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2024 Buyer’s Guide - Choosing The Right CLM | Download Now
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KEY FEATURES
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Contract Management


IS CLM A GOOD INVESTMENT TO OVERCOME LEGAL CHALLENGES?

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The legal function is often seen as a blocker during sales cycles. Many legal
teams find that a CLM solution is a good investment to curb this perception.
By
Kshitija Agrawal
•
Oct 7, 2022
•
5 min read



“It’s still stuck with Legal.” These unfortunate words are often uttered during
sales cycles, contributing to the common perception of legal as a bottleneck in
closing deals. But while in the past such delays were unavoidable, modern legal
teams now have tools to help put contracts on autopilot.

CLM tools can help solve issues like outdated templates, uncontrolled versions,
and lack of precise language, which may seem small when starting out but can
quickly become a strain on resources. That is why CLM solutions prove to be a
good investment for legal teams, helping them streamline workflows, enhance
processes, and improve cross-functional collaboration. In simple words, a
contract management system helps a legal team transform from a business blocker
to a business enabler. 

In this guide, we’ll outline signs that point to an overburdened legal
department, present a simple solution to help you direct resources efficiently,
and help you understand whether a CLM is really a good investment for your
business.

> Already know your team needs a CLM solution?
> Check out these guides:
> CLM Assessment Guide: How to Choose a Solution That Actually Works for You
> How to Successfully Implement a Contract Management System


FIRST THINGS FIRST: DO YOU EVEN NEED A CLM?



Unorganized contract management practices can cost a business 9.2% of its
revenue annually. If you’re here, you’ve likely encountered some contract
lifecycle management challenges already and are looking for a solution. Even so,
here are some signs that might signify a dire need to overhaul your contract
lifecycle management systems:


YOU SPEND TOO MUCH TIME DIGGING THROUGH ARCHIVES TO LOCATE CONTRACTS AND
CONTEXT 

Lack of visibility and searchability over contracts are top concerns for
fast-growing businesses and their legal teams. At any time, do you have
visibility of which contracts are active, due renewal or expiry, or related to
other contracts. And importantly, can you pinpoint the context behind all of
these contracts? If not, how long does it take to gather this data?

Our opinion is that this process is often needlessly long and painfully tedious
for teams that have a lot more on their plate than digging through email threads
and folders.


THERE IS A LACK OF STANDARDIZED LANGUAGE IN YOUR CONTRACTS

Capitalization of words, incorrect terms, varying definitions, faulty tenses,
and other small mistakes increase risk exposure. The counterparty can exploit
these loopholes to put your business in a quandary. It could lead to
non-compliance issues and revenue loss.


YOUR TEAM FACES DIFFICULTIES WITH CHANGE MANAGEMENT

At any point during a business relationship, you may need to make changes to
contracts related to policy, pricing, renewals, and more. Managing these
manually can be cumbersome without efficient procedures in place. Communicating
these changes to stakeholders and implementing them in time is critical to
keeping business operations smooth.


LACK OF LEGAL BANDWIDTH IS CAUSING COMPLIANCE FAILURES 

You may win tens and hundreds of contracts, but that’s only the beginning.
Tracking contracts post-execution to meet obligations is crucial. A lack of SOPs
increases the risk of non-compliance and related costs.


INEFFICIENT PROCESSES AND LACK OF PRODUCTIVITY ARE PLAGUING YOUR LEGAL TEAM

Managing contracts manually can quickly become inefficient as your business
grows. Your legal team could lose a lot of time locating documents, ensuring
compliance norms, and engaging in back and forth with stakeholders. If your
business requires executing standardized contracts on a large volume, then
traditional contract processes might also be creating a lot of duplicate work
and causing inefficient use of resources.

> The first alarm for me is when you’re not able to locate contracts or when
> they’re scattered over different channels, with missing context for which you
> have to reach out to individuals involved in that particular deal — and you
> might not even be connected with them anymore. That’s the first sign that you
> need a purpose-built solution like a CLM that can work as a centralized
> repository of all this data.
> 
> — Supin Prem, Sr. Manager, Legal Tech, SpotDraft


WHAT ARE YOUR CURRENT CONTRACT MANAGEMENT PROCESSES LIKE?

If your organization executes contracts — be it one or one million in number —
you are opening yourself up to risks. To mitigate these risks, it’s important to
have visibility over your contracts and optimize your processes for maximum
efficiency. Here’s a helpful exercise that can help you take stock of your
current CLM practices and workflow, and see where a CLM solution might prove
helpful.

Begin with a full score of 10, and subtract a point for every “No”.

Contract management practice Yes No (-1 pt) Centralization: Do you have a single
centralized repository for all your contracts? Standardization: Are all your
contracts templatized and standardized (excepting custom provisions for specific
customers and special cases)? Collaboration: Are all your contract-related
communications aligned in one place (instead of being spread across email/Slack
etc.)? Streamlining: Are your approval processes optimized to happen without
repeated and manual follow ups, with visibility over what action is currently
required and by whom? Accessibility: Can all your stakeholders access the
contracts they need instantly and from anywhere? Monitoring: Do you have
reminders and alerts in place for auto-renewals and expiry? Security: Are your
contracts stored in a secure location and are there appropriate measures for
access control? Automation: Are regular and repeated admin tasks intelligently
automated (instead of admin/legal/business teams spending manual effort)?
Measurability: Do you have well-defined KPIs for your contract management
lifecycle? Adaptability: Is your contract management process simple enough to
adapt to the evolving needs of your business? Your score on a scale of 10


HOW TO READ YOUR SCORE

Any scoring mechanism is typically a scale — say, 1-3 is bad, 8-10 is good, etc.
However, contractual and legal risks can not be measured that way. Even the risk
that appears most tangential can be huge.

