Advising on contracts is the bread and butter of an in-house legal team’s workload, so it makes sense that, as GCs look for legal tech to help them control costs, increase productivity, and meet their strategic priorities, a contract lifecycle management (CLM) solution is often top of the list.
Beyond this, as their remit expands and they are increasingly tasked with guiding the business through a complex legal, economic and regulatory landscape, GCs and other stakeholders in the company need to make data-driven decisions. That means drawing on the business’ assets – including its contracts – to help them identify opportunities and mitigate risk.
A comprehensive CLM solution is a powerful tool to meet all these needs and provide value to legal teams and to the business as a whole. Here, we discuss what CLM is, and what it can do for organisations with different needs, across each stage of the contract lifecycle.
What is CLM and why implement a CLM solution?
CLM is the proactive and methodical management of key stages of a contract, from initiation to drafting, review and negotiation, to approval, execution and storage, to reporting, analysis and beyond into obligation management. CLM solutions are designed to streamline all the tasks and eliminate the pain points around this lifecycle.
For example, at the intake stage, a CLM solution can help capture instructions and facilitate the collation of all the relevant information, cutting out the delays that can often occur if data is missing or siloed.
At the creation, negotiation, and review stage, it can assist with drafting by automating repetitive processes, aiding in the choice of precedents, and ultimately speeding up document production, plus supporting collaboration, red-lining, and version control.
At the approval stage, achieving sign-off can be challenging, especially where concessions have been made in negotiations. A CLM solution can help lawyers work out who the proper approval authorities are, and smooth out what can sometimes be a complex and multi-faceted signature process, reducing the administrative burden with e-signature capabilities.
At the storage and management stage, it provides a centralised contract repository – a single source of truth for all agreements. This can make a big difference to an organisation’s ability to manage and monitor its contracts: no longer are they stored in multiple locations, under disparate naming conventions and with differing tag, so it’s easier to locate contracts when you need them, and to keep abreast of the obligations contained within them.
CLM solutions also have a vital role to play when it comes to reporting and visualising data.
During the active phases of a contract, legal teams need to be able to report on status, monitor its performance, track key milestones, and ensure it is compliant with the terms and conditions, while handling any amendments that need to be made.
As it approaches expiry, performance needs to be assessed, terms renegotiated if necessary and informed decisions must be made about the contract’s future. As well as knowing what the main risks and obligations are in each contract, it’s important to have similar oversight of the entire contract portfolio. Without the appropriate tech tools to surface these insights, a lack of visibility can be a perennial thorn in the legal department’s (and business’) side.
What are the key benefits?
Legal teams and businesses that implement CLM solutions benefit from:
- Significant efficiency gains – having a centralised contract repository, streamlined and consistent workflows and automated processes mean that tasks can be completed quicker and more effectively.
- Improved collaboration – using CLM platforms as a collaboration space helps break down siloes and contracts get over the line quicker.
- Enhanced visibility – insights can be harnessed, and oversight improved with tools that can surface, analyse, and visualise key data, so that informed business decisions can be made.
- Greater control – risk is reduced, and compliance assured thanks to more transparency and standardisation, minimising the potential for things to get missed or errors to creep in.
How to find the right CLM solution
There are a lot of CLM options out there, offering a range of features and functionality depending on the vendor and your requirements. The most advanced deliver AI-powered capabilities and machine learning, mobile accessibility, multi-language and localisation support, vendor/supplier management tools, customisation options and scalability.
However, it’s vital not to get too side-tracked by everything that’s possible and make sure any solution you choose can do exactly what you need it to do – easily – no matter how basic or sophisticated. Moreover, don’t try to do everything at once: fix the most immediate pain points first and then roll out more capabilities from there. Many legal teams start off by addressing issues like creating a central contract repository or implementing e-signatures and then build on that.
Talk to vendors about the likely implementation time and the time-to-value you can expect. By working closely with trusted suppliers, you’ll be able to benefit from their expertise and maximise your ROI.
Given how much of a difference a CLM solution can make, it’s no wonder it’s one of the fastest-growing areas of adoption in legal tech. Research among corporate legal departments by the Thomson Reuters Institute shows that more than half (55%) are now using a CLM system, and many more say they’re interested in the possibilities offered by cloud-based, AI-powered platforms for contract management.
___________________________________________________________________
To find out more about how a CLM solution could benefit your legal department and your business and answer the question: “Why CLM?”, watch our webcast.
