Legal Contract Management Software – Industry Benchmark For Firms
The legal sector has become a hotspot for widespread legal contract management software, as well as contract and workflow automation, for good reason. According to the 2019 ACC Benchmark Survey, 80.8% of in-house lawyers had to participate in contract management by simply reviewing and drafting documents, two tasks that can easily be digitized and automated. Legal firms are now adopting legal contract management software and contract management technology at massive rates to improve efficiency and streamline mundane legal processes.
According to reports, around half of legal firms in the United States reported utilizing technology, especially legal contract management software to replace human resources, a proportion that has remained consistent over the previous three years.
The same applies to in-house legal staff, with over half of US corporations reporting using technology-assisted document reviews in a 2018 poll and over 30% reporting automating legal procedures. Furthermore, industry reactions to technology appear to be beneficial. An overwhelming majority of top attorneys in Singapore agreed in a 2018 study that legal technology enhances service delivery, lowers costs, and is critical to the industry’s future.
Types Of Legal Contracts – Overview
Presented in either a textual or a verbal manner, legal contracts are binding agreements between two or more people.
Legal contracts are broadly divided into two types:
- Bilateral Contracts:
In this type of contract, the deal is agreed upon so that both parties commit something to each other to get their work done. The promise of one party acts as consideration for the promise of the other.
- Unilateral Contracts:
A unilateral contract generally involves a deal where one party asks to pay after the other party completes performing the clauses in the contract. Usually, unilateral contracts are most commonly used when a purchaser has a public payment offering for a specific activity.
Contracting Challenges Faced By Legal Firms
Contract management entails numerous challenges for legal teams and firms. Here are the major hurdles involved in governing contracts pre and post-signature.
- Business growth overburdens teams with contracts:
Even with a mid-sized legal team of 7–10 people with varying areas of expertise, receiving different types of contract requests in various areas, the lack of a contract management system results in ad-hoc management of crucial legacy contracts.
- Lack of transparency:
Legal contracts are often misplaced, and there are instances of mismanagement. Inter-vertical collaboration between sales, legal, and finance teams is also constricted due to a lack of contract visibility and access. The status of the contracts remains unchecked, ultimately hampers the whole process.
- Timely Updates and Renewals:
When working with suppliers who demand continuous services, businesses must be informed when a contract ends. This is done to prevent the contract from automatically renewing. Instead, a balanced judgment may be made on whether the contract should be reviewed. Businesses that deal with various contracts frequently experience auto-renewal troubles and may even fail to renew crucial contracts.
- Compliance Issues:
Contract managers may find it difficult to keep track of contract term compliance when managing large volumes of contracts. After all, knowing the status of a contract 24×7 might be difficult for a single legal contract agreement. Furthermore, firms must evaluate the ratings and reputation of the providers they are considering.
Legal Contract Lifecycle Management – What Is It & What Does It Involve?
Contract Lifecycle Management is the high-level management of a contract’s journey from drafting & negotiation through to execution & performance, following every stage of the contract’s lifecycle.
The contract lifecycle starts with submitting a contract request, including contract execution, tracking, contract intelligence, and renewal. As it is driven by AI, the software can comprehend what the user is doing in real-time and give ideas, tools, and features to assist in finishing the job in the allotted time.
To elaborate, the steps involved in contract lifecycle management are as follows:
- Initiation –
Regarded as the first stage, this contract management stage involves discussing the contract details that are supposed to be drafted, executed, and tracked.
- Drafting –
After getting hold of the contract details, the parties involved in the contract start writing the skeleton of the contract from the details that they gathered during the initiation stage.
- Approvals –
The drafted agreement is approved internally by organizational stakeholders and then shared with the other parties.
- Negotiation –
This usually involves negotiations about the major data between the parties and involves a lot of contact and interaction, which contract management systems can help conduct in real-time.
- Signing & Storage-
After approval, the parties finally pen a signature to initiate the contract.
- Performance –
Parties agree on and adhere to the extra requirements and the previously indicated rules, guidelines, and practices to avoid late payments and litigation and further block the process.
- Extension and Renewals –
If the contracts expire, the parties can visit the repository and look at the contract details and either renew or extend the contract as per their needs.
How To Solve Contract Inefficiency With Contract Lifecycle Management
With Contract Lifecycle Management, legal teams can oversee and manage every stage of a legal contract’s lifecycle.
Here’s how legal firms can solve contracting challenges using legal contract management software:
- Reduce manual tasks & dependencies involved in contract processing using pre-configured templates, clause libraries, AI-enabled clause suggestions, and pre-defined contract workflows
- Streamline pre and post-signature phases by leveraging automated renewals, performance tracking, and improved contract status visibility
- Shorten and expedite the review and negotiation cycle by improving collaboration between legal and sales teams using digital negotiation features like change tracking, redlining, and content suggestions
- Make the contract process more efficient by leveraging centralized contract storage, contract analytics, and clause tagging
- Expedite contract execution using eSignature integrations, scalable upload & eSign workflows, and a virtual audit trail
How Does Smart Contract Management Automate Legal Contracts?
Smart contract management helps the parties review, sort, and maintain contract visibility & access. The benefits of legal contract management software include:
- Reduced Negotiation Cycles and Turnaround Times
Businesses normally do not want a contract cycle that takes too much time. With a proper legal document management system, organizations can speed up negotiation cycles, enabling them to go to market faster than their competitors. Smart CLM software helps in this faster internal and regulatory approval routes.
- Risk Mitigation
Smart contract management keeps all the records of a contract signed between the parties. It furthermore helps reduce the risk and control liability factors as it allows for monitoring the risk factors before any contract is signed between the parties.
- Better Analysis and Reports
Every contract requires reports for improved visibility and analysis that follows. An ideal legal file management software comes up with follow-ups and detailed reports of analysis and insights about the existing contracts.
- Transparency and Compliance
Legal department management software helps in gaining more visibility into contractual commitments. Also, it provides transparency to compliance duties and milestones to guarantee ethical product procurement and adherence to packing and delivery timelines.
- Access-Controlled Repository
The contracts are stored in a centralized contract repository for easy access and collaboration. Signed contracts are automatically sent to the repository for visibility and easy retrieval.
While some CLM solutions will assist customers at every stage, some solely concentrate on the post-signature phase, which involves the contract repository, post-signature administration, and analytics.
But the finest cloud CLM solutions must provide a range of alternatives to adapt to your immediate demands and allow you to grow as you further organize your company operations.
SignDesk’s Legal Contract Management Solution
SignDesk’s end-to-end contract management tools allows legal teams to draft contracts and negotiate provisions in real-time using legal contract software. Among the leading legal document management software, CONTR.ACT also offers eSignature integrations and custom notification modules to manage contract execution.
Our legal contract management software is equipped with intelligent approval matrices and pre-defined compliance workflows to help legal teams cut procedural TAT by over 50% and enhance contract efficiency.
Talk to our product experts to learn more about how our legal contract management software works.
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