Archive for the ‘Contract Management’ Category

Arbitration

November 19th, 2014 By Virtual Paralegal Services

No one wants to think their relationship with another party will deteriorate; however, things do often fall apart, for a variety of reasons. Therefore, for those who are accustomed to entering into long-term contractual arrangements, having an arbitration clause in the contract is a good tactical move and will allow the parties to prepare for the worst.

What is Arbitration?

Arbitration is a faster, less expensive, and private process by which all parties agree, in writing, to submit their disputes to one or more impartial persons authorized to resolve the controversy by rendering a final and binding award.

Arbitration is guided by relatively informal procedures. Traditional courtroom rules of evidence are not strictly applicable. There is an informal discovery procedure. However, the arbitrators must make a final decision once all relevant information is present.

The Agreement

The written agreement is used to resolve any future dispute by the use of impartial arbitration. It is the key in a contract for resolution of future disputes; through the contract, the parties have come to an agreement to submit to arbitration any dispute, if and when it arises.

Another key benefit to having an arbitration agreement is it settles disputes over the locale of the proceedings. When the parties disagree, locale determinations are made by the American Arbitration Association (“AAA”) as the administrator, thereby precluding the need for intervention by a court.

The standard arbitration clause may also include reference to the American Arbitration Association’s optional rules for emergency measures of protection, before an arbitrator is sleeved, and for expedited arbitration. If the parties wish, standard clauses may also be used for negotiation and mediation. There are also standard clauses for use in larger, more complex cases. The AAA rules generally provide that any administrative fees be borne as incurred, and the arbitrators’ compensation be allocated equally between the parties. Fees and other costs can be dealt with in the arbitration clause.

Who are the Arbitrators?

The AAA maintains a screened and trained pool of available experts. Arbitrators are impartial and knowledgeable neutrals parties that are chosen to serve. Neutrality is a crucial part of being an arbitrator. Under the AAA rules, an arbitrator can be disqualified for showing any bias.

Usually, there are three arbitrators per dispute. Each party will choose one arbitrator, and the two will then select the third. They are selected for a specific case because of their knowledge of the subject matter; they are viewed as experts. Based on their experience, arbitrators will render an award grounded on thoughtful and informed analysis. The parties can request a reasoned award, and the arbitrators will provide conclusions based on law.

Confidentiality

Arbitration is a private dispute resolution method. Unlike court cases, whose judgments are public, the arbitral award is not released to the public.

Except as may be required by law, neither a party nor an arbitrator may disclose the existence, content, or results of any arbitration without the prior written consent of both parties.

Arbitration is great method of resolving conflicts between parties. Contact us today to learn how to utilize arbitration as a conflict resolution tool to meet your needs.

Bookmark and Share

1099 Independent Contractors – Are you Compliant?

July 3rd, 2014 By Virtual Paralegal Services

In a study conducted by Intuit, 40 percent of the American workforce will be freelancers, contractors, and temp workers by 2020. Even now, many companies are replacing some of their full-time employees with part-time professionals, freelancers, and independent contractors. Some are keeping a present employee, but changing the status from employee to independent contractor. The changing workforce requires employers to be ever more vigilant about the questions and compliance requirements surrounding independent contractors.

Is that former employee – now contractor – or the new contractor truly a 1099 independent contractor or does he/she require a W-2? The difference is significant. You withhold and manage taxes for employees; while independent contractors pay their own based on the 1099s they receive (Form 1099 is the independent contractor’s equivalent of a W-2). The IRS expects you to know the difference between a W-2 employee and a 1099 independent contractor. In addition, you must make the correct annual filings with the IRS for both W2 employees and 1099 contractors. If you get it wrong, the penalties are high.

So how do you know the difference?
Ask the right questions.

1. Do you set the hours or does the worker set his or her own hours?
2. Naturally, you know what work you want accomplished, but who sets the guidelines for how, when, and where the work will be accomplished – you or the worker?
3. Does the worker furnish his or her own tools and equipment and hire his own assistants if needed?
4. Does the person have a workplace, home office, equipment storage, etc. that belongs specifically to him and is at a separate location from your business?
5. Does the individual work only for you – or is he/she free to obtain work for other companies simultaneously?
6. Do you set an hourly wage/salary or does the worker set his/her own rates/commissions per job?
7. Do you receive an invoice from the worker for his services?
8. Did you sign a contract for the work he/she is accomplishing on your behalf?

Using independent contractors to perform a multitude of tasks is beneficial for most businesses, involving far less liability and obligations than W-2 employees, and potentially eliminating the provision of employee benefits, insurance, tax withholding, etc. It is crucial; however, to not only classify an individual correctly, but to understand 1099 compliance.

