Bringing efficiency to your contract and document management process
Although COVID-19 has upended many aspects of how legal work is getting done, the recent Legal Department Operations (LDO) survey from Thomson Reuters shows that many law departments still are focused on the same priorities as before the outbreak: improving effectiveness and increasing efficiency.
These two, often cited hand-in-hand, lead many departments to ask themselves: “How can we reduce waste and duplication of efforts, find better ways of managing workflow for less cost, and convey the success of those efforts to management, showcasing the department’s value?”
The first step, of course, is to address efficiency and make sure the department is doing all it can and has all the tools it needs to work in a way that uses less time and resources, especially as most legal work continues to be done remotely. According to the LDO survey, corporate legal teams are discovering their outside counsel costs have plateaued and they cannot cut their way to efficiency. For many, that means looking inward at where further innovation could get the job done better, faster, and at less cost. Not surprisingly, many departments see their contract and document management efforts as the place where efficiency improvement is most needed.
This ever-growing emphasis on efficiency has pushed lawyers to turn to sophisticated tools that use innovative technology, like artificial intelligence (AI) and machine learning, in order to reduce duplicative work and shave hours off the time they must devote to manual tasks, like contract drafting and review.
Assessing your contract management
To seek better efficiency in how your legal department handles its contracts and documents, it’s crucial to understand how you’re managing the process now. It’s no exaggeration to say that the drafting, execution, and analysis of contracts is the vital lifeblood of many corporate law departments. And even small improvements in the process of managing contracts can pay hefty dividends almost immediately.
So, you need to ask yourself: how well is your department managing this task? Are your team members spending far too much time making sure the language in a contract is correct? Are you managing large numbers of contracts that contain varying levels of risk? Are your team members having difficulty finding model documents upon which they could base new contracts?
If the answer is yes, you might need to consider an AI-based tool that would ease these pain points and allow you to manage your contract workload more easily and with greater efficiency. For example, think how much better it would be if team members could access an AI-enabled tool that would remember their most-used clauses within a wide range of contracts and even flag any differing language to ensure any mistakes are avoided.
This tool could also analyze any contract or group of contracts to see whether any deviated in a significant way from standard contracts the company had executed previously. Further, the AI capabilities would also allow your team to instantly search through clusters of contracts to determine which represented the particular aspects and details you were seeking for inclusion in a new contract. These tools can even group similar documents together and identify which single file is the best representative of the cluster.
More specifically, certain contract management tools can be trained to zero in on specified clauses within contracts, identifying the instances the clauses appear in future contracts. These advanced tools can also “score” contracts, finding which contain the biggest deviation from standard form—thus presenting the most risk—and which contracts are more in line with previously executed contracts.
More importantly, you can then use this deviation score to create a chart to prioritize contract review to ensure those agreements that are dissimilar to the selected model form are identified and handled with an increased level of diligence. This, in turn, will translate into fewer errors, less cost, and a clearer value proposition that can be expressed to management.
The enhanced value for your legal department
Beyond process improvement on individual contracts, such as those cited above, AI-enabled contract and document management tools can improve your entire department’s approach to contracts and alleviate the most commonly cited problems with contract workflow and management.
Indeed, almost two-thirds of corporations said that a major business challenge was delays in the closing of key deals due to unexpected slowdowns or problems in contract processing. These problems often included a slow drafting process due to lack of templates, contract playbooks, and libraries of stored clauses and common terms. These problems, in fact, led to further issues, such as lawyers running a greater risk of using out-of-date terms and a generally slower approval and signature routing process. Much of this was traced to the issue that contracts were not stored securely in one central place and available in a workable format.
Worse yet, in many cases there is no tracking of contracts in this process—nor of the process itself—making it very difficult to know the simplest of data points, such as the number of contracts worked on, whether that number represented and an increase or a decrease in department workload, or how that internal workload was being allocated among legal team members.
Clearly, it’s in cases such as this where contract management tools can help the most.
As we’ve discussed, these AI-enabled tools can demonstrate that contract management can be made more effective, collaborative, and transparent by focusing on the three main stages of a contract:
- Drafting - The power of contract and document automation in drafting cannot be overstated. Using these tools saves time, reduces risk and potential drafting errors, and allows law department leaders to demonstrate improved return on investment (ROI).
- Execution - These tools also provide a level of workflow automation during the execution phase of a contract that is greatly beneficial. Tools can provide comparisons of similar documents, enable use of e-signatures, and even establish an auditable routing system for needed approvals.
- Analysis - The use of AI within these contact management tools can allow you greater capabilities to identify and reduce risk and flag any specified clauses that would point to increased risk. Also, these tools can utilize a contract deviation score that can allow you to compare large numbers of contracts and be made aware of those contracts that may require more attention and diligence.
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