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Best Practices: Contract Drafting and Collaboration

Legal Department

Contracts serve as the foundation for business agreements. They define the rights, responsibilities, and obligations of all parties involved. However, the process of drafting and collaborating on contracts can be complex and challenging, often leading to confusion and disputes if not handled effectively.

There are many best practices that can help you confidently and efficiently navigate contract drafting and collaboration. 

From ensuring clarity and understandability to promoting effective communication and collaboration, here are some of the key elements that contribute to successful contract management, drafting, and collaboration. They’ll also help Legal establish itself as a trusted advisor within your organization instead of being a department that creates “red tape”.

The challenge

Other units state they’re frequently “slowed down” by legal processes. Additionally, due to unclear roles and responsibilities, many other departments are unsure how to request contract drafting, the person in charge of each contract stage, what system to contact the needed person, and how to remind a lawyer of an overdue contract risk.

10% of sales personnel complain that they’re stuck on deals longer than necessary due to Legal’s inefficiency or poor negotiation skills. That’s not a surprise; collaboration with Legal, it seems, is generally an unorganized and complicated process that provides little clarity but grinds things to a halt in a haze of confusion.

This situation can convince other units to bypass Legal to get work done faster. But by doing so, they expose their organization to different kinds of risks

The good news is that contract management workflows can be streamlined to speed up processes, make business more effective, and improve cooperation between lawyers, as well as internal and external customers. 

Here’s a closer look at why effective processes are critical for contracting.

Contract drafting, collaboration, and management in the contract lifecycle

Drafting ensures that contracts accurately capture the terms of an agreement and are legally binding. Collaborative contract management enables stakeholders to work together, identify potential issues, and resolve them as early as possible. This helps all parties stay informed while reducing misunderstandings and minimizing the risk of disputes. 

Statistics reflect this conclusion: 43% of corporate employees believe improved communication and collaboration are crucial for Legal to support internal clients.

Effective contract management is also integral to a contract lifecycle; it allows businesses to meet their obligations and minimize risks. When done effectively, the best contract management workflow:

  • Secure compliance and minimizes exposure to legal and financial risks, including breach of contract 
  • Improve visibility into contract performance and obligations and streamline the contract lifecycle while reducing delays (speeding up negotiations by up to 50%) 
  • Reduce operating and processing contracting costs by 10-30% 
  • Improve stakeholder alignment, vendor and supplier relationships, overall efficiency, and sales time (by up to 24%) 
  • Saves up to 82% of a lawyer's time

Now that you’ve learned some of the benefits, here are some best practices that will help you achieve them.

Best practices for contract drafting and collaboration

Creating effective contracts requires careful planning and attention to detail. Let’s go over the best practices for contract drafting you can apply to your organization’s contract management process; these will help you streamline the process and create contracts that meet your needs, reduce legal risks, and protect the business.

Contract clarity and understandability

Clear and understandable contracts not only establish a strong foundation for business agreements, but they also reduce the risk of disputes, foster better collaboration between parties, and ultimately protect the interests of all stakeholders. 

By following these practices, businesses can ensure that their contracts are comprehensive, leaving no room for ambiguity or misinterpretation.

Define the scope and objectives of the contract: Identify goals, requirements, and desired outcomes clearly to avoid confusion or misunderstandings later in the process. 

Be clear, concise, and consistent: Use clear descriptions, avoid ambiguities, and maintain consistency in language and formatting to facilitate understanding and reduce the risk of disputes. 

Avoid legal jargon and complex terminology: Write contracts in a way that is easily understood by all parties while avoiding technical language that may lead to confusion or misunderstandings. 

Use the MVP concept for legal and contracting: Establish a "Minimum Viable Product" approach by focusing on essential operations first and refining processes with data and feedback.

Drafting and administration

Contract administration makes things run smoothly and efficiently to save time and money. By keeping an eye on contracts, organizations can get the most value out of them and set the foundation for a mutually beneficial agreement.

Know what's inside your contracts: Assemble a clause playbook and develop a centralized location to check and retrieve critical data from contracts. 

Include dispute resolution procedures and fallback language: Specify jurisdiction, outline steps for resolving disputes, and align these provisions with the contract's objectives to minimize costly disputes

Establish ownership, storage, and access: Clearly identify who owns the contract, where it should be stored, and who can access it to ensure accountability, prevent confusion, and protect against unauthorized access. 