Before hiring an independent contractor and signing a contract:

• Assess the independent contractor’s business and require pertinent documentation.
• Ask the independent contractor to complete a questionnaire specific to 1099 workers. Include a checklist that helps to determine if the worker is accurately classified as an independent contractor versus an employee.
• Sign a written contract with and maintain a separate file for each independent contractor. This file may include, but isn’t limited to the following documentation:
1. Copies of tax returns showing the contractor filed a Schedule C for the past couple years if he or she is a sole proprietorship
2. Copies of 1099 forms by other companies for whom the consultant has provided services
3. Professional licenses and proof of insurances
4. The signed independent contractor employment agreement and any other drafts of it
5. W-9 form signed by the consultant
6. List of equipment and materials the 1099 professional will use to perform services and costs
7. All invoices submitted for billing purposes

Written contracts are imperative and protect both your business and the independent contractor. Make sure your agreements include an Independent Contractor clause that clearly identifies the roles of the parties. Also, make sure you are managing your 1099 contractors and tracking 1099 payments correctly in order to comply with annual filing requirements.

Hiring independent contractors can be a tremendous benefit to your business.Contact Virtual Paralegal Services. We will help you create your questionnaires, draft your contracts, and help manage and maintain 1099 compliance.

Bookmark and Share

Contract Playbooks: The Reason to Outsource your Contract Lifecycle Management test

June 26th, 2014 By Virtual Paralegal Services

The contract process in many companies is often a conglomeration of fragmented procedures and labor-intensive processes. Key players don’t have the visibility they need to understand contract terms and conditions, compliance, governance, or analysis. CLM software promises to streamline the process, but every company is unique in its requirements and best practice procedures for investing, or any contract-based professional course of action. Outsourcing your contract lifecycle management to a paralegal service, instead of one-size fits all software, brings rich rewards. A significant plus factor is the Contract Playbook, which is custom-designed for each individual business based on that business’ past contracts, priorities, practices, investing guidelines, acceptable compliance limits, etc.

Creating a contract playbook begins by evaluating all present contracts and the creating a code of standards for all future contracts.

For example:

Parties and Forms of Agreements
The first chapter in your company’s playbook will likely deal with issues related to the contacting parties and the permitted and preferred forms of agreement. It establishes acceptable party information. Concept of purchase orders, and standard contractual terms-including term length and acknowledgement – are also typical. Additional guidelines cover signing authority and requirements.

Additional chapters in the contract playbook typically include:

  • Acceptance of goods and conditions
    • Inspection
    • Nonconformity
    • Delivery timeframes
    • Indemnity – IP infringement and other causes
  • Insurance
  • Liability Limitations
    • Risk
    • Damages
    • Cumulative
  • Terms of Payment
    • Price
    • Discount
    • Interest
  • Termination Rights
  • Warranties
    • Intended use
    • Product specifications
    • Non-conformity
    • Representations
    • Conditions

Additional miscellaneous provisions may include information about attorney fees, general releases, lien waivers, party relationships, mutuality, notices, audit rights, arbitration and dispute resolution, Force Majeure, and governing law.

Your company’s contract playbook is customized, and then updated with each new contract. It provides quick and easy access for all personnel involved in the creation, negotiation, and/or approval of a contract, guiding each step of the process, including “language” samples in each section. The playbook provides guidelines for negotiation, approval, tracking, and contract analysis. Finally, a customized contract playbook helps to ensure compliance to contract milestones.

Organize and simplify your contract process. Save time and resources by outsourcing your contract lifecycle management to the experts. Contact Virtual Paralegal Services to learn more.

Bookmark and Share

Creating the Win-Win Contract

May 29th, 2014 By Virtual Paralegal Services

Creating win-win contracts has less to do with bargaining, compromise, and competition and much more to do with reaching a mutually beneficial business-to-business relationship. When the contract is completed and signed, both sides of the negotiation should walk away feeling like they were listened to, understood, and dealt with fairly. Both sides should feel confident that they achieved their goals and the contract will be honored. Finally, there should be a sense of looking forward to continuing their business relationship with the other party.

This is possible when both businesses:
• Strive to understand the other business’ needs and desires
• Attempt to solve problems on both sides of the equation
• Maintain a mindset of flexibility, rather than rigidity
• Focus on enlarging the pie rather than dividing it
• Aim for win-win outcomes

When creating the contract

Focus on key issues:
• Value: what is an accurate representation of the value being exchanged, not just monetarily, synergy value, etc?
• Performance: conformance to an agreed upon set of requirements and clear criteria for when those requirements are met
• Expectations: specified itinerary of actions, events, milestones, and completion
• Budget: systematic plan for expenditures – who owes who what; when is it due, how is it to be paid
• Liability: what is a fair allocation of liability and limits to that liability?

