{"id":1689,"date":"2010-04-23T03:09:00","date_gmt":"2010-04-23T03:09:00","guid":{"rendered":"http:\/\/localhost\/projects\/horsesforsources\/getting-practical-042110\/"},"modified":"2010-04-23T03:09:00","modified_gmt":"2010-04-23T03:09:00","slug":"getting-practical-042110","status":"publish","type":"post","link":"https:\/\/www.horsesforsources.com\/getting-practical-042110\/","title":{"rendered":"Practical outsourcing tips over a pint: legal advice from George Kimball"},"content":{"rendered":"
\"\"<\/p>\n

George Kimball: author, outsourcing lawyer and father of three girls<\/p>\n<\/div>\n

\u00a0I\u00a0once swore I’d never have lawyers on here – that was until my old pal George Kimball decided to write his first book, which deserves a plug.<\/strong>\u00a0\u00a0\u00a0<\/p>\n

George is unique – he’s an outsourcing contracting lawyer with whom you’d actually\u00a0enjoy a pint or two, and always has the uncanny knack of adding an air of practicality to the most stressful and dicey of situations.\u00a0\u00a0 However, it may be the three daughters currently running (not ruining)\u00a0his life that help him deal so calmly with the rigors of negotiating\u00a0some of today’s toughest\u00a0outsourcing contracts.\u00a0\u00a0<\/p>\n

George has become one of the best known lawyers in the industry over recent years,\u00a0 representing\u00a0both buyers and service providers on some of\u00a0the largest and most pivotal engagements during his tenure at law-firm Baker & McKenzie, before recently joining the legal team at Hewlett-Packard\u00a0(so read that small-print carefully next time you buy a printer).\u00a0\u00a0<\/p>\n

I asked George to share his top tips for approaching outsourcing contracts with our readers; so go to the fridge, crack open a cold-one and take onboard George’s practical postulations…\u00a0\u00a0<\/p>\n

George Kimball’s “over a pint” tips for first-time outsourcing buyers<\/span><\/strong>\u00a0\u00a0<\/p>\n

Thanks, Phil, for the kind invitation to offer a little advice \u2013 \u201cover a pint.\u201d\u00a0 Here are a few suggestions for buyers of outsourced services \u2013 especially first time buyers.\u00a0\u00a0<\/p>\n

Get good advice<\/em>.\u00a0 Unless you have done this before, repeatedly and successfully, seek outside advice; but don’t just \u201cturn it over to the experts.\u201d\u00a0 No outside advisor can know your business as well as you do.\u00a0 You (and not the advisors) must live with the results.\u00a0 Proven methods, processes and forms have great value, but can be tailored to suit situations.\u00a0 One size does not fit all.\u00a0 Look for consultants and lawyers capable of thinking creatively, and willing to vary familiar forms and methods.\u00a0\u00a0<\/p>\n

Focus on essentials<\/em>.\u00a0 Details matter, but spend time and attention where it matters most: on scope, performance standards, pricing and adjustments, transitions, people, governance.\u00a0 \u201cWorst case\u201d scenarios and remedies matter, and must be provided for, but should not lionize attention.\u00a0 Seek long term results, rather than short term advantage.\u00a0 Today, there are great pressures to complete deals quickly, in order to reduce transaction costs and accelerate savings, but there was great wisdom in legendary UCLA basketball coach John Wooden’s maxim: \u201cbe quick \u2013 don’t hurry.\u201d\u00a0 Err in haste, repent at leisure.\u00a0 Take sufficient time to get things right the first time.\u00a0\u00a0<\/p>\n

