Managing risk at an organization is a full-time job, especially for a general counsel (GC) or chief legal officer (CLO). As a company’s chief internal lawyer, they are expected to provide legal advice on a vast range of subjects – legal rights, risk mitigation, compliance with new and existing laws and so much more.
If that weren’t enough, GCs and CLOs are also expected to manage the organization’s legal matters, oversee outside counsel spend, conduct legal research, review internal litigation strategy, and be the ultimate approver and keeper of the organization’s contracts. Despite handling all these critical, sensitive matters, legal departments are often seen as “cost centers” and therefore are forced to do their challenging jobs without all the resources they need to succeed.
Technology, automation and artificial intelligence are key to doing more with less and streamlining processes, particularly when it comes to contracts. Contract lifecycle management (CLM) tools allow busy lawyers end-to-end control over contracts, freeing up time to focus on other tasks in the process. They can also play pivotal roles in helping corporate legal departments reduce contract management costs. For example, Pearson’s commercial transactions shared service center for more than 10,000 users worldwide achieved a 35% cost reduction and 30% improved contract turnaround time.
Contractual Pain Points
Even the simplest contracts can expose an organization to risk and liability if it’s not handled correctly. GCs and CLOs are tasked with overseeing the crucial job of examining and creating draft agreements, maintaining knowledge of the organization’s operations and legal documents, approving non-standard contract language and more.
Without a centralized solution for managing contracts on an organization-wide basis, legal departments run into countless hurdles, including:
- Inconsistent language between contracts, often caused by employees using out-of-date contract templates
- Competing objectives of moving contracts through quickly yet still having enough oversight to effectively manage risk obligations
- A lack of insight into all the organization’s current contracts
- An inability to track changes in contracts and ensure that contracts are in compliance with new and existing laws and regulations
- The risk that contracts might expire or renew without notice because no one’s tracking them
- Complicated review and approval processes for even standard contracts
- Manual review and approval processes that create longer contract cycle times
- Human error and inconsistencies inherent in manual processes, increasing the organization’s risk exposure
- Lost revenue when add-ons, upgrades and renewals are missed
- Being seen by other aspects of the business as a barrier to closing deals
The above list is by no means exhaustive. Given the large volume of contracts at today’s modern businesses, the challenges presented by trying to manage those contracts can become overwhelming when you rely on manual processes or basic contract tools that lack automation and AI and a means of creating a single source of truth for the organization’s contracts.
The Benefits of CLM Tools
While the challenges outlined above may seem daunting, they’re not insurmountable. CLM tools use automation and AI to remove the tedious, manual aspects of traditional contract management, increasing accuracy and efficiency, eliminating errors, and freeing up precious time that GCs and CLOs can use to focus on the many other critical tasks they’re responsible for handling.
Among other things, the right CLM solution will allow you to:
- Find every contract you need, when you need it
- Store all your contracts in one cloud location, creating a single source of truth for your organization’s contract data
- Have full visibility at all times into the status of contract drafting, negotiations, amendments, and renewals, ensuring that nothing’s missed or overlooked
- Implement uniform templates and playbooks to speed up contract cycle times, reduce manual errors and ensure you’re always using preferred terms
- Automate approval processes to eliminate bottlenecks
- Be notified of contract renewals to get a jumpstart on the process
- Allow for self-service, so that other departments can create standard contracts with the correct language without legal review
- Better manage risk across the organization
- Demonstrate that the legal department is a strategic partner of the business, not a cost center
The ideal CLM tool will give you real-time insights into all phases of the contract lifecycle and provide you with actionable intelligence to make informed decisions for the business. More information means a better ability to identify and control risks across the contract process.
It’s time to take control of your contracts and let automation and AI do the heavy lifting for you.