Define:
• Each party’s responsibilities
• Exactly what constitutes conformance
• Elements critical to success
• Definition of terms
• Identify external variables
• Specific task, events, and milestone schedule
• Liability and risk

Communicate:
• Paraphrase each other’s statements’ to affirm understanding
• Avoid finger pointing – use third party evaluation when appropriate
• Keep issues in writing
• Focus on the goal
• Ask questions

Establish
• Limitations of liability
• Indemnities
• Dispute resolution procedures

Consider clauses
• Recognize which party benefits from clause and which one will benefit from the default at law
• Have a clear picture of which party is more likely to breach the contract and which one is most likely to suffer damages
• What are the underlying interests of each party
• How should risk be allocated

In the end, win-win contracts share multiple traits
• User friendly – both parties find them easy to understand
• Concise
• Simple to add-on new agreements rather than having to renegotiate
• Uncomplicated contract administration

When both sides focus on creating a win-win contract, and follow sound principles for creating those contracts, they significantly increase their chances of long-term mutually beneficial relationships. Contact Virtual Paralegal Services.

Bookmark and Share

Contract Lifecycle Management

May 7th, 2014 By Virtual Paralegal Services

The foundation of every business and its relationships is their contracts. These contracts define procurement, sales, marketing, finance, legal, and human resources. They specify every detail, responsibility, and expectation connected to the business. Managing these contracts effectively and measuring their performance is a key factor in business performance. Outsourcing “contract lifecycle management” is a sound investment that yields improvements in efficiency, reduces risk, and increases visibility.

Improves Efficiency

Streamline contract creation
Virtual Paralegal Services (VPS) creates a customized contract negotiation playbook for each client. From this playbook, we create and negotiate all your contracts. VPS starts by abstracting all of your existing contracts to begin building your contract playbook. From there, VPS reviews your default positions and creates varying levels of negation strategies using fall-back positions. Contract drafting, review, administration, and management create contract continuity and offer specialized processes based on your business needs. Furthermore, your customized playbook keeps getting smarter as VPS negotiates new and updates existing contracts.

Introducing flexible and unambiguous workflow for the process
We maintain workflow by routing contracts to pertinent internal parties for review and approval, using a configurable set of contract variables, including contract type, product or service being exchanged, monetary value, and risk level. Our systemized process means measuring contract turnaround times in days, rather than weeks.

Utilizing legal resources efficiently
Utilizing our contract lifecycle management services, frees your in-house legal team and/or company administration to focus on the business itself. In addition, it not only eliminates the prohibitive hourly rates of external review; ongoing knowledge, and growth stay within the company.

Reduces Risk

Assessing and mitigating risk
Most companies have multiple contracts (from hundreds to tens of thousands) and find it extremely difficult to impossible to manage ongoing obligations and maintain an accurate assessment of risk exposure. VPS contract lifecycle management services eliminate the problem through a proactive management approach. Critical dates and obligation requirements are managed by VPS. The business is notified and alerted to actions required in order to comply with contracts as well as mitigate risk.

Providing access to pertinent parties
Contract information is centralized and organized. Executives and managers can access the information they need, understand it in context, gain contract performance insights, and use it to their company’s advantage, while preventing access to all others.

Pertaining to corporate, industry, and governmental
This not only reduces regulatory penalties, but also enforces corporate policies. By carrying compliance items to a contract, a contract lifecycle management solution ensures the inclusion of the corporate policies and procedures that provide the level of auditable governance required by compliance legislation.

Verifying contractual obligations are fulfilled
By confirming that both parties meet their obligations, and that reporting requirements are properly completed, companies maximize their best return on their contracts.

Increases Visibility

Contract Performance Dashboard
VPS provides a monthly dashboard providing visibility into overall contract performance and value. The dashboard includes key metrics important to your business such as active contract value, contract value under negotiation, expiring contract value, etc.

Ensuring milestones are met
VPS creates a notification and alert system to ensure notification requirements are met. For example, this can include reporting dates, performance comparisons, alerts for renewals and terminations, and renewal dates for contract-required insurance.

Dealing with renewals
VPS will automatically send notification of auto-renewal dates. This enables managers to evaluate the contract’s performance, and possibly negotiate improved terms with the client.

Contract Lifecycle Management is not just a business option; it is an essential for ultimate stability and success. Contact Virtual Paralegal Services. We will enhance your company’s growth strategy through contract lifecycle management services. Phone: 888-600-4992 Fax: 508-318-6342

Bookmark and Share