4 Ways to Spend Less Time Reviewing and Managing Contracts
According to recent research found in the Enterprise Legal Reputation (ELR) Report from Onit, 40% of corporate legal professionals spend at least half of their business workday reviewing and managing contracts. Considering the salaries of those individuals, how much money could a legal team save if they managed to automate even a portion of that manual contract management work?
Fortunately, there are plenty of opportunities for legal teams to manage contracts more efficiently, ranging from simple process improvements to dedicated software designed to help speed up manual, time-consuming contract management tasks.
This article explores four ways you and your team can spend less time reviewing and managing contracts, so you can focus on building a more strategic legal department that drives the business forward.
1. Start by Analyzing Your Current Processes
The first thing you have to do to improve your contract review and management process is to understand your current situation. How can you determine where to invest your time and energy without a firm grasp on what’s currently working and what’s slowing you down? By establishing and monitoring the right contract management KPIs, you can identify the biggest areas of opportunity and implement process improvements to help you manage contracts in less time.
2. Share Responsibility with Subject Matter Experts
Legal teams are often tabbed with the responsibility of managing a company’s contract portfolio, but that doesn’t mean Legal is the subject matter expert for every agreement. Sales, Marketing, and Procurement teams generate a significant portion of the total agreements within a given organization, so it makes sense that after Legal’s initial contract review, those cross-functional teams are asked to manage their obligations and important dates and milestones throughout the life of the agreement.
Contract management software makes it easier for legal teams to share contract management responsibilities by allowing system administrators to set up granular roles and levels of access within the system. This empowers Legal to give specific teams or individuals access to manage the documents that are relevant to their role, without giving up control over those contracts — meaning you can share contract management responsibilities without adding risk.
3. Develop Templates with Up-to-date, Pre-approved Language
When other departments are generating their own contracts, starting with a template or clause library containing pre-approved language can significantly reduce the time Legal has to spend on the contract review process. By putting in the time up front to build out contract templates, Legal not only saves time reviewing contracts in the future, but they also make it easier for enterprise employees to do their jobs, which is an important step to take according to the findings in the ELR Report.
The Report found that 65% of employees admit to bypassing Legal and their policies, due to things like slow response times and a lack of collaboration. Legal can improve this dynamic by equipping their colleagues with the tools needed to work more effectively — which also creates guide rails that make it easier for the business to remain compliant.
4. Make Use of Artificial Intelligence
The use of artificial intelligence (AI) in contract management software continues to expand, and more and more useful functionality has emerged in recent years. While some contract review solutions can even use artificial intelligence to read your contracts and automatically determine the level of risk based on predetermined preferences, there are a variety of more standard AI features that can significantly reduce the time needed to review corporate agreements.
Automatic tagging features use artificial intelligence technology to scan documents in your contract portfolio and extract key pieces of metadata that can then be used to generate alerts, build reports, and more. While it’s a best practice to review the accuracy of any information the AI was able to identify and classify, that process is significantly faster than manually tagging every document from scratch, especially when uploading a large volume of legacy agreements. Many legal teams use this functionality as a way to jump start their initial onboarding process and quickly see basic contract details like agreement type, parties involved, start date, and termination date.
Some contract management solutions can scan contracts stored in the document repository and automatically generate outlines of your agreements, based on section headers, indentations, and other formatting parameters that would typically indicate the beginning of a new section in the contract. This functionality enables you to quickly skim through an automatically generated outline and instantly jump to various sections in the document.
Advanced Search and OCR
Artificial intelligence also improves the search functionality found in contract management software, including optical character recognition (OCR) which reads both digital and scanned documents and turns their contents into searchable text. Advanced search functionality makes it easier for a legal team to quickly find risky terms or keywords buried within a lengthy agreement.
As the research shows, manual contract review and management tasks are taking up far too much time for corporate legal professionals. What can be done to prevent in-house lawyers, general counsel, and other members of the legal team from wasting half their day or more reviewing documents? With a combination of upfront planning and affordable legal technology, every corporate legal team can streamline contract management and focus more on becoming a strategic business partner to internal clients throughout the organization.