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Contract Version Control
Within the Intellectual Property Enterprise, contract
version control is a constant headache. This seemingly irresistible chaos is
resolved by introduction of an integrated contract administration, workflow
and finance system. Boilerplate language, standard
templates, historic agreements, negotiation revisions and ongoing updates to
in-force agreements are then efficiently compared, tracked, understood and
announced within the organization. System 7 offers three specific
tools to aid administrators, accountants and legal professionals in their
quest for confidence and control in this critical arena: Version Tracking,
Redlining Comparison and Contract Revision Posting.
New Contracts
Contract negotiations are inherently dynamic and
unpredictable in their course. Administrators face the perpetual challenge
of bringing order and efficiency to this process while maintaining its
vitality and creativity. Major agreements may be negotiated over a period of
weeks or months with the potential for hundreds of revisions. Semi-automated
revision tracking tools, such as those found in word processors, require
tremendous discipline and finesse when the number of submission-review
cycles exceeds three or four.
In manual environments, administrators and legal
assistants are charged with using word processing tools to establish major
contract negotiation versions, validate their contents for completeness and
accuracy, and store those working documents in a logical and accessible
manner. This time worn methodology may be practical (although labor
intensive) in support of active negotiations, but falls apart months or
years later when an urgent need for research arises.
Documents, notes and negotiator responses are often lost forever (or
hopelessly buried) within an impenetrable filing system. Routine
disagreements, amendments and renewals become unnecessarily challenging as
the intentions behind disputed contract clauses are obscured over time.
System 7 enhances the
contract creation, revision and comparison process to facilitate
administrative responsiveness while ensuring perpetual access to all
relevant negotiation and amendment documentation. “Shock and Awe”
legal tactics are promoted through the nearly instantaneous production of
standard agreements whose comprehensiveness and elegance quickly intimidate
opposing counsel into submission on most points. System 7’s Contract
Template and Boilerplate Language repository acts as a convenient
and accurate resource for precision Document Assembly of a fully executable
first draft.
This draft becomes the basis for Version Tracking and
Redlining Comparison of as many negotiated versions as may be desired.
Current renditions are saved, described and
identified with the press of a single button at any stage of the process.
All versions are numbered sequentially and stored in perpetuity within the
System 7 Universal Contract Database. Standardized agreements, for
example, might benefit from tracking only “first draft” and “executed”
versions. More sophisticated contract negotiations could benefit from
creating a new version to record each submission and response cycle. The
possibilities are endless.
Once a contract version has been established,
Redlining Comparison between this version and any prior or subsequent
version is available. This process can be of
particular value in performing a final quality assurance summarization of
all changes agreed to between first and final drafts. Redlining
Comparison is used to compare any two specified versions without regard to
interim changes. In other words, it makes no difference whether the
comparison is between versions 1 and 2, 6 and 15 or 19 and 20. The output of
Redlining Comparison is the traditional “green
underscore” for additions and “red
strikethrough” for deletions. Sensitivity controls are
provided to assure that text blocks of optimum size are compared and
presented.
Quality Assurance
The results of Redlining Comparison are presented in
the form of a Contract Summary Report enhanced to offer Version Selection,
Presentation Sensitivity and Applicable Sections controls.
While the above discussion has focused on the use of Redlining Comparison to
approve new contracts, this technology has the
potential to revolutionize the entire contract administration function.
Specifically, Version Selection is not restricted to versions within a
single contract, contract type or contracting party. Redlining Comparison
may be performed between any two contracts within the System 7 Universal
Contract Database, without limitation. Sales agreements may be compared to
Agency agreements. Acquisition agreements may be compared with Production,
Participation, Sub-Acquisition or Creative Agreements.
Any agreement may be “primary” or “secondary” in the
comparison process without regard to dates, differences in length or subtle
organizational distinctions. Applicable Sections controls offer
administrators the opportunity to focus their analysis on current areas of
concern by eliminating irrelevant terms and conditions from consideration.
In comparison, Word processing redlining is notoriously restrictive and
unreliable.