For instance, let’s take automation. Most businesses think of contract
automation as a bonus but not a necessity. However, every manual step is an
additional inefficiency in the system. Imagine a situation where a salesperson
created a contract and was distracted before sending it, or the email got stuck
in the outbox. The value of that risk is the entire potential revenue from that
customer.

So, even if your risk score is in the higher numbers, you may want to evaluate
the aspects of contract management where you didn’t score and how much of a risk
that might pose. It all depends on which risks you don’t mind taking at a
particular stage of your business.


SO, WHAT ARE SOME BENEFITS OF ADOPTING A CLM SOLUTION FOR YOUR BUSINESS?

If you’re still wondering whether your business needs a CLM system, here are
some benefits of contract lifecycle management systems.

> “We use SpotDraft for customer contracts and it helped us in improving TAT to
> create contracts. It provides great features for approvals, redlining and
> e-signature which pretty much covers the lifecycle of contracting for us.
> The SpotDraft team is really helpful and prompt with responses. They keep
> updating us on new features and incorporate our feedback.”
> 
> — Ankur M., Senior Product Manager


CLM OFFERS SCALABILITY AS YOUR BUSINESS GROWS

One of the major roadblocks when working between business and legal is that a
person can only do so much in a day. If part of that consists of manual tasks or
having to communicate information back and forth, you’ve got a natural
inefficiency that will cap the volume of work they can get through.

A CLM software creates efficiencies that allow the volume of work to be scaled
up. By automating key tasks and presenting information in an easily shareable
format, it helps to knock out the time spent on manual work.


YOUR TEAM CAN TRACK TASKS EFFICIENTLY WITH A FEW CLICKS

Tracking is an important part of contract management. You need this data to make
a business case for anything from new hire requests to the need for tools to
help out. For example, contracts should be tracked from intake to close, so you
can benchmark your efficiency.

The tracking features of a CLM help you calculate your time and costs for the
work done. You’ll be able to determine whether any process changes have saved
you time and money. Tracking also helps you to easily see the status of
contracts. Who is the current task assigned to and is it on schedule? It’s
important to be able to view this information without having to ask for it.




REPETITIVE TASKS GET AUTOMATED SO YOU DON’T GET STUCK WITH MANUAL WORK

There are many tasks you do repetitively when drawing or reviewing contracts. A
robust CLM will automate those tasks as much as possible. Examples include the
contract design or template, the addition of clauses to the contract, setting up
workflows to get approvals, tracking changes made to the contract, and redlining
third-party contracts.

Each process in the contract lifecycle gets automated. It minimizes risks due to
human error that could lead to compliance and cost issues for your business. The
simplified access and management of contracts leads to an improved user
experience. The right CLM should make automation easy.




CLM PAVES THE WAY FOR MORE TRANSPARENT AND EFFICIENT COLLABORATION

A CLM helps you to take a transparent, collaborative approach to contract
management, keeping all information visible to the team members working on it.
You can determine contract status without having to chase down files on
individual hard drives, or in someone’s desk.

Investing in a CLM purpose-built for legal teams allows for easy collaboration.
This means users should be able to log into the tool and immediately see the
most up-to-date information, including any tasks that have been assigned to
them. Managers can track contract details irrespective of the person drafting
the contract. Ideally, any comments or tasks should live within legal documents,
where they are linked with the appropriate sections for context.

For instance, on SpotDraft, users have the option of three types of comments
views — one that is only visible to themself, one their team can access, and one
that is available for collaborating with third parties.




YOU HAVE A ONE-STOP CONTRACT REPOSITORY THAT ACTS AS A SINGLE SOURCE OF TRUTH
FOR ALL YOUR LEGAL DOCUMENTS

Your business might be dealing in hundreds of contracts. Locating these can be a
hassle if you do not have an organized system. A contract lifecycle management
system acts as a centralized repository of contracts, enabling seamless
accessibility for your legal team by allowing both internal and external
stakeholders to access, share, and manage documents with ease.




IT ENABLES YOU TO REDUCE CONTRACT TURNAROUND TIME WHILE ENHANCING COMPLIANCE

Lengthy processes such as manual contract redlining strain your resources
without contributing to increased revenues. A CLM solution that offers features
for contract redlining, like SpotDraft’s legal Editor, reduces the contract
turnaround time (TAT), enabling faster closing of the deals. 

Moreover, contract lifecycle management software helps you implement consistent
processes that lead to improved efficiency and greater compliance. Meeting
compliance can be a hassle if you have an unorganized contract management
system. You can also keep the contract language consistent to avoid legal issues
arising out of that.




NEXT STEP: EVALUATING YOUR CLM OPTIONS

Now that you understand the benefits of a CLM and whether it is a good
investment to help you optimize processes and overcome contract lifecycle
management challenges, you will likely want to assess the various solutions
available in the market. We have a guide to help you understand that process
too, with detailed insights on how to evaluate solutions and create a checklist
of requirements.

> Read here: CLM Assessment Guide: How to Choose a Solution That Actually Works
> for You

And if you’d instead prefer to immediately start discussing your options and CLM
requirements with experts, you can book a meeting with our team.


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IN THIS ARTICLE
First things first: Do you even need a CLM?
What are your current contract management processes like?
So, what are some benefits of adopting a CLM solution for your business?
Next step: Evaluating your CLM options
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