As general counsels, we understand that contracts are essential for the
smallest of transactions, from something as
simple as a parking slip, to a transaction as massive as a corporate merger
worth millions of dollars. For as long as
memory serves, contracts have formed the hinge that holds together the
parties to a transaction, ensuring the smooth
running of any business.
Contracts, however, can be tiresome. As legally binding documents, each
contract comes ingrained with a set of rights
and obligations that are enforceable and missing a deadline can mean having
to pay a substantial amount of money in
damages due to breach or non-performance.
Thanks to the integration of technology-driven automation into the delivery
of legal
services, today’s intuitive
contract lifecycle management tools have transformed the entire universe of
contracts.
In this post, we discuss how
end-to-end CLM
tools has improved the different parts of the
contract lifecycle.
The contract lifecycle - then and now
Drafting & Contract
Creation
Then- Repetitive and cumbersome, as
done manually.
No way to automate even standard-boilerplate contracts.
Now- Pre-drafted templates and clause
libraries
make creating a contract as simple as filling a form.
Negotiation &
Settlement/Redlining
Then- The lengthiest part of a contract
lifecycle.
Multiple versions were exchanged between parties with no
way to
compare drafts or find deviations.
Now- A single platform to compare
various versions
of a document, add their comments, track deviations and
reach
consensus.
Signing & Execution
Then- The lengthiest part of a contract
lifecycle.
Multiple versions were exchanged between parties with no
way to
compare drafts or find deviations.
Now- Integrated system of e-signature
ensures
execution within minutes
Storage & Record
Management
Then- Numerous errors as there was no
single
standard for storage and management of records.
Then- No way to retrieve specific
information-
lawyers had to meticulously search across all documents
and spend
numerous hours.
Now- Keyword and meta-data search,
custom- filters
to ensure a thorough, multi-layered process of search
and retrieval.
Audit & Reporting
Then- Performed manually by
professional auditors
and specialized lawyers. Took weeks on an end as it was
done
manually.
Now- With multi-system integrations,
executed
contracts can be automatically stored and analyzed for
performance
and contractual compliances.
Renewal Performance &
Discharge Of
Obligations
Then- Done manually by legal teams by
resorting to
memoranda, would often cause massive losses due to
missed deadlines.
Now- RazorSign offers integrated task
management
and dashboard updates in real-time, sending reminders.
Contract creation
Once parties decide to enter into a legally binding relationship, the next
step is to solidify the rights and
obligations of both parties on paper. Traditionally, this meant that lawyers
had to draft each contract from scratch, a
task that was highly time-consuming and repetitive in nature. With no method
of reducing duplication of work, an
increase in the volume of business translated directly into an increase in
the workload for the legal department.
Legal tech
companies understood that while all contracts are
different in nature, there
are certain essential clauses that must be present in every contract, and
that this
information could easily be templatized. Today, tools for contract lifecycle
management
enable legal departments to use pre-drafted contract templates which can be
modified to
create the perfect first draft. Intuitive products like RazorSign enable
legal teams to
create contracts in a few simple steps with the help of their contract
template manager
and exhaustive clause library. Creating a non-disclosure agreement is as
simple as
filling in the details of the party to a pre-drafted template.
Negotiation & settlement
Traditionally, the process of negotiation and finalization would entail
comparing multiple drafts and redlining of
documents that ran into many volumes. The negotiation of a multiparty
commercial contract meant large legal teams
spending days and weeks, going over each and every clause, trying to find a
potential loophole or a potential risk. As
electronic communication became the norm, this practice improved only
slightly, with legal teams sending each other
multiple versions of a single contract, often leading to chaos.
One of the ways in which contract lifecycle management tools have been able
to substantially reduce the time taken in
contracting is by cutting down on the time taken during negotiation and
finalization of contracts. Today, legal teams
can make use of a single platform to compare various versions of a document,
add their comments, collaborate with
multiple stakeholders, compare and track deviations, create risk heatmaps
and reach consensus, all in less than a week.
Signing & execution
The traditional method of execution of a contract meant that it had to be
sent to each party by registered post, signed,
stamped and then stored in cabinets or lockers. Needless to say, not only
was this process highly time-consuming, it
also made the execution of a contract with multiple parties an extremely
tedious task.
