As the Legal Tech industry continues to grow, most legal teams have come to the conclusion that they need some sort of Contract Lifecycle Management (CLM) software to organize their contracts, increase productivity, and position themselves as a business partner. But there’s an abundance of information about CLM software to explore – and it can be overwhelming to dive in. In this post, we’ll cover what CLM is and the ways it benefits both legal teams and their partners across the business.
What is CLM?
Effectively named, CLM solutions manage the contract lifecycle, which means they help with the steps in the contracting process, including:
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
The ultimate goal of Contract Lifecycle Management (CLM) software is to empower legal teams to work more efficiently and effectively. Prior to the availability of modern CLM solutions, managing contracts was a time-consuming and tedious process. But now, by leveraging artificial intelligence (AI), certain 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 typical chain of email attachments with contract drafts and approvals back and forth is streamlined by the right CLM suite.
This greatly improves legal teams’ organization. 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. Different CLM suites offer a variety of features and benefits, but a solid CLM solution will solve most or all of the following issues.
Centralize and Organize Your Contracts
The foundation of a CLM solution is a contract repository, which is a central online storage system for all your contracts. A contract 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 contracts easier to find and keep secure. This is especially important when different departments 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 CLM workflow tools go a step further and help you assemble contracts from boilerplate language and legal templates, so you can develop contracts in less time, and which require less legal review. 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 contract, 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.
For more information on how to evaluate CLM solutions, check out this eBook. And if you’re ready to ensure that every contract you create, sign, and implement is managed as well as possible, then contact LinkSquares today.
