Who's Responsible for Post-Signature Contract Management?
Tracking & Monitoring
Legal teams leverage a multitude of tools, strategies, and best practices to optimize the pre-signature contracting process. Before agreeing to the terms of a contract, various people spend hours, if not days or more, drafting, reviewing, and negotiating the perfect document.
Since so much time and effort are put into the pre-signature process, why is post-signature contract management often overlooked or underthought? A recent survey conducted by ContractWorks and Censuswide found that 71% of legal teams believe their organization doesn't pay enough attention to post-signature contract management. But isn’t it just as important (if not more important) that contracts are closely managed and monitored to ensure that they perform as intended?
Once a contract is signed, failing to manage it with the same fervor seen in the approach to pre-signature management can leave an organization vulnerable to significant risk - ranging from missed deliverables and damaged relationships to fines and legal trouble.
This blog explores some of the reasons post-signature contract management is often overlooked, and how organizations can fix the problem.
The challenges of post-signature contract management
Businesses aren't ignoring post-signature contract management for no reason. This process often gets overlooked because it can be hard to master, and there isn’t one “right” way to do it.
Here are a few of the main challenges businesses face when managing contracts.
Lack of structure
Historically, most organizations do not have the processes or structure in place to manage a contract effectively after it has been signed. As Deloitte points out, "most companies really didn’t get a focus on even basic document retention until the last ten years ... [and] it’s hard to proactively manage your contractual relationships if you don’t know where the underlying contracts are or what is in them."
Different points of focus
Not every company has a dedicated contract manager or contract management team, which means there isn’t always a role invested in managing contracts after they have been signed. When people from various departments are responsible for managing their own contracts, it can be hard to create a uniform process based on different priorities and responsibilities. For instance, sales teams typically have a bias toward closing a deal, and don’t always have the tools in place to manage every deliverable and deadline throughout the life of the agreement. Finance and IT are often consumed with other work and don’t have the time to dedicate to closely monitoring contract terms and reporting on progress.
With the above in mind, effective post-signature contract management ultimately requires cross-functional collaboration to go smoothly and be sustainable. The sales team, for instance, has to communicate with the finance team to make sure everything is on budget. Meanwhile, other business units need to report on progress, so the legal team (or whoever is responsible) can compare that against the contract's milestones, timeline, and other terms.
With all of these challenges laid out, it's easy to see why organizations struggle with implementing and sustaining post-signature contract management. However, this process is too important to overlook, so organizations must develop a system that works for all parties.
Why is post-signature contract management important?
With poor or non-existent post-signature contract management, organizations are more likely to see contracts expire without anyone realizing, or automatically renew before anyone can review to see if the agreement is still needed. Moreover, an active contract that isn't being actively managed can result in missed deadlines, failed promises, and damaged business relationships.
With all of that in mind, the question becomes: Who should ultimately be responsible for post-signature contract management? There's no one-size-fits-all approach, but looking at what other businesses are doing can help you come up with a solution for your company.
Who should you assign post-signature contract management to?
ContractWorks and Censuswide found that 55% of legal teams are responsible for post-signature contract management duties. But perhaps one of the primary reasons why post-signature contract management breaks down is that there continues to be major debate over who is actually responsible.
This debate leads to a lack of clarity at many organizations. Details end up falling through the cracks, and the associated risks, costs, and concerns that come with poor post-signature contract management often get overlooked as a result. Since no one is directly responsible, no one is likely to be tracking contract performance, so there aren’t opportunities to catch minor issues before they grow into more significant problems.
Ultimately, there is no right answer as to who should be managing contracts for your organization, but it's essential that you put one person or team in charge of the process to create accountability.
Simplifying a challenging task
As mentioned, post-signature contract management isn’t easy, and it takes a lot of time and effort to get it right. Because of that, it’s important that whoever you decide is responsible for managing agreements has the support they need to be successful, including organizational buy-in, input and feedback from other departments, and technology to navigate the process efficiently.
While dedicated contract management software isn’t needed in every situation, there are many reasons businesses of all sizes adopt a solution. Here are a few of the ways contract management software simplifies the post-signature contract management process.
One central source of truth - with a contract management system in place, you can store and organize all of your agreements in one secure, online location. This makes it easier to find your contracts when you need to review information or answer questions about a specific document.
Advanced search functionality - to make the process of finding contracts even easier, advanced search functionality and OCR (optical character recognition) allows you to immediately locate any keywords in your contract management system, whether in the name of the folder or document, or within individual contracts.
Improved cross-functional collaboration - when multiple people and departments can access the same information, it eliminates the need to constantly send contracts (that potentially contain sensitive information) back and forth via email and other channels that lack extensive security measures. And by setting permission-based user roles, other departments can access the contracts they need without being able to see every document in your system. This also frees up the legal team - or whoever the primary contract manager is - from having to waste time fielding questions about basic contract details.
ContractWorks is the simple and affordable way to manage your contracts once they’ve been signed (but it also includes built-in e-signature functionality). Unlike many contract management software solutions that try to solve for the entire contract lifecycle and ultimately take months to implement, ContractWorks is designed to quickly help teams store, monitor, and report on your contracts, without replacing your existing pre-signature tools and processes.