Keep it simple,<\/em> or at any rate, as simple as reasonably possible.\u00a0 Outsourcing is complicated.\u00a0 There are lots of moving parts \u2013 technologies, people, locations and much else.\u00a0 No one should expect to crowd everything on the back of an envelope.\u00a0 Still, contracts need not be as thick as telephone directories, or as inscrutable as hieroglyphics.\u00a0 Lawyers anxious to protect their clients tend to write rules for all eventualities \u2013 forgetting sometimes that life largely consists of surprises, and that few things ever happen quite as anticipated.\u00a0 Issues arise inconveniently and unexpectedly.\u00a0 When they do, good processes may be more useful than rule books.\u00a0 Seek clarity, simplicity, and ease of administration.\u00a0\u00a0\u00a0<\/p>\n

Service levels matter, but do not equal or assure quality.<\/em>\u00a0 Service levels are a useful management tool, but easily overrated.\u00a0 Suppliers are rational business people.\u00a0 They never sign up for service levels that they cannot consistently meet or exceed, so credit dollars (\u201cpenalties\u201d) are rarely paid (and for that matter, no one on either side ever wants to pay or receive them).\u00a0 Service levels are to success as vital signs are to health \u2013 necessary, but not sufficient.\u00a0 Customary measures such as system availability or response time are useful, but consider developing metrics for systems and processes that benefit the business.\u00a0 Users may not notice modest differences in usual metrics \u2013 a few tenths of percentage point\u00a0 here, a few seconds there.\u00a0 They do notice shipments, deliveries, payments, production and collections.\u00a0 Consider metrics that measure them.\u00a0\u00a0<\/p>\n

Prepare to manage the contract and relationship<\/em>.\u00a0 Weak governance \u2013 too few people, without sufficient clout, and accustomed to managing operations, rather than relationships \u2013 remain the single most common, avoidable error among customers.\u00a0 Begin building a team long before any contract is signed, and involve that team in making the deal.\u00a0 Build strong organizational consensus behind outsourcing.\u00a0 It is challenging enough when all sing from the same hymnal.\u00a0 When business units and headquarters have different agendas, failure is likely.\u00a0 No one will agree, except that it was a bad idea, whose sponsors should be hanged or at least put out to grass.\u00a0\u00a0<\/p>\n

Risks have to be managed.<\/em>\u00a0 This seems obvious, like the truism that contracts allocate risks.\u00a0 Despite the usual effort to shift risks in negotiations, both sides know (deep down inside) that risks can never be reduced to zero, or transferred entirely to the other side.\u00a0 Therefore, build good risk management \u2013 regulatory compliance, security, privacy, disaster recovery, and others \u2013 into the contract, and especially oversight and governance.\u00a0 Remember also that these same risks exist with internal operations, before outsourcing.\u00a0 Outsourcing may or may not increase those risks (although transferring operations outside or offshore may mean additional points of failure and different perceptions of risk).\u00a0\u00a0<\/p>\n

Remember why contracts work.\u00a0 <\/em>Contracts are more than armories of rights and remedies.\u00a0 Termination rights and the rest have their place, and may matter in some (let us hope) unlikely situations; but companies perform contracts for the same reason that nations observe treaties:\u00a0 because it is in their interests to do so.<\/em>\u00a0 Good contracts motivate parties to perform through a reasonable equilibrium in the allocation of risks, responsibilities and incentives.\u00a0 Performance yields benefits \u2013 savings and service for customers; margins, opportunities and references for suppliers.\u00a0 Failures to perform have consequences sufficient to help keep everyone on the straight and narrow.\u00a0 Motivation matters, but fear alone can rarely motivate excellence.\u00a0 Outsourcing works best when both parties succeed.\u00a0 The customer receives good service for a fair price and saves money.\u00a0 The supplier makes respectable returns from good performance, with reasonable prospects for renewal, additional opportunities and good references.\u00a0 Unless both parties succeed, neither is likely to do so.\u00a0\u00a0<\/p>\n

