Creating a contract
- Drafting a proposed contract
- Editing a contract (also called redlining)
- Finalizing a contract
Executing a contract
- Signature
- Counter-signature
Managing a contract
- Storing an executed agreement
- Extracting data from a contract to parse out obligations, opportunities, and risks
- Pushing extracted contract data into another system
Centralize and organize your contracts.
The foundation of a Contract Lifecycle Management solution is a contract repository, which is a central online storage system for all your contracts. A repository connects to every local device and cloud storage system you use, draws in all the contracts you have in these systems, then helps you organize them into a cohesive contract portfolio. Having a single place to manage your contracts makes them easier to find and keep secure. This is especially important when different departments, such as sales, marketing, and finance, draft and execute their own agreements.
Draft contracts faster (and with ease)
Most CLM systems have a workflow management function that helps you track contracts from early drafts to redlines to final agreements. This ensures everyone knows where every contract is on your deal pipeline and helps clear up bottlenecks by identifying who is responsible for what task in each stage.
Standardize contract language
Advanced Contract Lifecycle Management solutions go one step further, enabling anyone at the organization to assemble contracts from boilerplate language and legal templates. This means each contract is built in less time and with less legal oversight. It’s a win-win for all parties involved. It also keeps your contract language standardized, so “one-off” versions of your standard policies and best practices don’t make it into binding agreements.
Extract critical data from contracts
Some of the hardest questions to answer for many organizations are, “how many of my contracts renew next quarter?” or “how many employee agreements comply with the new regulations passed last month?”
Many legal teams try to track these data points when contracts are executed, but short of actually reading every arrangement, few can answer real-time contract questions when they come up. Modern CLM software can extract this data from all of your legal agreements, so you have accurate answers any time you need them.
Artificial intelligence
The ultimate goal of CLM software is to empower legal teams to work more efficiently and effectively. Now, by leveraging artificial intelligence (AI), CLM software can read and understand contracts – and automate tasks.
Modern automation also allows legal teams to communicate and collaborate more effectively, with the completion of one task automatically triggering the initiation of another. The right CLM suite streamlines chains of email attachments with contract drafts and approvals back and forth.
Rather than operating in silos, CLM software provides a centralized repository for all contracts stored, accessed, and shared throughout the organization. This is particularly helpful in today’s remote and hybrid workplace. If legal teams are going to thrive and survive in the modern era, they need the extra bandwidth that CLM software provides.
How to choose the right CLM solution
Even when you know you need CLM, choosing the right platform can be a daunting task. Here are three steps you can take to simplify the process.
1Map out your needs.
While many legal teams will require similar solutions, the best CLM for your organization will be identified as the result of planning. The key is to know your legal processes from front to back, and the best way to do this is to write down a list of every stop your contract makes from conception to execution.
Once you’ve visualized the process, you can identify where improvements can be made. Where are your pain points? Which steps in your pipeline are dragging on longer than they should be? How often do errors occur? These questions will bring the problem into focus and help you identify the solution.
2Narrow your focus.
Now that you have your contract processes mapped out, you can begin to prioritize specific solutions. No legal practice is perfect, and your team will probably have more than a couple of pain points that stand to benefit from a CLM solution. Instead of trying to fix everything all at once, focus on one or two areas that need the most attention. By identifying these one or two problem areas, you can approach contract lifecycle management vendors with a specific outcome and have an easier time deciding who can help.
3Ask questions.
When you’re finally prepared to approach CLM vendors and explore different solutions, it’s critical to ask the right questions. For example, how long will it take to integrate the platform, and what sort of training will your team need in order to navigate the interface? How secure is the network? How will data be hosted, shared, and accessed throughout your organization and between trusted partners? What renovations is the platform currently going through, and what changes should you expect to its functionality down the line?
More than anything, you want to understand the vendor’s services as clearly as possible, how it can be applied specifically to your processes, and what kind of support you can expect should any problems arise.
For more information on how to evaluate CLM solutions, check out this guide.
