In this interview, Fraser Hill, General Manager of Digital and Process Transformation at Shell, sat down with Charlotte Johnstone, Senior Content Manager at LegalTechTalk, to discuss the evolving role of contracts within the legal landscape. Fraser shared his view that while contracting remains a fundamental activity, its value to business operations is often underutilised. He emphasised that most contracts are not used in courtrooms but rather serve as commercial tools, prompting legal teams to rethink their approach to drafting and managing contracts.
Fraser encouraged legal professionals to shift their perspective and consider contracts as data objects rather than static legal documents. By doing so, businesses can unlock the potential for automation and data-driven insights. Fraser highlighted the immense opportunities this transformation offers, including enhanced operational efficiency, improved supply chain management, and smarter risk pricing. He envisions a future where contracts are integrated into broader business systems, serving as dynamic instruments that drive commercial value and operational effectiveness.
Charlotte Johnstone: Hi Fraser! How would you describe the current state of contracting across the legal space?
Fraser Hill: In my view, contracting is pretty healthy as an activity, but the value that is created for a business is fairly limited. If the purpose of contracting by legal is to generate a contract which can then be used to manage disputes in a court, then it does a pretty good job at doing so. However, when you think that most contracts never see the inside of a courtroom and most disputes are managed commercially, then you have to ask – why is anyone putting in the effort?
The organisation should ask why it needs a contract in the first place. I think what it will discover is that we need a commercial artefact that enables two or more entities to communicate and operate in a common language for the duration of the agreement between them. Yes, there needs to be mechanisms for dispute management, but what they need is a tool for commerce, not an unintelligible stream of legalese.
Charlotte Johnstone: Should legal teams change the way they perceive contracts? If so, how should it change?
Fraser Hill: Yes, they should start by asking how they can make business simpler, more automated and economically beneficial. The job is to enable commerce, and so the first question should be – ‘what is the outcome that I’m seeking?’, then ‘what is the appropriate instrument for the task?’ If it is that we need to execute a full contract, ask ‘who is going to interact with this document?’ If it is not a lawyer, but, let’s say, the operations team, or sales, or accounts payable etc, ask ‘will they understand what this contract requires them to do?’ If not – what needs to change? Is the contract structured for the user, is it well laid out, is it comprehensible to a non-legally trained person? Then you need to ask ‘is the contract set up to enable automation?’ Do I have all of the data that I need to execute my core business processes – populate the Bill of Materials, set up the tables in the ERP, executive Requisition to Pay, etc? So, as a legal professional, do you understand how the business actually works (the systems, process, data model)?
Charlotte Johnstone: If legal professionals can start thinking of a contract as a data object, what possibilities/benefits can emerge as a result?
Fraser Hill: For me, this is about the opportunity of automation to operationalise the agreement for effectiveness, but also to unlock insight and value by making the document a structured data-source, the commercial system of record, that can connect Finance, Sales, Manufacturing, Procurement processes, without the need for human interfaces.
If you consider it a data object, you can achieve all of the items in point 2, but further, you can start to identify insights across the business (buy-sell side alignment of payment terms for example), you can start to map your supply chains and model (and price) risk exposure. You can build spend reports that reflect the reality, you can build smart contracts to eliminate the need for clunky approval processes. The opportunities are endless and limited only by your belief that a contract is a legal document…it is so much more if it can live beyond the simple legal use case that most organisations believe that it is for.
Read full LegalTech Diaries Volume 5: https://www.legaltech-talk.com/legaltechdiaries/volume-5/
