Innovating legal at NatWest

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One of the biggest appeals for me joining the legal team at NatWest was the progressive culture: we were encouraged to be innovative, to try new things and flex our creativity. There’s no better example of this than the project we completed to restructure and redesign our contracts.

The problem: a complex suite of template agreements 📁

We’re a large, heavily regulated bank with a considerable supply base. Over time our template outsourcing and technology agreements became longer and more complex.

The more complex they became, the more risks we covered off and the more guidance notes we held to try to support the contract negotiation process. As a result, we had unnecessary drag and slowed down the contracting process, which in turn negatively affected the stakeholder.

It felt like the right time to hit the pause button and review what we had to see if we could simplify the process.

The solution: simplified, streamlined contracts ⚡

We set out to simplify our template contracting approach, and this involved reducing unnecessary friction at any point of the process - whether it was pain felt by our legal team, procurement colleagues (who negotiate the majority of our contracts), or our suppliers.

Here’s how we did it.

Once we’d landed on what we needed in our contracts we spent a considerable amount of time working on how we were saying it

1. Make the solution Purposeful (with a capital P)

Our original objective was to take unnecessary friction out of the contracting process, to make our contracts shorter and to reduce the number of templates that we carried.

We then started to ask ourselves if we could be more ambitious.

Instead of redesigning our contracts with efficiency as the primary driver, could we redesign our contracting approach in a way that would further the bank’s purpose?

This would involve embedding a purpose which focuses on inclusivity, sustainability and supporting businesses and enterprises to thrive; those objectives became key outcomes for us.

2. Work out who you are designing for

We used design thinking to review our contracting approach, and we spent a lot of time on the ‘empathy phase’.

This involved working out who the users of our contracts actually were, and how we could make our template supply contracts as fit for stakeholder purposes as possible.

We explored key design principles: avoiding legalese and making the templates simple, accessible, and easy to navigate.

3. Apply legal design principles to contract content

We started to review our template agreements by working out what we wanted, or needed to cover.

What was the right risk allocation for us; which legal and regulatory obligations did we need; how deep is the risk that we are trying to cover off and how likely is it to crystallize?

Does a certain provision meet the bank’s purpose? Does it further it? Does it help businesses to thrive? What’s the sustainability angle?

Answering these questions allowed us to rebalance our contracts, resulting in provisions which incentivize our suppliers to support the bank’s climate ambitions, to pay the living wage and use a paperless notice process.

Once we’d landed on what we needed in our contracts we spent a considerable amount of time working on how we were saying it, favouring short, simple sentences and making every word fight for its place.

We reduced the length of our template services agreement by two thirds, in large part as we stopped copying and pasting the ‘typical legal wording’ which everyone’s used to reading.

People tend to appreciate the familiar, so we used the default setting on our emails and comms within the bank in our contracts

4. Focus on ‘invisible legal design’

A key learning for us, having spoken to various firms, “new law” providers, thought leaders and legal designers, was that good legal design was quite often invisible.

We were keen to create a document that looked engaging, had some sort of visual element and wasn’t simply routine words on a page, so we focused on the architecture. We pulled together a list of all of the clause headings and clustered them into groups:

• Clauses which would be used by contract managers during the term of the contract (such as audit, assurance, governance, notice provisions)
• Clauses that related to data
• Provisions that related to termination, transition, exit, and survival

Our contracts are much more intuitive to navigate as a result, particularly if you aren’t a lawyer.

We also used small behavioural economics nudges in the contract design process. The idea was that people tend to appreciate the familiar, so we used the ‘Calibri’ font, which is the default setting on our emails and comms within the bank.

This automatically makes the document seem less alien and a little more engaging.

On the other end of the scale, we highlighted all of the blanks that need completing in blue, rather than yellow - as it is less familiar and more jarring. This will hopefully nudge colleagues to complete the blanks rather than skimming over them!

5. Prioritize the quick wins

We had a clear understanding of how to improve our templates - but with so many documents to choose from, knowing where to start was daunting.

Firstly, we honed in on the quick wins; one of the biggest points of friction for legal was around low-value, SaaS agreements, so we quickly created an improved template to help teams self-serve.

Secondly, we applied the same process to our proof of concept and confidentiality agreements as they are key documents supporting our engagement with small and medium enterprises.

6. Focus on the whole process, not just the contract

Once we’d redrafted our services agreement template (the master template that we use), we created a single playbook to support negotiating that agreement, using the principle of less is more.

It might be slightly counter-intuitive to think that less guidance may help with self-serve, but for us having a simpler, more actionable, suite of guidance works better.

We wanted to have a playbook with everything procurement and business teams actually needed to know, sitting alongside each of our key templates.

An impactful, innovative legal team 🙇

There were several benefits to this project, both for legal and the wider business:

• We removed friction from our contracting approach - and truly removed it, instead of pushing it onto other teams in the bank
• Our contracts are two thirds shorter, and easier to read and understand
• We’ve supported key components of the bank’s strategy in relation to its wider climate goals and social purpose

We’ve also had a positive impact within the business, supporting our aim of being seen as a progressive, forward-thinking, innovative team.

This is a chapter from The Bundle - download volume two, issue #1 now to hear from legal at some of the world's fastest-growing companies, including Klarna, Paddle, and Omnipresent.