in a company he/she cannot allow to have an experienced Head of legal and/or a Legal department in the organization on full-time basis. At the same time, CEO saves enough money, reputation, and time, knowing how to operate efficiently in this environment. Advice is important in a B2B business space, in particular. 

GIST.

6 activities below are important to execute. 

Must do activities in your organization: 

1. Match your operational KPIs with counterparties’ contractual terms
2. Standardize key legal terms with counterparties to save your employees time
3. Minimize uncertain scenarios in your operations to save you money and time 

For CEO: 

1. Have hierarchy of contracts and a review system in a company
2. Know what to read in contracts 
3. Know how legally formulate business terms, that is relevant for your business specifics 

GO DEEPER.

I. Match operational KPIs. If you outsource part of your production, logistics, IT, customer service, or some in-house function, SLA (Service Legal Agreement) contract terms matter to achieve your business operations KPIs. Knowing your operational KPIs, implement it “smartly” in contracts when it makes sense. 

II. Standardization of key legal terms. The larger a counterparty is, the less standard contract it expects from your organization. Always know what terms almost non-negotiable because of related costs for your company and explicitly communicate it to the counterparty. 

III. Minimize uncertainty. Nothing is only black and white. The same is true for your relationship / activities with counterparties. Your company contracts have to be as detail as it allows comfortably to operate with counterparties, as well as your employees understand what to do. Quite important comment for logistics part of operations. 

IV. Hierarchy of contacts & Review system. CEO gets dozens of pages of contracts / legal documents to sign weekly at growing stage of business. Tackle this without materiality consideration is not possible. Second, relevant employees at your organization have review contracts before CEO looks at them. Mainly CEO has to make decisions in divarications. 

V. What to read. Without prioritization it’s easy to skip important part in a contract. Frame what in contracts you are looking for and focus 80% of your time on that.

VI. Legal formulation. Assuming that a lawyer writes a contract with counterparty without many details from you is a mistake. You should know your business legal issues and right wording. Moreover, specialization here is even more important. Experienced lawyer with no M&A specialization does not say to you all important terms for an M&A deal contract. Therefore you have to know at least law terms that is relevant for your business issues. If you at stage zero at law currently, start, for instance, from basics: British common law (I did it one decade ago). Nobody benefits from lack of legal knowledge, neither CEO nor company.