Create greater visibility into your corporate contract lifecycles
The corporate law department has been helping businesses solve problems for generations. But those problems keep getting more sophisticated. A modern approach to contract lifecycle management (CLM) creates greater visibility across all contracts — so the processes and solutions can get more sophisticated, too.
If you received one of these questions this afternoon, could you answer in time to help the business pivot?
- Supply chain issues are emerging in Ukraine. How many of our contracts involve Ukraine?
- Our employees are nervous about their personal safety. What are our obligations in openly anti-LGBTQ states?
- Revenue is down. Which contracts allow us to raise prices?
- Costs are up. Where can we exercise opt-out clauses?
Law departments that use a contract lifecycle management system have visibility into their company’s portfolio of contracts and clauses — so they can deliver complex analyses quickly.
In traditional contract management processes, legal teams manually manage contracts across the portfolio — from initiation, drafting, negotiation, and approval to execution, obligations, compliance, and renewal. Contracts live in different systems as static documents and are formatted differently and managed on disparate timelines. This makes for time-consuming, repetitive work; an increased risk of error and missed deadlines; and delays in business moving forward.
All that manual work leaves the legal department playing catch up. They must scramble to compile and find contracts that match a business request, rather than proactively or quickly offering insight and analysis to business colleagues.
Modern CLM systems can provide visibility across the entire contract lifecycle because they are built around a core of orchestrated and automated processes, from collaborative drafting tools to standardized contract clauses to monitoring of approvals, documents, and metrics.
Contract visibility issues for corporate law departments
Providing quick and accurate answers to questions about contract patterns and trends is a critical capability for legal departments. One of the key benefits of CLM systems is that they can give you deep visibility into your contracts portfolio quickly.
Without visibility, the team will run into issues. For instance, if the business needs to know its position in a certain country — for example, “How many of our contracts touch Canada?” — the legal department would have to sift through systems and contracts to see the relevant content. They would lose time reading contracts — time they could be discussing the implications of their obligations with the business.
Then there’s the risk of missing something. If the business has an urgent question, your team must manually find and read contracts while they’re in a rush — and manual work under pressure often leads to human error. If your colleagues need to know how often they’ve agreed to a specific indemnification clause in order to decide their negotiating posture, they need accurate information to move forward. A few missed clauses could lead to misguided decision making.
Maximizing contract lifecycle management
Only 55% of global corporate legal departments have an enterprise CLM system and fewer than that have a system designed and implemented specifically for the legal department, according to the Thomson Reuters report “See the bigger picture: Shift from “handling contracts” to contract lifecycle management.” That means that even if you have a CLM system, there is likely a lot of opportunity to maximize your approach to contract lifecycle management.
Providing quick and accurate answers to contract questions can elevate your legal department in the minds of business stakeholders and decision makers. A law department CLM provides a central repository of contracts with consistent structures and indexed clauses. That gives your team ready access to key insights about the obligations and opportunities of the business. They can use these insights to help advance the business and grow their relationships with colleagues across the organization.
Visibility across the contract portfolio is helpful for strategic insight but it’s not the only benefit of a CLM. The law department and the business also need visibility into the obligations of each specific contract. This includes renewal dates and actions required for compliance. A modern CLM enables the team to quickly keep track of those specifics, staying ahead of negotiation cycles and staying on top of business obligations.
Your contracts tell an important story of your business — your relationships with partners, your obligations to customers and vendors, and their obligations to you. Having ready access to the contents of this story is incredibly valuable. It enables quick and efficient decision making and better business results. It enables your legal team to engage more meaningfully in business problems, rather than spending time compiling data they could have at their fingertips. It improves your contracting experience from start to finish.
Learn more about how a CLM system can help with contract visibility in our white paper, “See the bigger picture: Shift from handling contracts to contract lifecycle management.”