Ensure access to the latest contract template version: Store templates in one place, establish access permissions, and prevent the use of outdated versions to maintain contract integrity and compliance. 

Secure data consistency and availability: Keep contract-related data in one place with standardized fields, provide stakeholders with access to the latest information, and conduct regular data audits.

Contract automation and improvement

Contract automation is a game-changer when it comes to effective contract management workflow. By harnessing the power of technology and innovative solutions, organizations can automate repetitive tasks, reduce human error, and improve overall contract management. 

Here are some actionable steps to help you leverage CLM software technology for contract drafting.

Use standardized language and pre-approved dynamic templates: Save time and improve efficiency by using templates with approved language to minimize human errors and ensure compliance with stakeholders' requirements. 

Use generative AI with quality control: Leverage AI for contract drafting, but ensure the quality of outputs by selecting the appropriate technology, training it on relevant data, and reviewing the final results with human oversight. 

Delegate low-value contract drafting to non-legal teams: Empower non-legal teams with proper training, pre-approved templates, and guidelines to handle low-risk contract drafting, reducing costs and saving time. Automation can be a great help here.

Integrate contract drafting with other lifecycle processes: Create a seamless flow by integrating drafting, negotiations, approvals, and tracking using contract management software, enabling better collaboration and decision-making. This can be achieved by using contract management software that allows for collaboration and tracking each step in the process.

Best practices for contract collaboration

Effective contract collaboration involves a team effort from stakeholders across the organization. By following these best practices for collaboration, your teams can improve communication, increase efficiency, and reduce the risk of errors and delays in the contract lifecycle.

Centralize contract repository: Keep all contracts in one place to facilitate collaboration, improve version control, and avoid confusion or errors caused by multiple document versions. 

Establish clear contract roles and responsibilities: Let relevant stakeholders focus on their areas of expertise and avoid unnecessary review of the entire contract. This improves accountability, collaboration, and contract outcomes. 

Create clause playbooks: Outline standard contract terms, explain each clause, and establish fallback positions. Playbooks promote consistency, reduce negotiation time, and increase the likelihood of reaching an agreement.

Lessen dependence on emails: Utilize collaboration tools for real-time redlining, commenting, task assignments, and file sharing to streamline contract operations and improve efficiency.

Keep stakeholders informed about contract progress: Real-time notifications and centralized communication channels enhance transparency, turnaround times, and collaboration and allow stakeholders to address issues promptly. 

Establish conditional approval flows: Automate approval processes for low-risk contracts and route high-risk contracts to the appropriate individuals for review. Clear criteria for approval improve transparency and accountability.

Don't push your clients to change; meet them where they are: By providing the right tools with features like internal and external comments, review assignments for separate parts of the text, version control, and the ability to use formats of documents they may already use (.doc, .txt, .pdf ), you can make it easier for your clients to collaborate. 

Use e-signatures: Electronic contract signing simplifies the signature process to make it faster and more convenient for all parties involved. e-Signatures provide an audit trail, reducing the risk of disputes. 

Build a clause library: Create a collection of pre-approved clauses and provisions for faster document review and improved compliance across the company. Thus you can swap clauses in a few clicks instead of writing them from scratch.

By implementing these best practices, you can elevate your organization's contract management capabilities and drive positive results. From understanding the contents of your contracts and including dispute resolution procedures to establishing ownership and access rights and securing data consistency, each practice plays a crucial role in streamlining operations, mitigating risks, and fostering collaboration.


Effective contract management is a continuous process. As new technologies, regulations, and business dynamics emerge, it is essential to stay updated and adapt your practices accordingly. Regularly assess your processes, solicit feedback from stakeholders, and embrace innovation to optimize your contract management efforts continually.

By empowering your teams with the right tools, fostering clear communication, and promoting collaboration, you create an environment where contracts become valuable assets rather than burdensome paperwork. The benefits are significant, including improved efficiency, reduced costs, enhanced compliance, and strengthened relationships with clients and partners.

Schedule our free demo today to learn more about ContractWorks contract management software and how to custom-tailor CLM software for your needs, streamline your contracting, and calculate its potential benefits.

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