Contracts play a pivotal role in how your business is conducted and the results it achieves. Failing to manage the creation, execution and operation of those contracts exposes your organization to unnecessary risks, potential loss of revenue and increased costs. An organization cannot claim to be in control of their business if their contracts are left unattended, so it’s increasingly important for organizations to make implementing an effective contract management system (CMS) a top priority.
Why You Should Use a CMS
While there has been a tremendous leap forward with respect to contract management technology, there still is an increased need for lawyers to mitigate risk while simultaneously becoming more efficient at contract archiving. When your contract process is automated, contracts are centrally located and changes tracked in real time, it’s easy to keep users across your organization up to speed and accountable. Automation helps your legal department:
- Mitigate risks and identify potential bottlenecks as well as other areas for process improvement.
- Realize significant business value, such as broader collaboration, end-to-end process support and faster contracting cycles.
- Eliminate manual, paper-based work products by adding features such as e-signature.
- Leverage business intelligence or analytics in order to incorporate a robust set of metric-based tools to assess contract compliance and user performance.
Effective contract automation also allows for expanded knowledge transfer. For example, in the past when an in-house attorney left a firm, that person’s knowledge and expertise walked out the door the minute they did. When an automated contract management system is in place, it can serve as an effective repository for preserving and codifying that specialized knowledge by using templates and digitized contract playbooks. Contract automation can also serve as a useful resource in training less experienced attorneys, allowing them to gain insight by using digital tools that can be incorporated into the contract management platform. Using these tools can alleviate some of the burden placed on senior attorneys by freeing them up to focus their attention on more complex strategic efforts, including those that provide greater returns to their organization.
Which Type of CMS Is Best
Contract management systems come in many different forms, ranging from simple database systems that allow companies to find their contracts and track basic information (such as expiration dates and renewal deadlines) to complete contract lifecycle management systems that fully automate the contract lifecycle — from the initial contract request through contract creation, signing, document storage and post-contract reporting. Some systems are primarily intended to support the procurement function and others focus more on the sales side, but increasingly, these systems are being designed to handle all types of contracts.
While a simple database and tickler system may be adequate for companies with only a small number of contracts, for larger organizations, it may be more prudent to incorporate a complete CMS, which will add significant functionality to help manage what, for many companies, is an increasingly complex and critical area. There is not a one size fits all solution.
When we work with our clients, we carefully evaluate their current state in order to gain a thorough understanding of the client’s overall business needs, infrastructure, volume of work, policies and procedures and the skill sets of the workforce performing the contract management function.
Our Team has researched scores of CM technology vendors and has developed comprehensive checklists and system criteria that can be used during a clients’ system evaluation and vetting process. Although many CM systems have the ability to be quickly deployed, companies must ensure the platform they select has the ability to scale as their business needs change or evolve. Ultimately, the goal of any CM implementation should be how to transform the legal professional’s workflow into smartly organized digital information.
In efforts to better assist organizations who may be considering implementing a contract management system, we have developed the 7 Steps to Contract Management Survival Checklist.
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Mark Yacano is a recognized innovator in the delivery of legal services and a trusted adviser to corporate law departments working with corporate counsel on both business and legal strategy. As the Global Practice Leader, Managed Legal Services at Major, Lindsey & Africa, Mark and his colleagues in the Solutions Practice Group work with clients to develop outsourced talent solutions that allow them to reduce their legal fees while improving the quality of work performed on their behalf. He can be reached at (202) 292-2887 and email@example.com.