Contract lifecycle management refers to the management of each and every step in the life of an organisation’s contracts, starting from the initial request, continuing through the process of negotiation, execution, and ending finally at the expiration or renewal of the contract. Efficient utilization of CLM automation tool streamlines and optimises every step in a contract lifecycle, consequently increasing business productivity and leading to overall organisational growth.
Traditionally, legal teams and General Counsel have been responsible for the efficient and timely completion of the contract lifecycle, so much so that the management of contracts often ends up consuming a major chunk of their time. Until a decade ago, the entire process of execution of a contract, from the initial offer to the final signature, would take anywhere between a couple of weeks to over a month. Overseeing the drafting of contract templates, participating in series of negotiations, as well as managing performance obligations and timelines simultaneously, legal teams often found themselves unable to devote time to many other important tasks. Moreover, not only were lawyers juggling multiple tasks, most of these tasks were highly time taking and repetitive in nature. Thanks to technology enabled automation, this entire cycle has been reduced to a fraction, with a substantial increase in accuracy.
Within an organization, the legal department is often referred to as the “fire-fighting division”, called in to reduce damage and efficiently resolve disputes by ensuring minimum financial loss to the company. However, in the last two decades, Legal Departments and General Counsel have been playing a more proactive role in the growth of the company by protecting against potential risk, reducing missed obligations in the execution of contracts and increasing compliance. This is at marked variance from the earlier reactive mode that used to be in prevalence amongst corporate legal departments.
As legally binding documents, every part of a contract must be thoroughly analysed for any loopholes or potential risk. For example, a loosely drafted indemnity clause can cost a company thousands of dollars in legal fees alone. Additionally, it also falls upon the legal department to secure the company’s interest by conducting a comprehensive background check of the opposite party and its credit rating, checking for instances of non-performance in the past. As such, the legal department plays the role of not just an advisor, but also that of a protector, saving the company from major losses.
Every contract requires the participation of multiple stakeholders across departments and organisations, and it falls on the legal team to ensure the smooth coordination amongst all these participants and bring a contract to fruition. Right from the initial request for contracting to template authoring, negotiation and version tracking, contract review, approval and contract execution, including real-time contract updates, it is the job of the General Counsel to ensure efficient communication between parties. In this regard, a cloud-enabled CLM platform is advantageous to streamline contract process by enabling teams to collaborate with external stakeholders, clients/suppliers and ensure that each team member knows about what is happening within the organization.
The job of the legal team does not end with the execution of the contract; ensuring due contract performance and fulfilment of compliance obligations is an equally important aspect of the same. A company stands to lose millions of dollars on a single missed deadline, and it is the responsibility of the General Counsel to ensure that all contractual obligations are met timely and in due form. Needless to say, this requires a thorough system of auditing, regular compliance checks and a robust mechanism of follow up and timely updates from all departments. While all these tasks were performed manually in the traditional in-house set up, intuitive CLM solutions offer integrated audit trails and task management capabilities, enabling legal teams to stay on top of all contractual performance and compliance obligations.
For any company, the efficient management of contracts helps in increasing the productivity in each stage of the contract lifecycle, by decreasing bottlenecks, reducing the turnaround time and minimising risk or potential loopholes. A comprehensive contract lifecycle management solution has the ability to significantly increase business productivity by streamlining each step of the contract lifecycle. Let us dive into a little detail about what this looks like in day-to-day functioning-
The efficient utilization of CLM automation tools like Razor365 enables legal teams to reduce the contract turnaround time by integrating the various steps in a contract lifecycle on a single platform, while simultaneously reducing human effort and error. Today, end-to-end CLM solutions for legal department are streamlining and optimising the entire process of contracting, so that General Counsel and legal departments are able to add more value to the company’s growth and business productivity. Faster timelines, informed decision making, increasing compliance, and efficient risk mitigation when combined, this efficient management of contracts is bound to lead a company to greater productivity.