‘The reality is that we do not know on what terms we would win access to the single market. We do know that in a negotiation we would need to make concessions in order to access it, and those concessions could well be about accepting EU regulations, over which we would have no say, making financial contributions, just as we do now, accepting free movement rules, just as we do now, or quite possibly all three combined’- Theresa May, UK PM, April 2016
What do the Brexit uncertainty and business enterprises have in common? The VUCA factor i.e. volatility, uncertainty, complexity, ambiguity. One thing that business leaders can learn from the Brexit imbroglio is to have a proper contract lifecycle management (CLM) software in place with provision to include unpredictable events and new developments into the agreements. Britain’s sudden decision to leave the EU left many top business executives in the UK, in limbo, as to the possible economic fallout and legal implications of the escalating political crisis and currency fluctuations. The ones who had full proof, future proof contract strategy in place, are spared the risk and can better manage compliance requirements. Thus, a digital, easily accessible, secure contract management system is vital, which can dynamically be suited to everchanging needs and evolving conditions, including force majeure events.
Some key learnings from the Brexit impact that business that adopts and put to practice are:
- Negotiation is not enough: Talks can help navigate decisions in a particular direction.However, it is imperative that talks are crystallized into a contract and covered under Obligations & agreement terms so that there is absolute clarity and no scope for confusion or misunderstanding between the parties in the future.
- Digital is the way to go: Gone are the days when a purely manual, a physical contract agreement was signed between parties to solidify the terms and conditions. A physical contract may not be able to incorporate changes of the kind and scale required in today’s times. Often, one would need to proactively include changes in the clauses, a facility which is possible only in a digital medium, with a centralized repository.
- Considerable savings in time: According to survey Brexit impact would require a whopping 208 man-years of effort to put on paper the contracts of a single large UK organization. This is based on a conservative estimate of around 19000 contracts and an average time of 4 days per contract. On the other hand, in case of a new age CLM Software, the same documentation would require mere 65-man days, with each contract expected to be completed in about 5 minutes. This is a good example of the huge, positive impact that a digital CLM software can have.
The need to have a properly executed and appropriately management contract must be understood and appreciated. The Brexit has made it difficult to predict Britain’s power to negotiate deals with the EU and its trading partners, globally. This is because, post-exit, Britain would have to disassociate itself from EU laws and renegotiate new international agreements and treaties. This would have a domino effect on the movement of people, goods, and money globally. The quantum and scale of legal documentation is huge. Thus, a key takeaway from this Brexit situation for business firms is to have a good legally executed contract in place. A CLM is vital to ensure that business units do not land in a soup at a later point of time, owing to differences in understanding of the legal contract with the client or the vendor, which may also result in the eventuality of legal disputes. In matters of business, it is always better to stay safe than sorry.