Scottish & Newcastle group's innovative "Pathclearer" approach to commercial agrements

Lawyers spend a huge amount of time drafting and negotiating detailed commercial contracts for their clients. However, the in-house legal team at Scottish & Newcastle plc (“S&N”) believes that in many cases detailed contract terms are unnecessary and can be a waste of time and resources for the businesses involved.

A paper problem

Our small team of lawyers at S&N was overwhelmed by paperwork. Often the big legal issues facing our business were hard to spot because of the sheer volume of paperwork that passed across our desks every day. Certainly, S&N is not the first to identify the need to implement an approach to drafting that is more pragmatic, commercial and efficient.  What we did, though, was develop a novel set of tools – called “Pathclearer” – which helped reduce paperwork and better identify legal risks.

Mutual understanding

We worked on the principle that in many cases detailed contract terms are unnecessary and can be a waste of time and resources for the businesses involved. Relying more on the common law and seeking to create commercial affinity rather than a legal straitjacket, the Pathclearer approach has proved to be effective in improving both the time taken to produce contracts and the effectiveness of these agreements. The commercial teams on both sides remain at the heart of the deal, openly discussing the key commercial concerns and gaining a better understanding of each other’s expectations. The result is a more honest and understandable relationship that is founded not on a piece of paper, but rather on the basis of mutual benefit.

Legal team’s added value

As well as finding commercial teams more actively involved in the contract negotiation, the speed with which terms can be agreed means that S&N is able to seize and realise more opportunities, some of which may have been lost in the quagmire of a more traditional legal approach. S&N and its business partners know what to expect both from each other and from their legal document. They know the contract is not an insurance policy, nor will it cure all future ills. 

S&N’s legal team is able to deliver a more efficient legal service, quickly clearing the path of the “dross” and in so doing, identifying key commercial issues (rather than slavishly arguing over the usual legal points). By adding value to the business process in this way, S&N’s legal team maintains its position at the heart of S&N’s business, able to identify and manage legal risk while reflecting commercial realities.

The year just ended saw a national rollout of Pathclearer in an effort to engage businesses and lawyers in debate about the applicability of this approach. A number of seminars and presentations have been given, including but not limited to the Forum on Commitment Management, a conference hosted by the International Association for Contract and Commercial Management, and Legal Risk Management, a seminar organised by the CLO Programme and hosted by Lloyd’s of London. For those interested, a detailed article on Pathclearer in PLC Magazine can be found on the www.practicallaw.com website.

Graeme Colquhoun is Head of UK Legal at Scottish & Newcastle plc


MEET YOUR COMMITTEE

The In-house Lawyers Group committee has been reviewing the service it provides to members. In recent years the committee has increased the number of seminars and introduced videoconferences to assist those outwith the central belt with their CPD requirements. It has also produced a Guide for Inhouse Lawyers and developed ILG’s own pages on the Society’s website. However, there must be other services the committee could develop.

In order to find out what members would like, committee members propose to visit each area and talk informally to members – to get a feel for what concerns, needs, desires there are which the committee could address. These visits are planned for January/February 2007 and would take the form of an informal evening get-together with 6-12 people. If you would be interested in attending one of these meetings or inviting the committee to visit your area, please contact the committee secretary, Tricia Sim at triciasim@lawscot.org.uk .

COMING SOON… next up on the seminar programme

Wednesday 31 January: Cartel Investigations – What all Inhouse Lawyers need to know

Speaker Catriona Munro, Maclay Murray & Spens. This will be hosted by Maclay Murray & Spens and videolinked between their Glasgow and Edinburgh offices. If there is sufficient demand, they will also link to Aberdeen.

Tuesday 6 February: EU Procurement – Recent Key Developments

Speaker Jennifer McEwen, Pinsent Masons. This will be hosted by Pinsent Masons at their Glasgow offices.

Tuesday 13 February: Policy & Influencing

Speaker Fiona Killen, Anderson Strathern. Venue: The Law Society of Scotland. This will be videolinked to Glasgow, Aberdeen, Inverness, Lerwick, Motherwell and Borders.

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