Businesses are based on what can often be a complex network of agreements. These days, GCs and their in-house legal teams not only need to be adept at managing all those different contracts, keeping on top of key dates, clauses and obligations. They need to enable the business to get maximum value from those contracts too, by providing critical insights on which decisions can be based.
So, it makes sense to implement a comprehensive, streamlined system to co-ordinate the creation, negotiation, execution, tracking, amendment and renewal of business contracts, automating manual processes where possible. This is what Contract Lifecycle Management (CLM) solutions are designed for; helping in-house teams manage the whole process more efficiently and cost-effectively from beginning to end and adding enormous value to the business as they do so. Here’s a quick overview of ten key benefits.
Best-in-class CLM solutions deliver:
- A central, searchable contract repository – having all your documents housed in one place means everyone knows where to find them and makes it much easier for people to search for what they need. A CLM system should act as a single source of truth, where the most up-to-date drafts or final versions can be easily found, alongside other associated records and documents.
- Process consistency and oversight– with a CLM system, you can put a standard framework around all the processes inherent in a contract’s lifecycle, from matter intake to execution and signing, to monitoring renewals. That way, nothing gets missed along the way – all the relevant information is inputted accurately, plus the risk of introducing errors is reduced, there are no time-consuming delays, and compliance is assured.
- Efficiency gains – making processes easier and more uniform creates efficiencies in itself because tasks should be quicker to complete, and time is less likely to be wasted chasing down mistakes or doubling up on work. Further efficiencies are delivered by automating manual processes, for example in contract drafting and analysis, or incorporating auto-sign capabilities for faster approval, speeding up transactions.
- Visibility – you need transparency over the entire contract portfolio and each individual agreement at all times so that you understand the obligations and actions that are required. And so, you are ready to answer critical questions from colleagues in the business that could impact on day-to-day operations or the company’s strategic direction.
- Automatic alerts – your CLM solution will send reminders to relevant people at each point in the workflow when actions need to be taken. It also tracks contract expiry and renewal dates, and alerts users when changing laws prompt new contract terms, so you never miss a deadline for contract revision, cancelation, or renewal. It will also monitor counterparty obligations and notify parties of contract breaches.
- Insight and intelligence – CLM solutions can perform advanced contract analytics, surfacing material clauses that might otherwise have remained hidden so the business can extract the most value from the agreement and protect itself from liability. Then, easy and effective reporting to law firm leaders informs robust decision-making.
- Risk mitigation – by leveraging artificial intelligence (AI), CLM solutions predict and address a wide range of additional CLM needs, such as finding contracts that may be impacted by new business developments or identifying previously unknown risks or anomalies within the contract portfolio.
- Better business relationships – slow processes, inconsistencies and a lack of proactivity in contract management can ultimately damage the legal department’s reputation within the company. CLM systems establish the legal function as an enabler, rather than a blocker. It’s even possible to create ‘self-serve’ portals for internal business departments to use, so they can fill out template agreements themselves in a controlled way, thus cutting out the need to come to the legal team for everything.
- An enhanced legal function – eliminating repetitive, manual tasks means that lawyers have more time to do what they do best – progressing high-value legal matters, instead of spending hours on mundane work. That helps keep lawyers happy, motivated, and loyal, while freeing up their time in this way leaves the legal team less reliant on external law firms. All of which helps prove the point: that legal is a value centre not a cost centre.
- Evolution over time – businesses never stand still, so your CLM system must adapt as your organisation changes and grows. Solutions need to offer more than just storage and record-keeping; they need to enable stakeholder engagement and make sure you stay ahead of the game when it comes to analytics and AI for maximum business intelligence. Ideally, they should integrate with other business systems, such as customer relationship management (CRM) systems, finance systems, and existing digital signature or analysis tools.
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Efficient, effective contract management over the entire lifecycle and across the whole suite of contracts is a critical component of business success, and a well-designed CLM system can add enormous value to your company at large and to your team itself. To find out more about the benefits of contract lifecycle management and how to maximise them, read our white paper: ‘See the bigger picture: Shift from “handling contracts” to contract lifecycle management’.