For example, negotiations for a major new agreement
might involve the possible imposition of a “most favored nations” clause
regarding Expense Reimbursements. Negotiators may suddenly need to know if
there are any pending or recent agreements that would put them in risk of
litigation if this term were agreed to. Without System 7, countless Word
documents must be searched for the clause in question, compared to the new
standard and then cataloged according to perceived legal exposure. With
System 7, the new clause is identified as “primary” and an infinite number
of sort options are made available to create a
redlined report presenting and analyzing the relevant portions of every
applicable contract.
Large organizations managing tens of thousands of
contracts face contract consistency issues of staggering proportions.
Redlining Comparison offers numerous opportunities
to perfect current contract standards, identify risky negotiating behaviors
and contain historic contract trouble spots. Consistent
adjustments to Contract Templates and Boilerplate Language during the
negotiation process are identified and proposed for inclusion as standard
terms. Historic Agreements are analyzed to highlight contracts that contain
terms (for example, “all future media”) that subsequent legal decisions have
rendered invalid or more limited than originally intended. Differences in
terminology used by negotiators within the organization are pinpointed,
discussed and reconciled.
Executed Contract Revisions
An additional dimension is exposed when consideration
is given to executed agreements that have been accepted by Accounting for
financial processing. Invoices are issued, cash is received, revenue is
recognized, participations data is accumulated, unapplied cash is allocated,
royalty collections are calculated. The list of resulting complications is
lengthy and challenging to maintain. In rare circumstances, the above can
represent an elegant one-way, one-time flow from contracts to finance (in
situations where a contract remains unchanged throughout its lifecycle).
However, complex, multiple year agreements are
commonly revised or amended whenever contingent dates are actualized or
licensed assets and/or product uses are voided or substituted.
While Redlining Comparison has a role to play in
tracking changes to the contents of the agreement itself, a more compelling
function, Contract Revision Posting, is required to handle the
accounting implications of changes to a financially activated agreement.
The importance of this function grows geometrically
over time as expanding accumulations of transaction activity evolve a
complexity that is difficult (if not impossible) to unwind and reset through
manual adjustments. Deferred, Unbilled, Uncollected and
Unrecognized Revenue must be reversed or reassigned. Cash receipts are
adjusted and reposted. Historic invoices are credited (or debited) to
reflect changes in pricing, payment schedules or granted rights. Cash-basis
participations revenues and history records are reevaluated and corrected.
System 7 automates all of these processes from a single point of control.
About
Jaguar News
Jaguar News is published periodically for the
purpose of maintaining communications with Jaguar’s clients, prospective
clients and other parties interested in the field of
Intellectual Property
Contract Rights Management. Jaguar Consulting was founded in 1985
for the express purpose of designing, developing, installing and
supporting Intellectual Property Software
Solutions.
Clients include Alliance-Atlantis Communications,
Cinar, DIC Entertainment, Explore International, Flextech Television,
Goodtimes Video, Hallmark Entertainment, Harmony Gold, HIT Entertainment,
Jim Henson Productions, Lions Gate Entertainment, Major League Baseball,
MGM, NBA, NBC, National Geographic Society, Nelvana, Sesame Workshop,
Southern Star, Warner Home Video and WNBA.
System 7 Universal Rights Management is
Jaguar’s seventh generation software product. It is an all-new design
created specifically to bring contract rights management technology to all
forms of intellectual property, including patents,
copyrights, trademarks, trade secrets and
permissions. This groundbreaking system features a
Universal Contract Database, Multi-Level Rights Inheritance, a
fully-configurable Custom Rights Framework, and Integrated Rights
and Royalties Management. System 7 is available in
the following software modules: Intranet Portal, Contract Administration,
Rights and Restrictions, Workflow Management, Revenue Accounting, Royalties
Receivable
and Participations Payable.
Further information including
a white paper, System 7 Fundamentals, and a
test drive of System 7 Intranet is available at
http://www.jaguartc.com/system7.
Jaguar Consulting Inc.
Pasadena,
California
Lincoln Center, New York
London, United Kingdom
For additional information: Visit http://www.jaguartc.com
Or contact Jaguar at 626/796-1955 or
info@jaguartc.com
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