How to Speed Up Contract Lifecycle Management in 5 Easy Steps
When done well, contract lifecycle management (CLM)* can significantly increase productivity and lower costs. However, if handled poorly, it can just as easily cause serious delays and open you up to quite a bit of risk.
The key to speeding up your contract lifecycle management is knowing where to start. Begin by building a solid foundation and working your way up, similar to constructing a pyramid.
1. Store All Your Contracts in One Place
If your contracts are spread out across multiple systems, blocked by permissions, or buried among earlier versions, you’re bound to run into delays.
One of the biggest pain points in contract lifecycle management is lack of visibility. Everyone within an organization tends to go directly to the legal department for every contract question. However, legal doesn’t necessarily own the contract or even have easy access to it. Not only does this cause serious delays whenever a question arises, but it also puts the company at risk of not complying with obligations defined in a contract. Legal departments cannot provide advice about a contract they cannot access.
Solve the visibility problem with contract lifecycle management software that keeps every contract (and all previous versions) in one easy-to-access place. When necessary, you can also use the software to set up user groups and assign security permissions for individual contracts or accounts.
2. Define a Process for All Contracts
Often, people submit something to legal and it feels as if it fell into a black hole. No one confirms receipt, provides updates, or lets anyone know when the work will be completed. Not only does this lead to frustration, but it also slows down the process. Every time someone pings the legal department for an update, legal has to waste time responding to the same status update inquiries.
Avoid headaches and delays by building a process that clearly outlines each step in the contract lifecycle, helping provide transparency for everyone involved. By creating workflows for new contract requests or changes to an existing contract, for example, each team member can view the steps within a specific workflow and is aware of everything that has to occur from start to finish. They can even see where the contract is within the workflow at any given time.
Establishing a process also allows you to tie performance metrics to each step within a particular workflow. As you continue using the system, it will automatically track not only the average time spent per matter, but also the time spent on each workflow step.
Tracking these metrics allows you to provide more accurate estimates for how long specific actions will take to execute, such as two days for new contract requests or five days for adjustments to existing contracts. As you continue leveraging your CLM software, you’ll start to form a clearer picture of how your internal team handles different types of matters, giving you a reliable baseline for setting external expectations in the future.
3. Build Contracts Smarter Through Automation
Chances are, if you have to write a certain kind of contract once, you’ll eventually have to do it again. Save yourself time and effort by automating parts of the contract creation process.
With the right contract lifecycle management software, you can create playbooks for different contracts to minimize back and forth communication. For instance, a playbook could be created for non-disclosure agreements (NDAs) that includes three approved templates along with the steps for sending, reviewing, and approving the contract.
In many cases, templates provide self-service functions for basic contracts. Instead of running to legal every time sales lands a new client, sales agents can answer a couple of questions, input a few data points, and have a pre-approved contract generated automatically.
Pre-approved contracts also solve the common issue of inconsistent legal language. More often than not, multiple attorneys are working together, but each has their own particular language style. Those minor nuances result in inconsistent contract wording that can be interpreted in different ways. To overcome this issue, you can create a clause library that contains pre-approved clauses for a variety of contracts, which allow attorneys to “plug and play” by choosing and inserting clauses without having to discuss it with the rest of the team.
Let’s take a limited liability clause, for example. The clause library contains three pre-approved clauses set at $1 million, $750,000, and $500,000. When Company X receives a contract with limited liability set at $1 million, they counter asking for a lower cap. Thanks to the clause library, your sales agent can get back to them right away with an updated contract containing the pre-approved clause with a $750,000 cap. The clause library prevents your sales team from having to reach back out to legal, saving time while also significantly speeding up the negotiation process.
4. Set up Integrations with External Systems
Many contracts will require a data transfer to upstream or downstream systems. Without integrations, many legal teams are stuck manually updating records across these multiple systems or relying on their colleagues in other departments to do so, unsure of what information has been updated, in what system, and when.
This type of manual workflow naturally increases risk due to human error. At best, the errors can cause confusion for the involved parties; at worst, the mistakes could end up costing you quite of bit of money due to incorrect contract terms, lack of knowledge of obligations, missed renewal dates, and more.
Setting up integrations with external systems can solve this problem. Integrations with spend and matter management, customer relationship management (CRM), enterprise resource planning (ERP), or vendor management platforms allow you to push data from CLM software directly to external systems.
Eliminating repeat data entry is an easy and extremely effective way to speed up contract lifecycle management and ensures the correct data is being displayed in each system leveraged by your company – whether by legal, finance, procurement, or human resources – which means greater collaboration cross-functionally.
5. Leverage Data
At SimpleLegal, we love data and think it’s one of the most valuable levers for in-house teams so it’s no surprise that leveraging data is number 5 on our list (and at the top of the pyramid we touched on to open this post). Once you have your contracts centralized, processes defined, metrics outlined, and integrations set up, use the wealth of data you’ve collected to improve your CLM efficiency.
Reports from contract lifecycle management software help identify common delays, information silos, and areas in need of improvement. To help you hit the ground running, look for a contract lifecycle management solution that has out-of-the box reports, such as a report that details average time spent per contract type (e.g., an NDA contract). This type of report can break the data down by phases, so you can see if a particular team or resource is overloaded and causing delays.
The benefit of using contract lifecycle management software to create and run these reports is that AI algorithms often uncover patterns that a human might not. While you might not think twice about the time spent on NDA revisions, a report might show you that 80% of revision time is spent rewriting one specific clause. Introducing a few more pre-approved clauses into your NDA clause library could shave a few days off the entire process.
Learn How Legal Technology Can Support Your In-House Team
For a legal team looking to build a foundational process to improve efficiency and avoid confusion, contract lifecycle management is one of the top tools in-house teams look to implement, along with e-Billing and spend management, vendor management, and task management.
To determine which tools are right for your team, consider what goals you would like to achieve and what issues need to be addressed. Need help assessing your options? Contact us – we’d love to learn more about your needs and help you find the best solution for your legal team’s individual needs.
*Onit, our sister company, is a global leader of enterprise workflow solutions for legal, compliance, sales, IT, HR and finance departments. Onit takes a platform approach to areas like contract lifecycle management, enterprise legal management, legal service requests and 400+ other bespoke solutions. The company helps transform the way large companies and their legal departments bridge the gap between systems of record and systems of engagement.