A turning point in the process of contract automation was the advent of
electronic signatures, which enabled the
paperless signing of documents. eSignature tools could be used to securely
execute contracts, thus reducing not just
paperwork, but also effectively cutting down the time spent in the execution
of the contract. Robust end-to-end CLM
solutions like RazorSign offer in-built functionalities for affixing
e-signatures, enabling you to sign and execute
legally binding contracts instantly, without delays.
Storage & record management
Traditionally, there existed no specific standard for the storage of contracts. Legal teams would often
struggle with
multiple versions of the same contract saved in a single folder, leading to
numerous
errors that could easily be avoided.
Today, contract management tools enable legal teams to effortlessly store
all contracts on-premises or on a secure
cloud, making sure that these documents are safe from the threat of loss due
to fire, theft, flood, or any other such
natural calamity. More importantly, all information is easily accessible
within minutes as it is stored at a central
location.
Bearing these in mind, essentially, the relevance of a prompt contract
management tool is pronounced all the more during
recent times and going forward. RazorSign has helped organizations helped
organizations automate contract management
systems and align the organization's performance with those of the
stakeholders' and internal teams.
Search & retrieval
Imagine having to search manually for a simple detail through a document
that runs into several pages. In the era of
paper contracts, armies of junior lawyers and interns were tasked with the
monotonous job of tagging, highlighting and
flagging the important information present in a contract. Sadly, this was a
problem that continued even with the
electronic storage of contracts, with no way to collectively search all
related documents using a specific keyword, or
by setting up filters.
In the age of CLM-powered automation, the time spent on search and retrieval
of information has been reduced to a
fraction of the original time by employing comprehensive techniques of
search and filtration. As they are stored at a
central location, all documents communication, and relevant information of a
party are inter-connected, ensuring that an
important document or detail never gets missed. RazorSign offers integrated
meta-data search and custom criteria
filtering functionalities, making retrieval of information possible within
minutes. Thus, looking for an essential
detail like the date of renewal becomes as simple as typing a keyword.
Audit & reporting
Auditing contracts refers to the process of evaluating and verifying the
accuracy of the contractor's policies,
controls, and systems by completing a close inspection of documents such as
transaction records, operations logs, and
account books. It serves as a check on the parties, to ensure that there is
due compliance with regulatory standards and
prevention of fraud. In absence of an integrated platform, contractual audit
and reporting was performed manually.
Contract management simplifies this process by connecting executed contracts
with
various compliance mechanisms
and creating an efficient system of checks
in the form of timely reminders, notifications and risk heatmaps once a
contract has
been executed, relevant portions can be earmarked and assigned to the
correct
stakeholders according to performance obligations.
A well-rounded CLM software like RazorSign has the ability to seamlessly
integrate with various core business systems
such as tools for customer relationship management and enterprise
resource planning, so as to be able to provide timely
reminders for contract fulfillment and compliance.
Renewal & performance
The execution of a contract isn’t the end of its lifecycle - a live contract
requires continuous performance, whether in
the form of monthly or quarterly payments, or the performance of any other
obligations. In terms of contracts of high
commercial value, a missed deadline translates into the loss of thousands of
dollars in penalty or renewal fees. As the
volume of business increases, it becomes increasingly difficult to keep
track of all this information manually.
This is where contract management tools are able to help companies save
substantial amounts of money, effort and time.
By allowing companies to track key terms, dates and deadlines of any
contract, CLM tools are able to send reminders in
real-time to the concerned person with respect to renewal or compliance
deadlines.
Task and obligation management becomes simpler with RazorSigns’ integrated
Task Management, as different parts of an
executed document containing performance obligations are identified and
assigned to personnel in the respective
departments. Timely alerts and reminders, combined with real-time updates on
an active workflow dashboard ensure that
you never miss a deadline.
Conclusion
From creating the initial draft, to the final execution of the contract,
automation in the field of contract lifecycle
management has streamlined and optimized each step of the process of
commercial contracting. The right CLM tool has the
potential to enable a company to execute hundreds of contracts
simultaneously, adding exponential growth to every
department and ultimately leading the company to greater profitability. With
contracts forming an integral part of every
commercial transaction, it is time that enterprises make the switch from
manual contract management to efficient CLM
automation.
RazorSign
