Legal departments have spent the last 10 to 15 years trying to figure out ways to reduce spend and maintain high levels of efficiency. One of the biggest areas of opportunity: improving the way contracts are managed.
The International Association of Contract and Commercial Management issued research showing that improving contract management can increase corporate profitability by nearly 10 percent annually. Implementing a contract lifecycle management (CLM) system helps legal operations not only contribute to such an increase in revenue, but to streamline the management of each contract so volumes of vital contracts remain error- and risk-free. CLM helps an organization integrate automation into the lifecycle of a contract so humans aren’t burdened with repetitive tasks, contracts are secure through software-based storage, and approvals happen more quickly.
Software solutions help legal department operations implement such automation so they can remove humans from repeatable tasks in the lifecycle of a contract and gain easy access to specific information within the contents of contracts. Here is how general counsel and legal operations use contract management software to improve legal department operations:
Use automation to reduce costs and improve accuracy while staying compliant
Improving legal department operations starts with making sure that humans in the department are maximizing their efforts with the highest levels of speed and accuracy. But humans will always make errors, and errors cost a department time and money. Automation and technologies that employ automation help reduce the costs associated with errors.
Without automation, humans can make mistakes in processing contracts and spend unnecessary time and energy correcting them. Technologies such as CLM software protect against non-compliance and penalties and other costs associated with non-compliance while also freeing up human labor spent on fixing contracts.
With artificial intelligence, automation also helps reduce errors during contract review. General Counsel (GCs) and legal ops teams can use the automation in contract management software to identify and tag key contract terms and high-risk clauses that will need special attention during the contract review process. This keeps contracts running through their lifecycles more quickly and helps anticipate contract issues before they arise, eliminating the need to backtrack to these contract terms down the road.
In turn, this process improvement allows the legal department to operate more efficiently across the board.
Use standardization features to streamline all processes and maintain visibility
CLM software ensures all contracts go through one, centralized system so the business can manage every step of every contract with full visibility into the entire process. The legal department no longer has to chase down where contracts are in their lifecycles, and it doesn’t need to waste time or labor managing the process of each contract. GCs and legal ops teams can improve overall operations with the greater visibility that comes with using technology such as contract management software.
Use cloud-based aspects to eliminate risk
Contracts are stored in a software-based system with CLM, which means they can’t fall victim to physical destruction, and they are not at risk for theft. This move away from paper and into digital storage means tons of time and grief saved for legal department operations. With cyber criminals becoming more sophisticated every day – and with their increased targeting of smaller and mid-sized businesses – legal departments need multiple security layers for contracts. They can improve operations by using technology such as contract management software to guarantee the security of their documents.
Use cataloging features to save time
Legal departments will instantly feel the effects of reduced manual labor when it comes to contracts because CLM software can perform functions such as flagging problematic clauses and terms, quickly sorting through large volumes of contracts, and automatically tagging agreements for speedy review and process.
With access to the right technology, GCs and legal departments can do their jobs better by letting software solutions take the burden of processes humans used to have to perform. They can greatly reduce labor involved in tedious, repeatable tasks, save time and money across all contract processes, and ultimately improve efficiency for themselves and the business they serve.
Onboarding technology such as CLM can cause a few changes in an organization, so legal departments should follow some basic guidelines when considering implementing CLM:
Create an implementation roadmap
Consider how each person touched by a CLM will need to adjust. Import those considerations into a short- and long-term plan for how the software will work within your organization.
Decide who the point person will be
Often, a CLM software provider will make the transition to using the technology simple for a business, but you should have a staff member designated as the point of contact to head up the implementation.
Choose the right software
Consider what parts of your contract management process you’d like to automate when shopping for CLM software. A CLM software provider can help you perform an audit to determine which solution is right for your organization.
That said, which organizations are best suited for CLM? CLM benefits any organization that regularly processes any type of contract. Some of the types of contract processes that CLM helps to streamline, protect, and improve are:
Any corporation with high-volume and/or high-risk contracts that include repeatable measures, clauses, and conditions can greatly benefit from CLM. Even contracts related to such complex and bespoke matters as mergers and acquisitions are a suitable fit.