Contract management best practices for in-house legal departments

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Five proven strategies to streamline contract workflows and enhance efficiency

Contract management — ensuring terms are favourable to the organisation and the documents are easily accessible — is generally a legal department’s most important and time-consuming responsibility. Smooth and beneficial business operations require having well-executed agreements in place. But handling intricate contracts effectively demands careful attention.

Resource-strapped legal departments must remain responsive to a frequently high volume of new contract requests and legacy document inquiries. Thankfully, the tools, know-how, and processes for handling contracts efficiently and with fewer errors have advanced significantly in the past decade.

Analysis powered by artificial intelligence (AI), workflow management tools, and collaboration portals all increase speed and effectiveness. In fact, technology and tools have advanced so quickly that approaches that seemed wildly innovative five years ago are baseline requirements now.

So, what are best practices in contract lifecycle management? Here are five key attributes:

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Best practice tip #1: Contract management is collaborative

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Best practice tip #2: Contract management is secure

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Best practice tip #3: Contract management is scalable and repeatable

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Best practice tip #4: Contract management is matter specific

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Best practice tip #5: Contract management is digital and mobile-friendly

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Best practice tip #1: Contract management is collaborative

Effective contract management requires dozens of moving parts to work in concert. Each phase involves multiple steps and parties. To help each part move smoothly, you need a centralised contract management ecosystem enabling stakeholders to collaborate consistently and easily.

This collaboration often involves sharing insights, suggestions, and redlining changes before finalising a document for signature. Ensuring accuracy is easier when using a system that guarantees everyone is working from the latest version of a document.

Integrating all phases and stakeholders in the contract process provides unprecedented control and visibility into activities, workflows, approvals, documents, and metrics. This approach accelerates transactions, enhances business value, improves accuracy, and reduces risk, enabling comprehensive analysis and reporting on your entire contract portfolio.

Best practice tip #2: Contract management is secure

Effectively managing commercially sensitive and extremely confidential contracts must include best-in-class data security.

Begin by ensuring your system is hosted in a highly secure environment. Opt for a provider that offers secure private cloud hosting and stores your data in a Tier 3 or higher data centre, equipped with redundant and dual-powered servers.

At the application level, implement two-factor authentication to manage access and enable document encryption. Finally, ensure that your provider’s security team is experienced, screened, and operates around the clock to protect your data.

Best practice tip #3: Contract management is scalable and repeatable

Effective contract management enhances existing processes, freeing lawyers to focus on complex legal tasks rather than administrative duties. It’s both scalable and repeatable, ensuring efficiency and consistency.

Business colleagues rely on the legal department to provide secure, straightforward access to the most recent version of contracts, ensuring compliance with agreed terms. An effective contract management system organises contracts for easy retrieval and tracks user activity.

To ensure consistency, create and share pre-approved templates and clauses. Know-how resources from Practical Law include model documents and checklists to enhance your template library or address new issues. Additionally, providing self-service options for straightforward contracts can streamline the drafting process. This frees your department to focus on complex, high-risk deals.

Best practice tip #4: Contract management is matter specific

While an effective contract management system should be scalable and repeatable, it shouldn’t be cookie-cutter. A great approach to contract management is matter-specific.

Every contract is unique, requiring tailored drafting and negotiation. While borrowing provisions from previous documents can be useful, simply copying and pasting key terms, obligations, and dates increases business risk and the potential for missed value.

Contract management systems equipped with AI-driven document review and analysis tools can identify specific provisions, facilitating collaboration with business partners to optimise deal terms.

Best practice tip #5: Contract management is digital and mobile-friendly

The collaborative nature of contract review and management requires that stakeholders can access, review, edit, and sign contracts and status updates from any location and device, at any time. Mobile-friendly systems and electronic signatures are essential for seamless contract management.

Gone will be the days of last-minute emails for approvals and chasing down signatures. An effective and flexible workflow can eliminate these manual processes so that all the correct steps and approvals are met. This not only speeds up contract execution but also mitigates the risk of unauthorised agreements.

The legal department is often seen as a cost centre. To demonstrate value and keep pace, an in-house team needs a contract management system that follows best practices. A solution that is collaborative, secure, scalable, matter specific, and digital empowers the legal team to drive results and build strong partnerships.

Discover how HighQ, a modern and adaptable legal operations and business management software, simplifies legal processes to optimise your contract management.