Participants in this research project are committed to identifying these barriers to innovation and developing practical measures to overcome them. Removing these barriers has many advantages: contract law and formal models of contractual economy assume that agreements are fully adapted. On the other hand, current legal research highlights the role of standardized concepts in drafting contracts. These lines of research overlook an important class of contracts between these extremes. Many contracts, such as the merger agreements discussed here, are complex combinations of custom and standardized concepts and thus have serial effects both in terms of level and scope. Such contracts are “suitable for mass” to borrow a term from engineering research. This paper establishes a theoretical framework for understanding how the mass adaptation of these complex agreements is achieved. It is complementary to recent science, which applies the theory of modularity to the design of complex chords, introducing an alternative approach – flexible specialization. Empirical methods are then put in place to study the structure of complex agreements. This article presents the results of a preliminary empirical study that indicates that the architecture of mass-appropriate contracts reflects the logic of the flexibility of specialization and not of modular design.

The image of the contract design that is emerging is that of agreements based on a flexible architecture, provided by a dynamic group of experts more similar to the industrial districts of Emilia-Romagna in Italy than the legendary Highland Park line of the Ford Motor Company. These preliminary results have a significant impact on education, policy and research. As far as education is concerned, this article adds a missing dimension to recent attempts to articulate a non-uniform theory of U.S. contract law. With regard to policy, evidence that the flexibility of specialization of the infrastructure of mergers and acquisitions (M-A) market challenges the deterministic accounts of the legal industry transformation, and highlights the compromises overlooked by recent arguments in favor of further standardization of the complex contract. Finally, with regard to research, this article provides a basis for much-needed theoretical and empirical work on the effects of interaction between governance mechanisms within an agreement. The challenge of continuous improvement and innovation in contracts is that achieving the objectives is for both the service provider and the customer – it is not a one-way street. Unfortunately, at the speed of daily delivery of the service, often no party returns to the contract to recall that these promises were made or to create a process by which they could be delivered.

Most of the quarantine commitments we see have such clauses in agreements that have never been implemented – or even contemplated by either side! Continuous improvement and innovation are a way of thinking that can only thrive in a well-managed relationship. Governance excellence is essential – and we find that clients who focus on structure and process in their relationships can not only realize the benefits of continuous improvement and innovation, but also bring other benefits: frictions between the two teams are greatly reduced, problems are resolved in an orderly manner, and the management chain knows exactly what is happening in the service relationship. ISG has developed a tool that allows clients to consider continuous improvement of their own governance and management skills – our sm-G Maturity Assessment. This tool can be used to create management functions for common services and purchased from a client organization, and can be repeated regularly over time to measure the continuous improvement of this essential function. A well-managed relationship is a happy, productive and innovative relationship.