The advantages of contract lifecycle management tools for corporate legal departments
Corporate legal departments are increasingly required to advise their internal stakeholders in a manner that is scalable yet personalized, reducing the quantum of work that is outsourced to external counsel, while at the same time dealing with resource and budgetary constraints.
For some organizations, such constraints have become all the more significant during the course of the pandemic, thus leading to the evolution of what is increasingly being referred to as “Legal Department 3.0” in the latest edition of Vahura Insights.
An evolution to Legal Department 3.0 usually necessitates a revamp in the legal operating model used by the corporate legal department. While technology does not necessarily have to be the backbone of a strong legal operating model, an operating model complemented with the right set of legal tech tools can play a key role in unlocking the value that legal brings to the organization.
A key example of a legal tech solution that can play a role in enhancing the legal operations of a corporate legal department is contract lifecycle management (CLM) software. CLM is an application that helps in-house legal teams proactively digitize and manage contracts from the initiation stage through the execution, compliance and renewal stages. Some of the advantages of using a CLM product are as follows:
- Enhanced searchability through digitization: The first key advantage of a CLM is that you have all your contracts in one place, in a searchable format with required access controls. The importance of this cannot be overstated as many organisations found to their detriment during the pandemic.
- Automating routine and standardized contracts: Most CLMS tools have contract automation features that allow users to generate contracts within minutes. While this feature may not be feasible for high-complex contracts, routine employment agreements, NDA’s, and standard-form vendor agreements can easily be automated. Since this degree of simplicity can allow business teams to generate agreements, it could free up significant bandwidth for legal teams.
- Integration with the legal department playbook: For large corporate legal departments that have developed playbooks to lay out the company’s legal risk framework, certain CLMS tools have the ability to integrate these playbooks. This allows the legal department to generate and manage contracts of varying complexities at scale, while saving significant amounts of time, thereby allowing legal to focus on the strategic legal matters of the organization.
- Data-driven insights: A few CLMS tools have features that allow it to analyze the textual and numeric data within contracts and arrive at insights on key clauses such as obligations, revenue and warranties. In addition to providing insights to legal teams, these data points could potentially prove to be useful to business teams as well, particularly while negotiating commercial terms in agreements.
- Artificial intelligence driven insights: A few premium CLMS software tools have integrated AI based systems that have the ability ‘learn’ the company’s risk appetite either by analyzing the legal playbook of an organization, or by reviewing a bulk of contracts flowing through the CLM system itself. This allows the CLM tool to automatically red-line key deviations in an agreement and flag them to the legal counsel. Some CLM platforms combine AI with a service model to provide actionable data points for business such as revenue leakages, and revenue opportunities.
- Workflow management: Most CLM tools have integrated workflow management features that allow legal teams to set up custom workflows for various types of agreements. Such workflows can help in streamlining processes, thereby unlocking valuable bandwidth, and can also help in providing the general counsel with a bird’s eye view on the status of all contracts in the system and identifying potential bottlenecks that need to be addressed.
CLM platforms are a must have for any modern corporate legal department. Search for "Contract Management" to find the CLM products listed on this platform. If you have used a CLM platform and want the world to discover it, please recommend them here for a listing.
For a deeper consultative conversation, please fill up the form on this page to set up a complimentary meet with the helpful folks at Vahura Consulting.