It’s hard to think of what business agreements would be like if we didn’t use contracts. But there’s often a common misconception around the vitality of contracts and other legal documents, especially in business. People think that we can make do without good contract management. But the way we take care of these contracts plays a crucial role in business processes.
Without contracts, many businesses would be susceptible to the inaccuracy and volatility of handshake agreements. Trust would crumble and partnerships would fall apart in a “he said, she said” battle. Legal documents matter, and contract management software plays a big role during these times when digitalisation is crucial.
70% of businesses indicated that they would be using technology and software to simplify processes moving forward. A contract management system (CMS) is a great example of a solution that does this. It helps companies, legal staff, and other administrative employees curate, manage, and execute contracts digitally. This kind of software is one of the many results of the legal tech evolution— one that has helped many organizations better manage necessary paperwork.
Today’s top contract management software provides all kinds of solutions to today’s biggest legal management issues. So, here are the top challenges of manual contract management and the ways in which digital tools can help solve these issues.
Contract lifecycle management, facilitating contracts from conception to execution, can often be a slow process. In many cases, getting a contract signed can take several days to complete. A big cause of this delay is not having digital systems to triage documents and have them signed on the spot. Other factors include printing issues, logistics and delivery, access to physical copies when traveling or working from home, and so on.
Digital contract management solutions solve all these problems and more. Companies can get contracts signed by bosses, partners, and clients faster and start executing them as soon as possible.
“Summize has been hugely helpful. What used to take half a day to create an NDA now only takes 10 minutes”.
Rosie Hawkridge, Legal Counsel at Littlefish
Part of contract lifecycle management involves agreeing to certain terms and arrangements. Not all contracts will be amenable to every party involved from the first draft. So, there might be a back and forth on negotiations and revisions. These revisions can become an issue with offline systems, with some amendments falling through the cracks or creating a lack of simplicity in communicating these changes.
Contract management software allows parties to add comments and ask for revisions before signing anything. With this system in place, everyone gets the chance to fix a win-win arrangement.
With all of today’s legal innovation, some people might naturally fall on more readily-accessible options, like cloud-based document editors, or they may simply email contracts and documents. But all these cloud-based file-sharing solutions — as helpful as they are in a myriad of other ways — lack one important element: security.
With contract management solutions, only the people who should see the contract will have access. Contracts are also highly encrypted and protected, so no details are leaked, even if there’s an issue with the system. This added layer of protection can help ensure that people involved in the agreement have complete confidentiality.
Having physical copies of contracts doesn't always ensure better organisation. File cabinets can often be blackholes of the most important files. When companies lose contracts and other legal documents, there can be many legal implications that will cost time and money.
Keeping a cloud-based digital contract management system will help create a better way to manage and organize files. Contract management systems can store thousands of files for many many years and still give people access to them. What’s more is these systems aren’t susceptible to paper decay, calamity, physical breaches or theft.
Gamma worked with Summize to create an intuitive contract repository for their contract portfolio. By implementing Summize and utilising the enhanced search feature within the repository has meant contracts can be easily found, which previously could often take around 24 hours and now takes 2 minutes.
On top of taking up a lot of physical space, physical copies of contracts eat up a significant amount of time. Staff have to store and search for them as needed, taking up a lot of time. As well as the administrative time it takes to organise the contracts, it also takes time to facilitate their execution. A lot of work goes into manually following up on unsigned documents and physically sending them out.
With digital contract management solutions, there is a negligible wait time to get contracts from any part of the world. And following up on execution and other repetitive tasks can be automated with the use of artificial intelligence.
It’s not uncommon for companies to have silos. But the goal should always be to minimize them by building more communication and clarity on company systems and processes. Silos in terms of contract management and client database, specifically, can become an organizational headache.
With many remote work software solutions like contract management tools and many other cloud-based systems, company personnel have unimpeded access to all systems, processes, and active contracts. This access helps everyone stay aware of any active contracts and how they can play their role in meeting the terms of those contracts.
The last issue that contract software solves is the huge problem of contract non-compliance. There’s no point in having a contract if the terms aren’t upheld. In most cases, there’s no way to prevent non-compliance; that all falls on human behaviour. But technologies like contract software provide us with the power to respond well.
When contracts are readily available, secure, and quick to execute, companies have a better legal assurance that they’re in the right. The goal of keeping these contracts in place on a digital system, after all, is to ensure that businesses have legal covering. When we’re able to respond well to legal non-compliance, it will hopefully become a nightmare of the past.
So, now that we know how contract management software works to our advantage, the question is how to deploy one. It’s relatively simple. These are the necessary steps to have a successful contract management system in your business or organization.
1. Assess your current state — Check your current state in terms of contracts. How many contracts do you have? What’s your current workflow? Who needs to use the contract management system? These are a few of the key questions you must answer to understand the best roadmap to integrate a digital contract solution into your business or organisation’s workflow. This information will allow you to make the best decision on what contract management software to use.
2. Get buy-in from key stakeholders — A significant challenge for technology adoption is getting buy-in from employees who will use the system. 34% of companies say that the biggest friction to technological adaptation is the lack of organisational and cultural structure. In consequence, companies end up with a tool that no one uses. Cast the vision to the right stakeholders, get a commitment to help set up the system and ask for compliance.
3. Collate all contracts and documents — After your colleagues have agreed to use the system and you’ve chosen the software that best meets your needs, collate all of your documents and contracts.
4. Deploy and maintain — The last step involves deploying it to your team and maintaining compliance. Have regular check-ins with key users such as account managers, accounting staff, admins, and so on.
The contract management market is predicted to grow to $2.9 Billion by 2024. As it continues to grow, contract management systems and other legal tech software will become the norm instead of the exception. So, adopting this technology should be a part of companies’ priorities for 2022 and beyond.