It's time to review your contracts - quickly and confidently
Immediately prior to the election, the Labor Party confirmed its ongoing support for extensive changes to the Unfair Contract Terms (UCT) regime. These reforms include making unfair contract terms illegal (with associated penalties) and extending the application of the legislation to a wider variety of contracts and party types (including supplier). It is essential for Legal, Contracting and Procurement leaders to understand the reforms – firstly because the Labor Government has identified these reforms as having lagged over recent years, and secondly because we expect that the legislation will be re-introduced imminently. Now is the right time to start your reviews and identify the potential for non-compliance.
It is also important to consider the wider context of these reforms, with many recent regulatory and societal changes also requiring close analysis of contractual arrangements including payment times reporting, modern slavery statements, climate transformation, social procurement shifts and Privacy Act compliance. In light of these developments, 2022 is shaping up to be filled with multiple rounds of contracts review, often requiring teams to pore over the same documents with several regulatory lenses – further tying up already stretched resources.
However, these reviews don’t need to be so cumbersome or repetitive. Legal, Contracting and Procurement teams should turn their attention to streamlining multiple rounds of review into single processes, and setting up technology solutions that reduce the burden of manual review.
Why use technology to optimise a contract review process?
Employing technology throughout the contract review process will enable businesses to tap into long term benefits such as reducing costs and review times, freeing up legal resources to focus on more complex legal issues and unlocking insights from the contract database.
These reforms will require businesses to understand and assess their contract, customer and supplier databases for compliance with the updated requirements of the UCT regime. Reviewing and remediating for potentially unfair terms is just a small part of ensuring the strengthened penalties do not apply – you need to understand your customer and supplier ecosystem and how you contract with them – and this requires a technology-led approach to avoid significant disruption to business-as-usual activities.
Our 5 key tips for successful technology-led reviews
To make a success out of a large-scale, technology-led review, there are five key steps to consider for effective program design:
Seizing the opportunity to build a business case for contract review technology
Seemingly large and expensive integrated solutions to single problems like UCT reforms may not always be seen as valuable opportunities. However, with the number of regulatory requirements relating to contracts increasing and ever-changing, an investment in technology and tools today could create significant future benefits for legal teams. The earlier reforms tabled a significant penalty of up to $500,000 for individuals, or for corporations the greater of $10 million, three times the value of the benefit derived from the contravention (or 10% of annual turnover). It is expected these penalties will be reflected in the new bill and should provide a solid business case for investment.
Get in touch
Deloitte has an integrated team of experts who can support you in optimising and executing contract review and legal operational services. Our proprietary technology Deloitte Cube is an award- winning document classification and analytics capability that has been successfully used in similar programs. With leading contract review tools encompassing machine learning that identifies clauses across various contract types and expertise in contract workflow tools, we configure our solutions specifically for bespoke needs.
Please get in touch for a discussion regarding legal contract review and technology solutions.