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==={{wasteprov|Over-processing}}=== | ==={{wasteprov|Over-processing}}=== | ||
'''Headline''': ''Don't design your | '''Headline''': ''Don't design your plane to be waterproof in case it falls into the sea. Design it so it doesn’t crash.'' | ||
Contractual risk protection standards, for both parties, are stuffed with redundancies, anachronisms, over-reaches and nice-to-haves. Each one is liable to challenge. Each challenge brings its own process wastes. | Contractual risk protection standards, for both parties, are stuffed with redundancies, anachronisms, over-reaches and nice-to-haves. Each one is liable to challenge. Each challenge brings its own process wastes. They arise in two chief ways: | ||
[[Risk controller]]s are short an option. They are incentivised to err on the side of caution | ===={{riskprov|Risk controller}}s are short an option==== | ||
[[Risk controller]]s are short an option. They are incentivised to err on the side of caution: they don't get a bonus if the client generates extra revenue, but they will be regarded as having failed if the client blows up owing the firm money<ref>In theory. But see the [[circle of escalation]].</ref>. So no wonder there are overreaches in the terms they require in general client documentation. | |||
====[[Barnacles]] and the effluxion of time==== | |||
''“[[Rework - Book Review|Policy is institutional scar tissue]]”'' - [[Jason Fried]]<br> | |||
Over time contract templates will inevitably accumulate what I call "[[barnacle|barnacles]]" — ''ad hoc'' responses to historic situations, reactions to unexpected risks, flourishes to cater for a particularly truculent counterparty. As people move on the reason for these adaptations is lost to time, and the instinct of successive lawyers (being cautious people, and short an option) when asked to consider these provisions will be, “I don't know why it is there, but someone must have put it in for some reason, so the safest thing is to leave it there.” | |||
In its original physical manufacturing sense, {{wasteprov|over-processing}} refers to unnecessary complexity in design, whether brought about through careless design or over-specification. The production cost of features that neither you nor your client are realistically ever going to use is as much a form of wastage as any. | In its original physical manufacturing sense, {{wasteprov|over-processing}} refers to unnecessary complexity in design, whether brought about through careless design or over-specification. The production cost of features that neither you nor your client are realistically ever going to use is as much a form of wastage as any. | ||
Revision as of 10:47, 3 June 2019
Over-processing
Headline: Don't design your plane to be waterproof in case it falls into the sea. Design it so it doesn’t crash.
Contractual risk protection standards, for both parties, are stuffed with redundancies, anachronisms, over-reaches and nice-to-haves. Each one is liable to challenge. Each challenge brings its own process wastes. They arise in two chief ways:
Template:Riskprovs are short an option
Risk controllers are short an option. They are incentivised to err on the side of caution: they don't get a bonus if the client generates extra revenue, but they will be regarded as having failed if the client blows up owing the firm money[1]. So no wonder there are overreaches in the terms they require in general client documentation.
Barnacles and the effluxion of time
“Policy is institutional scar tissue” - Jason Fried
Over time contract templates will inevitably accumulate what I call "barnacles" — ad hoc responses to historic situations, reactions to unexpected risks, flourishes to cater for a particularly truculent counterparty. As people move on the reason for these adaptations is lost to time, and the instinct of successive lawyers (being cautious people, and short an option) when asked to consider these provisions will be, “I don't know why it is there, but someone must have put it in for some reason, so the safest thing is to leave it there.”
In its original physical manufacturing sense, over-processing refers to unnecessary complexity in design, whether brought about through careless design or over-specification. The production cost of features that neither you nor your client are realistically ever going to use is as much a form of wastage as any.
The chief production cost in negotiation is time and human resource. It follows that the longer a contract takes to read , and the more it invites challenge, the more expensive (in these terms) it is to produce. Any time taken over the utter minimum and any client challenge to a term that is not vital the the firm's risk protection strategy isa form of waste in the process of reviewing review approving and concluding the client contract. As we have seen, client challenges to credit terms create their own additional wastes (waiting, transport, as well as risking of overproduction and defects).
While credit teams do not typically monitor or collect data about the frequency with which they invoke specific credit terms, we know for sure that well over 90 percent of contracts are never closed out at all, and the vast majority of those which are closed out generally make use of standard (uncontroversial) events of default which are generally not challenged in the first place: failure to pay, or insolvency.
- Credit points never used
- Superfluous templates
- Redundancy
- Unnecessary drafting
- Reading/reviewing unnecessary/convoluted text
Summary: "
- ↑ In theory. But see the circle of escalation.