Many legal departments haven’t yet jumped on the digital bandwagon, but times are changing. Specialized legal contract management software becomes increasingly popular for organizations that want to streamline their contract life cycle and contract management process. Just like CRMs can capture business relationships, contract management software for legal departments can help teams in drafting, negotiations, and compliance.
What is contract management software? In a nutshell, it centralizes contract data, automates the contract negotiation and execution process, and helps management contracts throughout their terms. We discuss more ins and outs of contract management software in-depth in this comprehensive guide. Here are some of the ways legal departments can use legal contract management software to speed up business before, during, and after a contract’s creation.
1. Create Contract Templates with Approved Language
A company’s legal department is a key player throughout the entire contract management process. One of the best ways in which a legal department can promote compliance in other departments is by creating contract templates.
A contract management system allows the legal department to store contract templates, so users can access them as needed. These templates are standard contracts. They contain the language approved by stakeholders and decision-makers within the company. When salespeople have protected templates, they can quickly make sales on this standard paper. But the protected access ensures they can’t just negotiate the terms without legal approval.
Additionally, contract management software for legal departments has a contract repository. The department can use this to search past contracts for specific terms and clauses when creating a new type of contract template. This means that the legal team doesn’t need to reinvent the wheel each time.
2. Streamline Contract Tracking and Reviews
At one or more points during the contract management process (and after execution), your legal department will review contracts. In addition to reviewing the language and terms, legal will also make sure both parties are meeting their contractual obligations. Contract management software for legal departments lets the right person set up review structures. These specific timelines and points in the business relationship require regular reviews and audits for compliance.
The contract review process is also important for recognizing customers or vendors who aren’t meeting their contractual obligations. Traditional contract management in the legal department requires hours of manpower to track down this information. Through using a centralized contract repository and benefiting from communications across departments, the team can quickly learn about any issues which might pose a legal risk for the organization.
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For example, the finance department might make note of a customer who hasn’t met their financial obligations. The legal department can receive an email or alert on their dashboard to learn about this issue and investigate further before putting the customer on notice.
3. Create Approval Workflows
Even with standardized contracts, situations exist where the procurement team or sales team might need to adjust some of the terms.
The legal department protects the company by ensuring any changes, especially those which include non-standard terms, comply with organizational goals. Ultimately, this helps ensure contracts don’t open the company up to legal issues.
When the legal department uses a contract management system, it can control in-negotiation contracts by creating approval workflows. This means a user from the legal department can create a workflow that controls every step from start to finish. They can also encode factors that trigger an approval requirement when sales or procurement changes any standard terms in a contract.
For example, a salesperson submits a contract which requires service delivery outside of the normal service area by a few miles. This may or may not have legal implications. But, just to be sure, the workflow notifies someone in the legal department via email. Then, the contact can review the change of terms and approve or deny the request.
The same goes for final drafts of a contract. Once negotiations are completed and each stakeholder has reviewed or approved their part, they get the final review. The legal team can make sure their department is the final stop for all contracts before signature and execution.
4. Monitor Important Deadlines
Contract management systems also help legal professionals stay on top of contract milestones, especially contract renewals or termination. Legal teams can set up automated reminders and alerts based on any term of a contract. They can also specify alerts for specific non-standard contracts. If your legal team is involved in the renewals process, early warnings are part of an effective contract renewal work process.
Depending on the size of an organization, a legal department might need to keep track of thousands of contract renewals. This is not an easy task with traditional contract management methods, especially as different users and departments add to the contract. Contract management systems provide transparency. When the legal department gets an alert for a contract renewal, they can quickly view all actions which have occurred within the life cycle of a particular contract.
Contract management software for legal departments is more than just an organizational tool. It provides administrators and lawyers with the tools they need. ContraxAware’s cloud-based contract management system includes a variety of tools for:
- Organizing negotiations
- Maintaining contract compliance
- Streamlining their responsibilities
- Mitigating contract risk for the entire organization