The benefits of contract lifecycle management for corporate legal departments

An effective contract lifecycle management (CLM) system assembles the right people, processes, and technology to manage contracts efficiently while providing insights and trends businesses and key stakeholders need to operate strategically.

When implemented properly, CLM systems integrate, track, and automate the creation, negotiation, execution, and management of all the contracts a legal department handles. The most agile approaches to CLM include artificial intelligence (AI) capabilities to help identify risks and provide predictive analysis.

When you take a manual approach to legal contract lifecycle management, your corporate law department is stuck reinventing the wheel on routine tasks and scrambling to provide insight to the business to support strategic decisions.

Consider equipping your people with technology and processes that deliver intelligent CLM. This investment will help you bring strategic insight to critical business decisions and help your team be more responsive to business needs.

Possibly the most important benefit of CLM is that it will free up time for higher-value work. CEOs, CFOs, and other C-level executives spend approximately 18% of their time managing contracts, according to Fortune Business Insights. However, adopting CLM software can allow them to concentrate on critical decisions while gaining valuable insight from a well-integrated contract management solution.

Support critical business decisions

Legal departments can use their CLM solution to shift how they work within the organization. For example, a contract lifecycle management system enables a team to create self-service portals for business users to speed up processing and, along the way, help them view your team as a business driver rather than a cost center.

When you maximize a CLM system’s benefits, you enable your corporate legal team to extract actionable insights from your company’s contracts. For example, CLM solutions can set specific, quantifiable goals and objectives and keep track of pertinent information throughout the contract lifecycle, which is crucial for measuring contract performance.

A well-designed CLM solution can help legal departments at companies of all sizes take a newly empowered role in their organizations. Using the CLM as a system of intelligence allows lawyers to evaluate contracts, leverage data, and analyze risk to drive business decisions.

Be more responsive to business needs

Simplification, automation, and digitization are central themes in business today. With a manual approach to contract management, the legal team and the organization do not have holistic visibility into the status of business contracts.

Contracts scattered across shared drives aren’t searchable. When they aren’t in a consistent format, it can take days of manual effort to identify all the company’s responsibilities to vendors, customers, and other outside parties. Could you easily advise on the question, “Can we offshore our marketing department?” without a streamlined view of all your obligations to third parties or your agreements on data privacy? You’ll likely have trouble providing a complete answer.

A CLM system offers real-time visibility and automated features that make finding documents across all stages of the lifecycle — from initiation and drafting to negotiation and approval to execution, obligations, compliance, and renewal — quick and easy. This automation helps the legal team collaborate more responsively with colleagues and allows all parties — the lawyers, the business, and the customer — to have a positive negotiation experience.

Allow lawyers to focus on higher-value work

Lawyers are born problem-solvers and risk mitigators. They chose the legal profession to solve complex and interesting tasks, and their job satisfaction depends on their ability to focus on high-value legal work rather than repetitive tasks and filing processes like manual contract management.

A modern, data-driven approach to CLM brings significant efficiencies, freeing legal staff to work on higher-value work they find more interesting. The payoffs: you’ll have more satisfied employees, which should improve recruitment and retention. With the team delivering higher-value work to the business, it will be easier for the general counsel to defend the legal department budget and headcount.

The benefits of a data-driven approach

A data-driven approach to contract management offers numerous benefits for organizations and internal legal teams, including:

• Greater visibility. This clarity allows organizations to pinpoint areas of strength and weakness more easily.
• Time savings. Manually managing contracts is labor intensive and time consuming. A data-driven approach allows organizations to monitor contract performance metrics consistently to reduce the time and resources required to manage contracts.
• Reduced risk. Effective contract management offers sound risk assessment and regulatory compliance monitoring. By recognizing potential risks and addressing them proactively, companies can avoid disputes and expensive litigation.
• Better decision making. When organizations rely on key performance indicators (KPIs) and other metrics, they can evaluate the success of their contracts, identify potential risks and the steps to mitigate them, and make data-driven decisions to drive better outcomes.
• Adaptability. Implementing an effective contract management system promotes a culture of improvement. When an organization can evaluate contract performance and learn from previous experiences, it can better adapt to changing market dynamics and business requirements.

Why contract lifecycle management matters

Modernizing your approach to contract lifecycle management is a beneficial investment that will pay off for years to come. By providing a real-time view of risks and obligations, you can:

• Help your business make better, more strategic, and informed decisions.
• Enable a shift in how the legal team interacts with the business — and how the business perceives the legal team.
• Simplify your approach to drafting and storing contracts, freeing up your lawyers to practice law rather than complete manual tasks, improving job satisfaction.

To learn more about the current CLM landscape and the opportunities legal departments have to optimize their systems and use AI tools to deliver better legal services faster, check out the white paper “Smarter about contracts” today.