Tech & Sourcing @ Morgan Lewis

As a follow-up to Part 1, in which we discussed increased reliability on sourcing teams’ input for commercial negotiations, this Part 2 discusses additional common provisions sourcing teams should consider in their oversight and management of the contracting process.

Sourcing teams are assuming increasing responsibilities in the contracting process, playing a central role in managing an array of issues, including legal, operational, financial, and information security risks. In an effort to streamline contracting lifecycles and reduce legal costs, companies often prefer legal counsel to focus on complex issues around intellectual property rights, indemnification, or regulatory compliance. This often leaves important unresolved issues to be negotiated by the sourcing team.

Fortunately, by focusing on certain terms of outsized impact that arise across deals, sourcing departments can contribute significantly to managing their companies’ risk profiles.

While a freedom-to-operate (FTO) analysis often centers on patent or trademark searches, contractual commitments can establish the practical boundaries—or maze—of a company’s degrees of freedom. Organizations with a checklist of high-level issues to be addressed during contract discussion and negotiation (such as liability, compliance, and data protection) should consider adding FTO to that list. With a more holistic perspective of the FTO landscape and with business and technical teams’ input, commercial counsel can find creative ways to complete the puzzle.

Flexibility versus certainty is an important and often challenging tradeoff throughout commercial contract negotiations, particularly regarding termination for convenience. Customers, mindful of shifting budgets, technological changes, and evolving business needs, want the freedom to walk away at their discretion. Vendors, mindful of upfront infrastructure investments, staffing needs, and revenue volatility, want a committed income stream. Reconciling these competing needs can become a significant sticking point, often arising later in the negotiation cycle after other issues have been settled.

While morals clauses have long been common in athlete endorsement agreements, their importance to sponsorship agreements between teams and sponsors is mounting as brands seek greater protection against reputational harm tied to their association with a team. In the team sponsorship context, however, the analysis will differ.

While stadium naming rights agreements have traditionally focused on the core commercial points one would expect—category exclusivity, signage rights, use of trademarks, media integration, hospitality benefits—as more stadiums host global events such as the FIFA World Cup and the Olympics, temporary obscuring signage language has become an increasingly important consideration in naming rights negotiations.

In Part 1 of this Contract Corner, we discussed the renewed focus on resilience in outsourcing agreements for 2026 and how resilience is increasingly becoming a design requirement, not just an untested BCP. In Part 2 we look at how geopolitical pressures can quickly become delivery constraints and how many organizations are leveraging global capability centers as an anchor for critical knowledge and continuity, and provide a practical 90-day action plan and high-level contract checklist that deal teams can leverage during strategy planning.

Outsourcing strategies in 2026 are being shaped by persistent disruption. Geopolitical uncertainty, major service outages, talent disruption, and post COVID-19 consolidation initiatives are driving a renewed focus on resilience in outsourcing operations and contracts.

Legal departments and contract teams are now often under pressure to move faster, provide value, and streamline processes all while contracts increase in length and complexity to address changes in technology (e.g., artificial intelligence) and laws (e.g., various privacy and regulatory requirements). The good news is that meaningful contract streamlining does not require a full rewrite or oversimplification of existing templates. Small, targeted changes can improve speed to contract, clarity of the agreement, and usability for both the legal/contract team and business team stakeholders.

In Part 1 of this series, we discussed why artificial intelligence (AI) agents present unique challenges for technology and outsourcing contracts. As businesses move from development to deploying them in real-world operations, contracts must grapple with governance and accountability issues, such as how these tools are monitored, managed, and held accountable.