February 3, 2015

Agile Legal Contracts: an Oxymoron?


Are the words Agile and Contract even compatible?

The goal of Agile is delivering value when detailed long-term planning either isn’t useful or possible. There are recent signs of change however.

The UK government is looking into contracts that make agile possible, the US has guidance on modular contracting and the flexible contract template seeks to promote communication and reduce litigation.

No matter how diverse the stakeholders, agile relentlessly focusses attention on deliverables. It relies on collaboration and teamwork to achieve results no matter the obstacles or challenges.

Contracts have a defensive purpose. They protect stakeholders from the risk of participating, whilst providing a framework which allows them to participate. It would be unfair to say that contracts limit participation, although this is often a necessary effect because contracts are actually enabling documents. In this respect, contracts are ‘plan-driven’ artifacts. They focus on a pre-determined outcome and set-out the terms for reaching that outcome, and the consequences of failure.

They are quite literally, black and white - this is what happens if everything 'goes to plan', and this if one party fails to 'deliver to plan'.

Time and Materials Approach

The easy option for clients wishing to take advantage of agile is to shoulder all the risk and hire expertise they need on the basis of time and materials. The development process, after all, solves a problem for the client and the supplier’s role is to bring expertise and resources. Should the development yield an unexpected financial dividend the supplier would not expect to participate.

Indeed, this is exactly the way other professional services are transacted: auditors, tax accountants, medical experts, and lawyers. Compared with these other professionals, the development role is actually relatively inexpensive. So perhaps it’s a reflection on the quality of software development generally, that contracts remain so punitive towards suppliers.

What’s your experience of agile legal contracts?

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