Contracts have always been an integral part of any business organization as they hold key information of all business transactions and often are a single source of truth for business dealings. With so much at stake owing to the constantly changing and complex regulatory framework, managing contracts manually can just not suffice anymore. Especially when large companies are dealing in thousands of such contracts on a yearly basis.
With the onus of managing, reviewing and negotiating contracts falling on the corporate legal department, they are in constant pressure to deliver compliant, profitable contracts quickly. These departments are fast realizing the role automation and AI in making contract management more sophisticated, analytical and strategic. There are growing instances of legal departments opting for advanced contract management solutions, not to manage contracts alone, but to get better business insights, improve turn-around time, collaborate effectively with various departments and make informed decisions.
Let us look at the 4 key roles contracts play in legal department operations and understand why digitizing contracts is the way forward:
Providing strategic data for risk management
Managing risk in order to avoid legal issues, penalties, and losses is an important task carried out by legal operations. Contracts, if not drafted and reviewed properly can hide huge risks and prospects for non-compliance. Legal department needs to have a holistic view of contracts in order to draft practices that would benefit both sales as well as legal teams from a risk standpoint. But, without a centralized digital CLM solution, pulling out all important data to gain insights into risk is not possible.
By centralizing contracts in a single unified location, they can be turned into a powerhouse of analytical data for legal departments to leverage. Legal can pull out reports to understand which negotiations take the longest, which clauses are most risky, or which vendor has not been performing well or defaulting payments. Having all data handy helps legal teams find permanent solutions for issues and set up procedures to avoid future hiccups.
Streamlining and standardizing processes
Contract turn-around time is often affected due to manual processes. With a lack of visibility into where contracts are stuck at a given point of time, following up becomes a task. With emails used to send contract documents over, these often get ignored or lost in the bulk and can lead to confusion regarding the latest contract version. Moreover, with no standardized templates or clauses, legal teams have a hard time reviewing contracts contributing to further delays.
A robust contract management system streamlines contracting processes. Automated workflows with alerts and triggers ensure contracts are routed to right stakeholders. Legal teams can set up pre-approved templates for reduced reviewing time. With the system automatically saving the latest version and tracking all changes, there is increased accountability and no confusion about the latest version. By way of configuring milestones and metrics, legal teams can track contract performance, get insights into contract progress and take timely action in times of any missed obligations or compliance.
Establishing Negotiations playbook
When it comes to contracts, negotiations are always tricky with multiple back and forth until both parties come to a common ground with respect to certain clauses. Legal teams need to handle these carefully and are often blinded without any past data to look at.
An advanced contract management system can act as eyes of the legal departments. With all conversations stored at one point, legal has full view of key data. By means of digging into past contracts and reports, legal teams can draw insights on which clauses are always negotiated or what alternate language to use to negotiate better with certain vendors during renewals.
Increasing cross-departmental collaboration
Corporate legal departments have always had the reputation of being unapproachable. Other departments have always tried to steer clear of them unless any contracting needs arose. But with the roles of legal departments and legal heads becoming more dynamic and changing every day, their involvement in safeguarding businesses and contributing to decision making is fast rising.
To cope up with the increasing demands and challenges, legal departments are opting for advanced, AI powered contracting solutions. These solutions are integrated with CRM and ERP systems for seamless collaborations across departments. With a centralized, unified contract management system, CLM helps develop a single source of truth for all contracting requirements of an organization across the globe. It helps unify legal departments from all locations to work in cohesion and transfer knowledge and information.
With the role of corporate legal evolving daily, they need to adapt to evolving technology to move forward. With advanced contract management solutions, legal departments finally have the means to extract valuable information from contracts and draw powerful insights for informed decision making. Contracts are and will always be an important part of legal departments and with the right tools, legal can make the most of them.
Ultria CLM offers unparalleled insights into your contract documents, quickly providing you with relevant information about contract performance and regulatory compliance via a single view customizable dashboard. To learn more about how Ultria can ensure compliance across all your agreements and help you follow the best practices for contract management contact us now.