Contracts often reside in a variety of systems, physical file folders, hard drives and even Outlook inboxes of individuals, making it difficult to locate the documents over a period of time. Also, contracts don’t always have the same terminology and language, making their location via searches problematic – even if an organisation has the capability to search for these documents. Locating a contract can indeed be akin to finding a needle in a haystack.
Crucially today, a contract is not a one-off activity. Given the pressure to control costs, legal departments need to actively manage commercial agreements to maximise their budgets with third parties. Inability to do so can often result in revenue loss and regulatory non-compliance, in turn leading to substantial unforeseen financial penalties. However, due to the number and assortment of contracts that organisations typically enter into – with employees, suppliers, outsourcers, etc. – contract management done manually is time-consuming, manpower-intensive and error-ridden activity because of the growing complexity of a multitude of business agreements.
In-house legal departments therefore must have a single touch point control across the lifecycle of every contract – right from contract assembly through to renewals and termination.
The ability to efficiently store and dynamically review and manage contracts is of paramount importance. This gives legal departments visibility of the contracts coming up for renewal or end of life, but more critically allows them to actively monitor and track the milestones outlined within every single agreement to ensure that it is delivering against the business requirements.
In-house legal departments therefore must have a single touch point control across the lifecycle of every contract – right from contract assembly through to renewals and termination. Sophisticated, easy to deploy solutions are available today that can help corporate legal departments streamline contract lifecycle management – end-to-end. Such systems automate processes with the end user in mind. For instance, alerts can be put in place three months before the expiry of contracts, reporting can be customised to meet individual needs, and so on.
Automation can transform contract lifecycle management into an efficient, reduced risk and rationalised operation.
Such solutions also help reduce the burden on legal departments. How often does it happen that the legal department is asked to review or amend basic contracts on an ad hoc basis?
These requests eat into staff time and detract them from more important legal tasks. By delegating workflows, corporate legal departments can help business areas to become self-serving, while still maintaining tight control over the legal aspects of contracts. For example, business department heads can be allowed to amend the ‘name of parties’ sections of standard non-disclosure agreements only, restricting changes in the rest of the document by building in edit controls.
Automation can transform contract lifecycle management into an efficient, reduced risk and rationalised operation. Legal departments will do well to explore customised contract management solutions that meet their individual needs.