Research confirms what we’re seeing and you’re probably feeling – Contract Lifecycle Management (CLM) technology has spiraled up from a nice-to-have to a must-have technology for companies of all shapes and sizes. But ironically, too many buyers of CLM are getting more disappointed as time goes on, and we think we know why.
Although the number of technology solutions are booming with more of them entering the market every day, it’s getting harder than ever to cut through the buzzwords and figure out where to start! And all this new tech was intended to make everyone’s live simpler! Really?
Too many of us forget -- while the advantages of automation for managing contracts are obvious -- simplifying the processes that comprise your CLM is the heartbeat of any effort to improve contracting. You must be educated about automation – know what it can and cannot do -- if you want to reap the promised rewards of CLM technologies.
Although the term CLM has become common parlance in the legal tech world, CLM is a function, not a system. In fact, if your company does not properly operate all its CLM-combined functions and processes, your success will likely be limited when adding any type of automation, including CLM, into the mix.
Ensuring that you implement a strong CLM foundation before leveraging automation into related processes is the only path to success. We call this foundation CLM Readiness.1 It is often forgotten, ignored, or avoided during the race to automation, the number one mistake made today in corporate contracting communities.
First step – examine your contracting processes
No matter how tight your budget becomes, your first step toward CLM efficiency is always ensuring your contracting foundations are solid. You can tackle this in practical stages to enable ongoing progress under all circumstances. Baby steps are the only way to go!
Contracting foundations include establishing a small, but useful arsenal of contract templates for those engagements where your own (1st party) paper can be used to kick off the contracting process. Having too many templates is overwhelming and impossible to maintain. Only develop those, starting with just one or two, that are most often used and aren’t highly negotiated.
Another foundation is setting clear parameters on when the legal department and/or the procurement or other contracting department must be engaged. Defining what contracts require certain approvals and inputs will help refine the number of different teams involved in certain contracts, and ideally reduce the number of touches a contract must have. Such a contract review policy will go a long way when reducing the cycle time of negotiations, if some teams are determined to be unnecessarily going forward.
Related to templates and contract review policy, is to have a few key playbooks to enable the business to handle certain contracts independently. Playbooks take many forms. Some are substantive negotiation guides that help with the terms inside the contracts. Some playbooks are more operational: they describe “how” contracting works, including how to have them signed, where they should be stored, where templates can be found, etc.
Second step – examine and optimize skill sets as needed
After carefully examining the overarching corporate contracting flow across departments and enterprise systems, find out more deeply who is doing what. Ask: are the right skillsets being applied to contracting or could other professionals play a bigger role, especially outside the legal team?
To do this, research certain unknowns like these:
- Perform a detailed review of how contracts flow across the company and
- Identify room for improvement.
By asking why and how, you can often reap immediate impact.
Understanding which functions in the company are critical to the contracting process can help refine the specific steps taken when routing to those experts..
For example, if the Tax department must be consulted on all negotiations of the tax provision in the contract, a few ways to make that more efficient may be:
- Create a one-page summary document for the Tax team recipient which summarizes the contract, and include the relevant tax section for review; or
- Develop a checklist with the Tax team’s input that someone else can use a pre-check before engaging Tax; or
- Designate someone inside the contracting group to serve a single point of contract and liaison for all tax questions. This person can act as a funnel.
The goal is to streamline and operationalize contracting as much possible, and to remove that sense that every contract is special and must be approached uniquely.
Whenever assessing the right balance of skills for contracting, make sure your assessment is accompanied with a plan to develop the necessary training. Skills can be acquired and uplevelled, but that requires an investment of time and resources. Creating consumable training that engages people in a way that makes contracting part of their day jobs is a necessary component to solving the contracting problem.
After optimizing processes, you can take bigger leaps toward CLM technologies, knowing that the important pre-work has been done. After improving your processes, adding technology becomes almost like an engine booster to a well-built rocket. After all, we’ve all heard horror stories about automating bad (or undefined) processes.
Once CLM technology is implemented (actually during the implementation phase), an entirely different set of skills will be needed to run and maintain that system. CLM solutions require someone to act as a system administrator who can ensure the system is doing what was expected and how it was expected. More importantly, someone needs to be available to the users of this new system to help resolve problems and continuously improve on how the system is being used. These skills sets are usually not found in a typical commercial contracting professional.
To summarize, it is critical to streamline complex commercial contracting processes before seeking CLM technology. Even small strategies can make significant improvements by using low-tech methods to allow lawyers to perform smoother legal reviews of contracts based on efficient processes, optimal templates, simplified playbooks, and continuous data-driven improvements.
Find out if you are CLM ready by taking a 5-minute assessment titled, CLM Launchpad.2 We designed this quick vitals check to help corporate legal departments (and other contracting teams) assess whether or not they are ready to benefit from CLM technology, or should they do a bit more pre-work.
END NOTES
- CLM Simplified For You, InnoLaw article
- CLM Launchpad, an InnoLaw Group platform
ABOUT THE AUTHOR
Attorney Lucy Bassli’s main expertise is commercial contracting and legal operations. She is the author of Simple Guide to Legal Innovation and CLM Simplified. Lucy was tapped to teach the Legal Operations course for Suffolk University Law School’s Legal Innovation & Technology Certificate Program. She is also a strategic advisor for LawGeex, an AI legal start-up that automates contract review. As a highly sought-after legal industry expert she works with corporate legal departments and law firms on legal service delivery, automation, smart risk-taking, and alternative resourcing models.
ABOUT InnoLaw Group
InnoLaw Group empowers legal teams to focus on only the highest value commercial transactions and legal advisory work to support key objectives of the business. Specifically, their consultants focus their Contract Lifecycle Management (CLM) consulting services on continuous improvement, process optimization and measurable outcomes. InnoLaw understands and appreciates their clients’ pressures and challenges of CLM and consider it their specialty.