Zycus recognized as a ‘Strong Performer’ in The Forrester Wave™: Contract Lifecycle Management, Q2 2023  Read More

How do you plan to brace your legal team and the contracts with the looming recession?

In KPMG’s analysis of the ‘Great Recession’ for instance, they found that ‘select companies were able to maintain profits and even managed to grow revenues and margins, despite falling demand. By acting early, they managed to sustain nearly all their shareholders’ value, while the shareholder returns of the worst performers fell by more than 23%.

This clarifies two things, quick and preventative action can save against huge losses, and that it is possible to remain profitable and even grow during a time of crisis. In this whitepaper we will explore how legal teams can help contribute to mitigating the upcoming economic crisis.

Contracts form the backbone of all economic activity, and as the team that is primarily in charge of these contracts, legal has a unique opportunity of helping their companies stay afloat during these difficult times.

SRB Framework

Here is a simple framework with the help of which legal teams can help protect and grow their businesses in this time of crisis.

Stop and Take Stock:

Many companies believe that their signed contracts are fixed costs or gains. This is not true, based on how a contract was drafted, the continued validity of all parties involved, the opportunity for renegotiation, etc. – value from contracts can vary significantly.

Re-calibrate and Re-negotiate:

Renegotiation contracts, reallocating resources and vendor consolidation have been identified as the 3 main ‘go-to’ tactics or levers to optimize spend and risk during economic uncertainty.

Build Provisions for the Future

New contract models, flexible payment terms, shorter lock-ins, protection against price, supply and demand fluctuations. Now is the time to get creative and build provisions for the escalation of economic turmoil in the coming months.

Any business is exposed to different vulnerabilities be it owing to internal reasons such as bankruptcy, lack of funds or external reasons such as inflation or recession. And that’s when the legal team comes to the rescue by mitigating risk.

Here about the 6 actionable steps via which your legal team can act on the SRB framework and help recession-proof your business:

Stop and Take Stock:

  1. Heighten vigilance: minutely track every single important contract KPI.
  2. Plug any value leakage

Re-calibrate and Re-negotiate:

  1. Reallocate resources
  2. Re-evaluate current contractual relationships & obligation

Build Provisions for the Future:

  1.    Code flexibility into your contracts
    a. Safeguard against supply chain turbulence
    b. Safeguard against price fluctuations
    c. Brace against change in demand
    d. Protect liquidity of the company
  2.     Mergers and Acquisitions – Looking Ahead

To learn about these actionable steps in detail, please look out for the next blog. Watch this space!


Mr. Panchal is the Vice President at Zycus. An ardent promoter and practitioner of Theory of Constraints and CCPM, Digesh brings with him deep domain expertise from his long and rich personal experience in manufacturing. In his prior stint at Verdantis, he has led highly complex implementations of Master Data Management solutions for multiple master domains, across various industries and varied deployment models. As a forward-thinking leader with extensive experience in the design, development, testing, and rollout of cutting-edge B2B SaaS solutions, Digesh excels at driving the day-to-day operations of complex enterprises to produce turnarounds. At Zycus, Digesh is responsible for building a best-in-class AI-driven Enterprise CLM software and drive market traction.
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