Propose reasonable terms.<\/em>\u00a0 On both sides, too many start with \u201ctough\u201d terms \u2013 the sort that no one in his or her right mind would dream of accepting.\u00a0 Why bother?\u00a0 The unsophisticated or naive customers will be very cross when they figure it out (as they will, eventually).\u00a0 Suppliers are unlikely to sign harsh contracts unless they are desperate or inept.\u00a0 Time wasted crab-walking toward sensible middle ground is better spent on those important issues, or planning the transition.\u00a0 No one’s allegedly \u201cstandard\u201d forms necessarily came down the mountain with Moses and his tablets.\u00a0 Start with something sensible, and remember the wisdom in the Golden Rule: do not unto others as you would not be done unto (especially when you have to live with them afterward).\u00a0\u00a0<\/p>\n

Tone matters<\/em> more than people suspect.\u00a0 Collaboration requires good working relationships built on candor, civility and trust.\u00a0 At the negotiating table, people are more willing to make concessions to others they like, respect and trust, than when they are squeezed.\u00a0 (If they are squeezed or bullied into something unfavorable, they will<\/em> remember.\u00a0 If they should be fooled or misled, they will<\/em> figure it out later.\u00a0 Depend on it.)\u00a0\u00a0 Outsourcing is not a love feast.\u00a0 These are\u00a0 unsentimental commercial arrangements with many challenges.\u00a0 Even so, there are no known substitutes for clarity, courtesy, intelligence, integrity, common sense or good judgment. \u201cTough\u201d methods and terms are not necessarily best.\u00a0 \u201cScorched earth\u201d tactics singe everybody.\u00a0 In the long run, neither side will succeed unless both succeed.\u00a0 Kinder and gentler is often wiser.\u00a0 Simpler, reasonable documents take less time (and money) to negotiate \u2013 an added benefit.\u00a0\u00a0<\/p>\n

Phil, I think we finished that first pint.\u00a0 Thanks for the chance to share one with you and your readers.\u00a0 Let’s have another soon.\u00a0 In the meantime, I hope that you and your readers enjoy the book:<\/p>\n

Outsourcing Agreements: A Practical Guide<\/strong>\u00a0<\/span><\/em><\/span><\/div>\n
\"\"<\/a><\/p>\n

Click for more info on George's new book<\/p>\n<\/div>\n

George Kimball’s book (pictured right)\u00a0is\u00a0an accessible guide to the legal and practical issues arising from complex outsourcing deals. Written for non-specialist lawyers, executives and managers, the book explains the commercial, legal and contractual issues behind outsourcing.\u00a0 Kimball describes outsourcing as a part of a larger trend toward extended, global enterprises in a world with fewer boundaries than before.\u00a0\u00a0 Companies outsource critical operations seeking superior performance, greater efficiency and lower cost.\u00a0 His book explains the competing interests of customers and suppliers, and how the contractual, financial, operational and other elements fit together into a coherent whole to deliver good results for both sides because, according to Kimball, \u201cneither [side] will succeed unless both succeed.\u201d\u00a0 Collaborative methods, he contends, yield better outcomes, while saving time and money in negotiations.\u00a0\u00a0<\/p>\n

\u00a0George Kimball<\/a>\u00a0<\/strong>is an attorney and long-time specialist in outsourcing.\u00a0 While in private practice, he was a member of Baker & McKenzie\u2019s respected technology, outsourcing and communications practice, and ranked as a leader in his field by Chambers and Partners and Legal 500.\u00a0\u00a0 He is a graduate of UCLA, University College London and the University of Michigan Law School with more than 30 years of legal experience.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

George Kimball: author, outsourcing lawyer and father of three girls \u00a0I\u00a0once swore I’d never have lawyers on here – that…<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[48,81,86,88],"tags":[354],"organization":[],"ppma_author":[19],"class_list":["post-1689","post","type-post","status-publish","format-standard","hentry","category-business-process-outsourcing-bpo","category-it-outsourcing-it-services","category-outsourcing-advisors","category-outsourcing-heros","tag-george-kimball"],"yoast_head":"\nPractical outsourcing tips over a pint: legal advice from George Kimball - Horses for Sources | No Boundaries<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.horsesforsources.com\/getting-practical-042110\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Practical outsourcing tips over a pint: legal advice from George Kimball - 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