RazorSign
Managing contracts without an in-house legal team can be challenging, especially for start-ups and growing businesses where they are prioritizing roles other than a general counsel. This often leaves businesses relying on external counsel until they reach a size where an in-house legal department becomes viable. However, the absence of an internal legal team doesn't diminish the importance of effective contract management, as contracts influence every facet of a business, from recruitment to expenses and sales.
Even in the absence of an in-house legal team, successful contract management is achievable with the right approach. This article outlines key tips for companies without their legal team, ensuring efficient and risk-free contract management for long-term success.
Contract management for non-lawyers
In businesses without an in-house legal team, contract management responsibilities are typically distributed across various teams, leading to inefficiencies and increased risks. To mitigate this, a Contract Lifecycle Management (CLM) solution becomes crucial. This ensures consistency in the contract management process across the business, from storing up-to-date templates in a centralized location to simplifying the handling of redlined versions. While many CLM systems are designed for in-house legal teams, companies without such teams can still benefit by ensuring that the chosen system aligns with their specific needs and can be effectively managed by non-legal professionals.
How to manage contracts without in-house counsel
Effective contract management can be accomplished without an in-house legal team. What it requires are the right people, the right forms, and the right system. Designating individuals within the company, even if not legal professionals, who understand the business and are adaptable to a new system is crucial. Developing well-written boilerplate terms and templates, along with legal reviews for crucial forms, ensures a solid foundation.
The cornerstone, however, is the right contract management system. This system should facilitate seamless storage, tracking of versions, management of signatures, milestone tracking, and compliance oversight.
Choose the right system
The right people and forms lay the foundation, but the linchpin of effective contract management lies in the system employed. Here's what an ideal contract management system needs to excel at:
Centralization: Keep boilerplate terms and the latest forms in a readily accessible, centralized location. An unorganized storage system risks losing up-to-date templates, potentially leading to the use of outdated or less-than-ideal forms.
Executed Contracts Repository: Maintain all executed contracts in a searchable repository, accessible by authorized employees from anywhere. This accessibility proves invaluable in managing business relationships and ensuring compliance with contractual obligations.
Digital Transformation: Transition older contracts from paper-based storage systems to digital, searchable versions for enhanced accessibility and efficiency.
Tracking
Version Control: Track contract versions from initial proposals to redlines and executed copies. Without a robust system, reliance on emails for version tracking can lead to time wastage, negotiation setbacks, and even unenforceable contracts.
Signature Management: Streamline the execution process by managing signatures effectively. A good system incorporates electronic signature capabilities to prevent delays and ensure accuracy.
Milestone Tracking: Track contract milestones and receive alerts approaching termination or renewal. Timely action on renewals or replacements avoids service interruptions and relationship strains, offering strategic advantages in the contract lifecycle.
Compliance Oversight: Monitor compliance issues and regulatory requirements efficiently. The system should provide easy access to contractual compliance information, preventing legal battles and ensuring adherence to regulations.
The right software
A functional contract management system invariably relies on well-designed Contract Lifecycle Management (CLM) software. While paper-based management remains an option, it poses challenges and increases the likelihood of deal disruptions.
The right CLM software offers robust tracking and storage capabilities, making it indispensable.
Key features of the right software include:
User-Friendly Contract Repository: A secure and user-friendly repository limiting access to authorized employees, even those less technologically inclined.
Version Tracking: Simplified tracking of contract versions, eliminating the need to sift through old emails, and facilitating the monitoring of key legal events.
E-Signature Tools: Effective and user-friendly e-signature tools that comply with legal requirements across jurisdictions.
Mobile Accessibility: In the era of remote work, contracts should be accessible from nearly anywhere using mobile devices.
Achieving efficiency and compliance
An in-house legal department isn't a prerequisite for effective contract management. The key lies in finding CLM software tailored to your needs. Such software not only helps sidestep common contracting pitfalls but also saves time and resources. By adhering to these contract management tips and adopting suitable CLM software, businesses can achieve both efficiency and compliance.
Conclusion
By adopting efficient contract management practices and the right CLM software, businesses can adeptly navigate the complexities of contracts without the need for a dedicated legal team. This not only saves time and resources but also positions the company for sustained success in a competitive business landscape.