In this era of accelerating technology, if you have a challenge, there’s probably a solution that can solve it. You only need to know where to look. Whether you’re a project manager in a corporate legal department or part of a procurement team, contract lifecycle management (CLM) software can provide a strong start to improving relevant metrics like time-to-execution, cost-per-contract, and even employee turnover rates. 

CLM software sounds like it includes everything you need on paper, but the reality is that more than a third of companies using CLM solutions also leverage artificial intelligence (AI) tools to further optimize contract workflows and maximize results.

Stages of Contract Management and CLM Tools That Can Help

Today, there are end-to-end contract lifecycle management solutions like LinkSquares that help corporate legal departments write, analyze, finalize, sign, and store agreements from one centralized dashboard. Seamless oversight is a foundational must-have for effective contract management, but your tech stack shouldn’t end there. 

Most organizations also use fully integrated tools to complement every stage of the CLM process. Once you’ve assessed the biggest drains on your resources, you’ll know where to start bolstering your tech stack with the right solutions.

Stage 1: Drafting

All contracts begin with a drafter who considers standard inclusions, the company’s position playbook (an often overlooked aspect as most companies do not have one in place), industry best practices, high-level goals, and potential risks faced by the company. Drafts must include every possible provision and be completely error-free to reduce the risk of litigation or profit loss down the road.

Recommended: Document Assembly CLM Tools [Example: SAP Ariba] 

Document assembly tools can be manual or automated. At minimum, drafters can use software that includes a clause library, playbook creation tutorials, and templates that can be stored for each contract type. When automated, the chance for data entry errors is reduced, drafts are compared to digital playbooks automatically, and version control is easier. 

Document assembly CLM tools can:

• Ensure all necessary components are included in a contract
• Expedite contract drafting time by relying on pre-approved boilerplate language
• Enforce company positions with a written document that serves as a risk-reducing guide

Stage 2: Contract Redlining, Review & Negotiation

The lengthiest part of a contract’s lifecycle typically involves reviewing drafts prepared by the counterparties, comparing them to the corporate legal playbook if one exists, redlining deviations, and negotiating terms with other parties. Most contracts involve multi-level review, passing from junior associates to senior members of the team, and sometimes bouncing between parties several times before reaching mutually agreeable language. 

Recommended: AI-Powered Contract Review Solutions [Example: LexCheck]

Review tools range from glorified spell checks that can complete basic editing tasks to full-scale risk assessment tools that employ the latest advances in AI and machine learning. At best, a contract review platform can automatically compare drafts to a company’s legal playbook, identify risky passages, or offer revision guidance with contextual links to aid decision making. 

AI-powered contract review CLM tools can:

• Review large volumes of agreements more quickly and efficiently
• Mitigate risk by ensuring compliance with preferred company positions
• Maximize manpower through automation, reducing time spent on manual review 

Stage 3: Approval & Execution

Both parties will need to determine who has sign-off authority in addition to when and where the agreement will be signed. Once each company has exercised its due diligence, appropriate personnel will sign the document—effectively closing the sales cycle and putting the terms into effect. Subsequent steps will involve working toward the delivery of goods or services as indicated in the contract.  

Recommended: e-Signature CLM Tools [Example: DocuSign]

The industry is changing, migrating away from agreements that are printed on paper, signed with ink, stored in filing cabinets, and eventually fed to paper shredders. Today, deals are happening faster than ever with the use of e-Signature tools that allow parties to execute deals instantaneously.

e-Signature CLM tools can:

• Reduce storage as they rely on cloud repositories instead of physical spaces
• Enhance security to protect contract data from loss or transit damage
• Accelerate sales cycles and implement deals in real-time rather than in weeks
• Improve transparency by having a record of who signed contracts and when

Stage 4: Tracking & Compliance

Once an agreement is signed by both parties, the parties are legally bound to the terms and conditions contained therein. So, they will need to track what products or services are owed as well as how much of the budget has been used or remains. Key deadlines for deliverables can be enforced by law; however, depending on the industry, there may also be a need to monitor compliance with various laws outlined in the agreements. 

Recommended: Compliance Tracking CLM Tools [Example: Contract Logix] 

Connecting contracts to financial performance, workflow obligations, and legal oversight is essential for ensuring the work is impactful and helping the company achieve its desired objectives.  

Compliance tracking CLM tools can:

• Proactively track metrics that can improve both contact and company performance
• Plan for legislative changes that may impact a large number of contracts
• Prepare for contingencies, monitoring deliverables, budget shortfalls, and noncompliance

Stage 5: Termination or Renewal

Every contract expires eventually. Some may be set up to auto-terminate or auto-renew when the time comes. Either way, it’s critical to know when deadlines are approaching so that a team can evaluate the contract’s performance and determine whether changes need to be made.

Recommended: Contract Status Monitoring CLM Tool [Example: Aptien] 

More and more companies are moving away from fallible spreadsheets and calendar reminders. Automated CLM tools specializing in post-execution expiration tracking can send out email and text reminders instead to help teams keep a pulse on renegotiation work well before deadlines arrive. 

Contract status monitoring CLM tools can:

• Automate reminders for impending expiration dates (up to 30 or more days in advance)
• Approach business relationships with greater care and concern
• Approve favorable deals faster while axing unfavorable ones to maximize profitability

Mixing and Matching CLM Tools for Added Efficiency

Utilizing various CLM tools together can be advantageous for businesses looking to automate their CLM processes. Integrations make it possible for one system to work seamlessly with another to provide total contract visibility, control, and value. 

For instance, a centralized dashboard can indicate when a contract draft has been initiated and display its location throughout each stage of CLM. A contract review tool can automatically apply digital playbooks to contract drafts to conduct a risk analysis. The redlined contract is auto-saved in the correct format and passed back to the appropriate party who can implement changes with the click of a button and upload final versions to an e-Signature platform to execute the deal. Once signed, tracking software can handle the rest.

Overarching CLM software is necessary to extract important contract dates and examine metrics like time-to-execution and the number of back-and-forths during negotiations. Through these technologies, a clearer picture emerges as to which language is most likely to bring success and which language may result in risk exposure.  .

Bolster Your Contract Redlining, Review, and Negotiation Processes with LexCheck

Take the next step and ramp up your CLM initiatives with LexCheck—the award-winning contract review and negotiation solution built by lawyers and engineers collaborating together. LexCheck powers your contracting process with breakthrough AI and machine learning capabilities. While it’s ready for deployment out of the box, in-house counsel can program custom “if/then” rules to further automate reviews and make every draft even more seamless than the last.