Type to search

Article Future of Law

Managing your contract lifecycle


The Covid-19 crisis has created an environment where working from anywhere has suddenly become the “new normal”. This has put digitalisation on the map for companies that want to achieve independence and flexibility in the way they operate. The legal department is not usually on the radar for many companies looking to drive digitalisation and automation. However, with today’s existing tools and capabilities, it can become an area that is at the forefront of automation in any company. One particularly good example is the management of contractual relationships using a Contract Lifecycle Management solution. 

There have been many developments in the field of Contract Lifecycle Management (‘CLM’) over the last few years, with suppliers focusing more and more on automation and AI capabilities for contract efficiency. 

But how can a legal team tackle the implementation of a CLM solution in order to drive automation and digitalisation in Contract Management? What steps need to be taken? Here are some thoughts on how to drive automation in your company: 

Define requirements in the context of organisational strategies

The key for all projects, regardless of the aim, is a good preparation phase. It is important to understand the requirements of your company and your stakeholders in order to be able to design a good solution that will help to eliminate bottlenecks within the Contract Management workflows. 

The biggest challenge, from my experience, is the internal alignment between all relevant stakeholders. To achieve a good understanding of the required steps within a contract workflow, it is important to understand why the individual steps are necessary and what purpose they serve. Think about who are the stakeholders in the whole contract workflow. What are the required approvals and what steps need to adhere to company policies? 

A mapping of the current state process is essential in order to identify the desired future state of your Contract Management. Think about the whole Quote-to-Cash cycle (ie the end to end process) and the need for integration with other systems (e.g. SAP or eSignature tool) to “close” the gaps. Carrying this out is essential and will help you gain great analytics and insight. Finally, yet still very importantly, you’ll need to get the buy-in of the whole Legal team and other affected departments, which will enable a smooth transition for everyone who works with the system on a daily basis. 

Improve the definition of existing processes and variants

Standardising processes across the business will help you to streamline your workflows and keep an eye on the “big picture” to ensure global alignment. If you’re an international organisation, do not forget to check local requirements to build up a flexible system allowing adjustments to adhere to local policies and regulations. Choose a system that allows you to self-administer your configuration without the need of going back to the supplier every time a change is required. Staying independent and in full ownership of your Contract Management tool is key for the future development of the system. This will allow you to more easily maintain alignment with company requirements, which could change in the future. Simplify your processes as much as you can so that the system stays user-friendly and efficient.

Review or develop improved contract templates

The heart of every smart Contract Management solution is an intelligent template and clause library. Preparing your templates to be fit for purpose is a big exercise for the Legal team. The aim should be to use a template with static wording, then implement rules and conditions for the insertion of smart clauses whenever required. 

A playbook including variations and fallback options for your clauses can help users to identify and use pre-approved language without the involvement of Legal for every change in the draft agreement. The use of a redlining tool that captures changes during the negotiation process will help you not only to finalise agreements faster but also to identify which clauses are the ones rejected most by your partners or customers. Having an overview of which clauses your counterparties consider “unfair” will help you continually develop your agreement templates. Doing this will minimise risk and drive contract negotiation efficiency through greater acceptance of terms. 

Identify self-service solutions

Looking at the lifecycle of the contract within your organisation as a whole, there are several solutions that can help you automate your processes:

Contract Request: The use of wizards, via which users can insert required information to request an agreement, is a good way to start your CLM workflow. A wizard guides the requestor by asking about the agreement type and format. In the case of a confidentiality agreement for example, some useful information could be:

  • Which party is disclosing information? (eg. this could identify if a unilateral or a bilateral CDA is required)
  • What is the language of the agreement?
  • What is the start date of the agreement? 
  • Who are the contracting parties?

By evaluating the answers, the system can select the right template from the library and enable the requestor to generate the required agreement with the click of a button. 

Another option to kick-off your agreement request step is the use of a request portal. Users can access the portal and log a new request, which could then be sent to the legal queue, where the Legal team can pick it up and start working on it. This creates a single point of entry for every request for the Legal department, which helps to triage the work and distribute it evenly among team members. 

Authoring and Negotiation: By managing your templates within the CLM tool, it is possible to generate the draft agreements very easily, and as many times you like with a click of a button. An extra portal for third party review will help you to structure your negotiation processes in order to be more efficient. This creates a common interface that parties can access in order to review and redline the documents. Many existing systems have a good redlining solution embedded, that can track changes made on draft documents. This enables you to report on these tracked changes and streamline your processes even further. For example, if you see that your liability clause has been rejected 80% of the time, it might be a good idea to work on a revision. The redlining tool can also help you to navigate through your internal approvals. If an important clause is for example deleted, this in itself could trigger an approval. 

Execution: When you’re finalising an agreement an integration with an eSignature tool could be ideal. The use of an eSignature tool will enable the parties to execute the agreement faster, without the need of exchanging hard copies or chasing signatures. Nowadays most CLM systems have a seamless integration with most eSignature solutions. 

Obligation Management: Keeping track of your requirements and obligations can help you stay on top of your agreements after the execution of the documents. Usually during a project the problems that arise are related to unclear responsibilities and the failure to prioritise business requirements. Having a smart system that alerts you whenever deliverables are due, or helps you to track your obligations and responsibilities, can be of great importance for the delivery of a project.  

Identify capacity for data consolidation and analytics

Keeping track of all the metadata can be of great value for the company when it comes to gaining insight into business relationships. A smart Contract Management system will allow your team to get on top of your contracts, be proactive, not miss deadlines and allow you to build valuable relationships with key partners. This can be of huge value to a company who, as a result, could be seen as a trusted partner delivering results. 

Using chatbots to drive Contract Automation

Chatbots are mobile assistants that enable automation and the quick completion of repetitive tasks, such as requesting or creating agreements, requesting approvals or sending documents for signature using applied artificial intelligence. Possibilities for using them include:

  • Search, clone, adjust, and generate agreements to quickly provide drafts to your contracting partners.
  • Create and send CDAs for signature with a single command
  • Look up the status of agreements 
  • Approve and sign agreements on the go

Contract Management automation can help your team become more efficient by reducing contract cycle times. It can raise the standing of your Legal department and help to position the team as a trusted and valuable business partner that can deliver results. 

Chrysoula Stefanou


You Might also Like