The role of a contract lifecycle management (CLM) solution is to save time, reduce risk, and remove bottlenecks for both the in-house legal department and the wider business.
By nature, commercial contracts carry a high degree of risk, including financial loss. If the management of these contracts is inefficient or ineffective, it exacerbates this risk — and this is why the decision to purchase a CLM is often high on the list of ‘must-haves’.
A new contract management solution also needs to be fit for purpose and provide a high ROI, yet Gartner estimates that by 2025 legal departments will capture just 30 percent of the potential benefit from their CLM investments.
According to Gartner, organizations will have better long-term results when they:
- consider how technology will advance specific operational functionality or business outcomes;
- have leaders who plan accordingly and reduce the risk of spending money on ill-fitting and poorly adopted systems; and
- have legal leaders who prioritize capabilities to match their process maturity rather than pursuing a ‘big bang’ approach, which may only reach a fraction of its expected value.
Therefore, it’s essential to approach the CLM selection process with a well-thought-out and holistic plan to ensure a smooth path to digital transformation. Understanding the issues your contract management software needs to solve and the specific fundamentals and best practices of CLM, means you’re better positioned to ask the right questions and make the best decision for your legal team and the business.
1. Will a CLM help to reduce costs?
When a CLM is part of a platform, such as a legal workspace, all legal work is managed in one place. This negates the need for several point solutions to address matters, contracts, spend, documents, and reporting, saving time and budget.
With just one provider, it’s possible to consolidate subscription fees and renewals instead of paying separate and expensive subscriptions, with the bonus of reducing time spent on administration.
“Matters and Contracts in one workspace is just more cost-effective; it’s less effort and time to implement, and it’s one simple interface where both the legal team and the business work more efficiently. No one wastes time duplicating work, looking for information in multiple places, or consolidating reports … everything is right there.”
Matt Brasch — Associate General Counsel, Buckle
2. How will a CLM improve productivity and turn-around times?
A CLM gives you back many hours, simply because it automates tasks that previously required manual actions, such as administrative work and contract approvals. We talk more about automation and self-service below, but some key features to look for include:
- the ability for the legal team and the business to track the lifecycle and status of contracts to help remove bottlenecks, reducing queries on contract status;
- version control so everyone’s on the same page;
- the ability to collaborate within a contract file; and
- quick and simple execution with electronic signatures.
With a contract management system, you can gather all your contracts from disconnected hard drives, shared drives, emails (and perhaps even filing cabinets), and collate them all in one solution.
Then, it’s time to think about how you will identify, extract, and analyze the information from your contracts. Look for a CLM that can identify key values and clauses with AI-powered import and review and automatically copy it into your CLM. This enables you to quickly understand what’s in your contracts, effectively manage renewals, spot opportunities, and control risk — without having to manually scroll through long documents to find relevant dates, names, and values.
3. How does a CLM provide context for all legal work?
Contracts and matters are naturally interconnected; therefore, a CLM that works with a matter management solution in a legal workspace enables deep context for all your legal work. Contextual data, documents, and correspondence generated through the contract formation process are all connected to the actual contract document, providing a single source of truth.
There will also likely be questions of interpretation or intent at some point on the contract’s journey. With a single source of truth, finding answers is quick, making it possible to make an informed response to any queries. In the event of litigation, a connected contract and matter management system means you can attach the litigation matter to the contract document, which links to all the contextual information. This makes the litigation process more efficient, more informed, and more effective.
Connected contracts and matters bring higher ROI
With matters and contracts working together on the same platform, you also have superior ROI on time and workflow.
Time: When contracts and matters operate within the same legal workspace, you get time back, as there’s no need to switch systems. There’s visibility across all legal work — not just isolated contract-related components of legal work — including the history behind a contract, task creation, activity, and status tracking.
A matter management system provides streamlined intake and triage, collaboration within matters, and matter grids to filter and save views. Combining these features with a contract management system with CLM, self-service contract creation, and contract approval workflows means you’ll have a powerful and time-saving combination.
Workflow: A CLM enables the automation of all contract processes, from drafting to execution, with an audit report of any approvals given. As a contract is often the output from a wider business initiative or a component that assists the business in achieving a goal, capturing the information that becomes before the contract’s creation and shapes all past, present, and future negotiations is necessary. The way to achieve this is within a matter management system that collates data, information, files, and communications about a business initiative in a single system. When this connects to a contract management system with a CLM, you have complete context and workflow efficiencies.
An Association of Corporate Counsel report found that of those seeking to invest in legal tech within 12 months, more than half were considering contract management, and 36 percent, matter management. So choosing a legal tech solution that combines both is a sensible and economical choice, particularly in light of Gartner’s advice to think long-term for success.
“I was trying to find a solution that we could use end-to-end with billing, looking at new matters, a CMS storage solution, and as a method of communicating with the business and enabling them to check the status in real-time… so having an end-to-end solution was certainly a part of the solution to go with LawVu.”
Rosanna Biggs — General Counsel, Linktree
4. How will a CLM empower the business?
When the wider business can create, manage, and upload contracts with little or no help from the legal team, you gain back time to spend on higher-value and more impactful tasks.
A CLM that is part of a legal workspace minimizes change and disruption for the wider business. It offers a single interface to learn for all training, onboarding, and troubleshooting, just one solution for IT to work with, seamless data to drive better decision making, and delivers a consistent end-to-end process with the all-important one source of truth.
Integrations with enterprise solutions enable colleagues in other departments to create contracts from the tools they’re already working in. For example, with a Salesforce integration, the sales team can create contracts directly from opportunities, with the data merged with the actual contracts and round-tripped back to Salesforce so everyone is on the same page. Other integrations that empower the wider business to engage with the contract process and action tasks include email and communication, file management and document processing, and digital signing.
Offering a ‘legal front door’ via a hub or portal is another way to enable self-service contract creation for the wider business. Business users can generate simple contracts, such as NDAs, access knowledge articles to guide them through the process, and easily manage and track a contract through its lifecycle, including notifications, key dates, and renewals.
Self-service contract creation empowers business users to take responsibility for some of their own legal work, which results in:
- increases in legal velocity and decreases in cycle times;
- being kept up-to-date with the live status of contracts;
- the removal of bottlenecks with improved commercial outcomes; and
- a central repository of contracts for better visibility and management.
When an organization simplifies its contracts and contract process, connects the legal function to the business, gets the right type of resourcing around it, and puts the technology in as an enabler, then, says Craig Conte, Lead Partner for Legal Operate, that’s where the real business case victories actually come.
5. What is the implementation process of the CLM?
Purchasing new solutions is exciting but can also be a little daunting. Ensure you understand the implementation process from the outset, so expectations are clear from both your own and the vendor’s perspectives.
As Alex Smith, LawVu’s VP of Customer Success says, implementation is an important part of the legal tech journey, so it’s essential that it:
- delivers value quickly;
- facilitates adoption by the legal team and the wider business so everyone can enjoy using the new legal tech; and
- ensures no barriers are blocking the movement forward through the implementation process and beyond.
Contract management as part of a legal workspace
Contract management helps you reduce risk and remove bottlenecks, relieves you of manual and repetitive tasks, and gives you back time. When contract management connects with a matter management solution within a legal workspace, there are further benefits as they seamlessly work together to save time, increase productivity, and provide deep context for all your legal work. This means you can focus on the higher-value, strategic work you moved in-house to do and become a more Connected Legal Function, optimizing productivity and engagement with your work, team, and the wider business.