Brexit is coming. The United Kingdom faces some intense negotiations in its process of leaving the European Union by March 2019, and we still don’t have a clear idea of what will change. So how can you maximize the strategic value of your contracts?
It’s clear that changes will happen and that they will affect many corners of international business. As your in-house legal team begins to assess how the new legal framework that arises from Brexit will affect your existing contracts, you must first ask a basic question: How well do you actually know those contracts?
Contracts are a valuable asset
Your contracts are the lifeblood of your business. They govern sales, supplies of goods and services, delivery, people, outsourcing, support, maintenance, investments, financing, and more. They include pricing, commitments to specific behaviors and delivery deadlines, and expectations about how disputes will be resolved. Many contracts negotiated before the June 2016 vote or now, when the Brexit process is still unclear, will still be in place next year on the March 29 transition date. Yet legal and regulatory changes from Brexit, as well as economic changes, could have major effects on contract viability.
Brexit changes could introduce significant contract risks
Potential risks from Brexit include:
- Unprofitable commercial terms: Currency fluctuations, tariffs, or other price shocks could force companies to buy or sell under unfavorable terms. And this isn’t just a risk for your organization—it could have a negative impact on the partners upon which you depend.
- Missed deliveries: Goods or staff could be more difficult to move across geographies.
- Regulatory costs and non-compliance: A separation between UK and EU regulatory systems could increase your costs by requiring separate regulatory compliance processes or reporting. Or,
- Jurisdictional confusion: Contract clauses dictating a specific dispute resolution process or jurisdiction for court proceedings could become outdated or unclear, putting you at a legal disadvantage.
The details within each contract are the keys to understanding these risks, quantifying the potential impact, and taking the right steps to mitigate them.
How to get to know your contracts better
For many organizations, contract visibility is the biggest barrier to knowledge. Contracts are spread all over the organization and are inaccessible to legal and finance teams who must evaluate Brexit risks. If you’re based in the United Kingdom or do business there, now is the time to bring your contracts into a contract management system like OpenText™ Contract Center.
With centralized contract management, contracts reports and analysis, best-practice guidance and guardrails for contract creation, and powerful process automation to drive efficient reviews, OpenText Contract Center will help legal teams to get a handle on current contracts while making better decisions about new contracts whose lives could span the transition to Brexit.
Shed light on the most troublesome terms
In addition, getting your contracts into a contract management solution makes them much easier to analyze. For example, you can automatically capture paper documents or scanned images using OpenText™ Capture Center. OpenText Contract Center supports integration with Capture Center, as well as OpenText™ Content Analytics, to extract key contract terms and clauses. This makes it much easier for your legal team to identify which contracts contain terms or language that may need to be amended.
Set the stage for Brexit now
It’s clear that organizations doing business in the UK need an effective system for managing and reporting on contracts, in order to implement changes and mitigate risks. Your legal team will need to be able to instantly access contracts, search for key clauses, assign team members to negotiate amendments to existing contracts, and establish governance processes to generate clean contracts as the details of Brexit become law. OpenText is here to help you thrive with agile contract and compliance processes.