“It is impossible to unsign a contract, so do all your thinking before you sign it” - Warren Buffett
That is exactly how contracts work. The process of successfully forming a contract is all over the place. Right from creating the first rough draft to sending the final one for signatures, there are at least 10 versions. The negotiation processes between parties can go for days to weeks to months in the blink of an eye. There can be human errors in typing, or a missed clause that can change the meaning of the entire contract. We can list many more of these instances which have
trapped the traditional legal industry in its shackles.
Current Scenarios
With Contract Lifecycle Management Software (CLM) grabbing the spotlight, new-age contracts are rapidly changing the face of the contracting world. The
cumbersome paper contracts are being replaced by digital formats. From automated contract templates to e-signatures, a well-tuned CLM offers a speedy
contracting process.
What exactly is Contract Lifecycle Management?
The successful execution of a contract does not end at drafting and signing. It is, in fact the beginning of long procedures including negotiations, editing, redrafting, adding standard clauses and much more. It is a time-consuming process which prone to human errors even at the slightest instances. The management of this
entire lifecycle that a contract goes through- from the first to the final draft and ahead, is termed as “Contract Lifecycle Management”.
What does a Contract Lifecycle Management Software Do?
A CLM software digitizes the entire process of contract management. It brings your entire contracting portfolio from paper and pen onto a screen. This creates a single digital platform to collaborate on every contract-related task.
Legal teams have dealt with heaps of paper-backed contracts, but with a CLM, there won’t be any more heaps on your desk!
Some Facts: Goldman Sachs found that digitizing the contract management process can :
There are 9 stages or processes that a CLM software deals with :
-
Request: A contract comes into existence because of the will of parties to enter into a contract. It is the outcome of 2 more people willing to enter into a
legal agreement to achieve a mutual goal. A CLM software would help you capture critical data that would encompass contract critical information. (And you
won’t even lose this since you didn’t scribble it on a paper)
Input – Information on what the contract is about, its specific, the details of the parties involved, start and end date of the contract.
Output – A contract request in generated in the CLM and critical information is stored on the virtual dashboard. Beginning of an audit trail.
-
Draft: This is the stage where contracts are authored. Using the available information, a draft of the tentative contract is created. This process of forming
the contract in a legal language is made easy by “Automated Templates”.
Input – Initial information that is stored in the CLM at the time of initiating a contract request.
Output – A full contract agreement draft to work on ahead.
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Review: Contract is an agreement between 2 or more parties. Thus, it is apparent that each will have their own terms and conditions. Once the draft is ready,
the terms and clauses would be crossed check by all the parties involved using the CLM. If there are any changes by anyone, the same can be made using
the same document. The redlining feature will highlight such changes for all parties to see. If any such changes are required to be sanctioned by others, CLM
also lets you configure workflows for speedy approvals. Once all parties are satisfied with the final draft, contract then moves ahead for signature.
Input – Contract document.
Output – Having a final contract document drafted with mutual consent of the parties involved.
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Execution: A contract comes into existence after the signature of all the parties involved. Once the final document is ready, it will be digitally shared with
the parties to attest their electronic signatures.
Input – Unsigned contract document.
Output – Contract document with e-signatures affixed by all parties.
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Repository: Once the contract has gained power upon signature, the CLM will automatically save this contract in a centralized repository. This will help you
have sample contracts and clauses ready at your disposal for renewals or similar contracts in the future.
Input – Signed contract document.
Output – Saved contract in the document repository for future references using open API.
-
Record: With a record of every contract executed, stored in the CLM database, you will have complete control of business-critical information. You can
effortlessly backup, review or revisit, refer or enforce policies that are a part of this database. It ensures high compliance with safe storage facility.
Input – Contract documents, agreements, other critical notes.
Output – Achieving high compliance enforceability with safe record management.
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Retrieval: With a central repository, you can quickly access any past contracts using searchable criteria like party names, date of the contract, etc.
Input – Contract document with searchable meta data.
Output – Immediate search results of accurate information and documents.
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Reporting: As the contract passes through all the above stages, the CLM creates an audit trail that records every single activity that took place on the contract
document. It proves to be very helpful in mining accurate contract data for users.
Input – Access to contract repository.
Output – Ease of data availability for generating custom reports and gaining visibility on the firm’s contracting portfolio.
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Renewals: Missing out on renewal dates of contracts is quite an understandable mistake that can happen when you deal with it manually. With a CLM, you
get proactive updates once any of your contracts reach near their dates of expiry. This way, you can never miss any deadlines.
Input – Contract documents with updated and accurate date of expiry.
Output – Easy and trackable contract renewals.
Key Takeaways
A contract lifecycle management makes the entire contracting practice very futuristic. With the power digitization, legal teams can focus more on the law and less on the administrative tasks:
- The management of an entire lifecycle of a contract – from initiation to renewal or expiry is “Contract Lifecycle Management”.
- A CLM software digitally streamlines the entire process making it effortless for the legal team to manage their contracts.
- 9 processes that a CLM looks after:
- Request
- Draft
- Review
- Execution
- Repository
- Record
- Retrieval
- Reporting
- Renewals
- Lawyers can focus more on the law with a CLM managing the administrative tasks.
- Benefits from using CLM are transforming businesses into futuristic enterprises.
Final Thoughts
A CLM’s primary aim is to make your job easy. PracticeLeague's Contract Lifecycle Management Software does exactly that. It takes the load off your shoulders and lets you focusyour energy on more important tasks at hand. With our automated templates, redlining and e-signature processes, you can manage your
contracting portfolio more efficiently than your competitors.
Recommended Reading
Here are a few case studies on how our CLM has helped numerous of our clients to manage their contract lifecycles without any extra efforts :
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