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Contracts: The First Step in Reducing Legal Ignorance
Most CIOs believe that the first step toward legal literacy is to focus on the basics: contracts.
The CIO cannot do this alone. Most IT professionals lack the training to wade through the truly incomprehensible legalese to understand what's really going on in a contract. Indeed, of the 130 senior IT leaders contacted, only one had any formal legal training. Asked whether he reviews contracts, the CFO of IT at a midmarket financial services organization responds, "I don't. I am dependent on my staff or the specific compliance departments to provide the information."
Indeed, hiring or engaging smart people in your organization who know more about contracts than you do is a tactic our respondents often employ.
The CTO at a mortgage finance company is pleased to report that he has "centralized all of my contract negotiation with my technology controller. He and I, along with legal, negotiate these deals. We use subject matter experts to better understand what we need, but keep it focused. I have centralized all of our compliance tracking within our PMO [project management office]."
"I have built a team of contract specialists that I hired out of the aerospace field," says the CIO at a global manufacturer. "They have heavy experience in working with technology-related contracts and how to bridge between the legal department and the purchasing department. They do all the work on ensuring the contract language and negotiations are handled according to our standards. I don't sign anything that doesn't have their stamp on it." Neither does the CIO at a state agency. "I must see general counsel initials and CFO initials prior to any signings," he says.
The CIO at a midmarket lifestyle company says, "I take this function very seriously, so I have resources with contract negotiating skills and legal terms and conditions. One has a law degree but prefers the business aspects of contracts. Once we are comfortable, we then work with legal to provide final reviews."
The CIO at an energy company believes in using procurement experts, but they have to know something about IT. "We use an internal procurement department for this, but I am considering the need to recruit some IT-focused expertise," he says.
Negotiations, a major part of any contract, are "as much an art as science," says the CTO at a government regulator. "Negotiation skills are critical. Understanding how to execute and operationalize a contract is critical."
Training can help. The CFO of IT at a midmarket financial services firm isn't the only respondent who recommends that CIOs take a course in contract law and some negotiations training. The CIO at a life sciences company counsels that leaders should "not stick their head in the ground. Get educated, and request help whenever in doubt."
The IT compliance manager at a pharmaceutical company agrees. "We should take advantage of seminars and other learning opportunities," he says. "There probably needs to be more of them. The problem is to convince IT-ers to recognize that they need to attend them."
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