In this episode of the Contract Heroes Podcast, hosts Pepe and Marc talk with contract management software CEO and co-founder Matt Lhoumeau. In the last 15 years, Matt has seen how contract lifecycle management has continued to adapt to new technologies and consumer expectations. He currently works as the CEO and co-founder of Condor, witnessing how a wide variety of companies have changed their behavior around contract management over the last decade. Now, in addition to more traditional software tools, AI has become a powerful force for change—but what does that mean for the current and future contract management landscape? How can teams implement AI tools into their workflow and get their teams excited about the possibilities? If you want to learn more about how AI is shaping contract management, you’ll want to listen to the full podcast. For more of a bird’s eye view, you can read on to explore what we discussed.
Meet Matt Lhoumeau: Contract Lifecycle Management Innovator
Matt Lhoumeau had years of professional experience under his belt before starting Condor, including four Master’s Degrees and years of helping CEOs manage relationships and start new departments within their companies. He entered the contract management lifecycle space because of a bad experience with contracts 15 years ago. As he audited vendor contracts for the second-largest telecom company in France, he realized that each individual contract was handled manually, taking what should have been a relatively quick task and dragging it out into six months of work. Throughout the process, Matt had to personally complete tasks that he knew could have easily been managed by software, saving workers time and the business money in the process. Between reviewing contracts, checking the dates they were effective, and finding out who to contact to renegotiate the terms, there was a lot of room for automation to make things more efficient.
How Thinking About Contracts Has Evolved in the Last Decade
Two of the biggest shifts in how businesses approach contracts over the last decade both involve the involvement of legal. Contracts were once considered primarily the responsibility of the legal department, whereas now, that responsibility has shifted to other areas of the business.
Many small- to medium-sized companies rely on outside counsel instead of an in-house legal team, reducing costs and further reducing the role of legal in contract management. Now, most contracts are managed by CFOs or COOs rather than a fully staffed legal department. Outside counsel still helps with the legal wording of many documents and may take care of drafting major contracts, but for most day-to-day contract tasks, they are not involved.
More and more contracts are also being templatized, both because of the shift away from in-house legal and to make it possible in the first place. Of all the contracts that come through Concord, more than 90% of the contracts signed do not involve any sort of negotiation. Instead, it’s a simple process of adjusting the template for that specific contract’s terms, sending it over, and making sure everyone who needs to sign it does.
Understanding AI’s New Use Cases in Contract Management
Whether your business is more on the purchasing side or the selling side, there are many tasks that can be automated with AI as well as more traditional software solutions. AI has accelerated many of the changes in contract management that were already happening two years ago when AI tools spiked in popularity.
Ensuring Compliance
Many companies are using AI to help with compliance. Although being compliant with all applicable laws and regulations is crucial, it is often subject to human error. An occasional typo is not a big deal in many industries, but in compliance, it can be the difference between being fully compliant and breaking the law without even knowing it. Compliance is also something that often goes on the back burner for SMBs because of all the more urgent things that need to be done to keep day-to-day operations running smoothly. AI helps with both of these compliance barriers, automating simple tasks so SMBs can stay on top of compliance and reducing the risk of human error in companies of all sizes.
Managing Multiple Contracts
Unless your company is still very small, it’s likely that there are multiple contracts you need to manage at any given time. From a lease on the space where your business operates to your biggest client’s agreement, each contract can have significant consequences if it’s mismanaged. By managing contracts using AI tools instead of having an employee manually review each one on some sort of recurring basis, businesses can dedicate those labor hours to something that drives more immediate results while still being on top of everything that they are contractually obligated to do.
Simplifying Legal Information
In the past, for someone inexperienced in law to fully understand the language and implications of a contract, they likely would have to have a lawyer review it and provide them with a summary in layman’s terms. Now, that work can be done by simply uploading the document into ChatGPT and asking for a quick summary of the contract and any clauses (or lack thereof) that may require some negotiation.
Addressing Common Stuckpoints While Implementing AI
Using AI to help with your contract lifecycle management may seem like a simple enough task, but it comes with some roadblocks that you need to be aware of. Here are three of the most common struggles businesses face when implementing AI into their contract lifecycle management and how your team can move past them.
Using AI With Outside Counsel
Especially over the past five years, more companies have been moving away from having an in-house legal team and toward using outside counsel on an as-needed basis. Approximately 65% of the clients that Concord works with have no internal legal counsel, instead working with outside counsel when it’s necessary for a specific contract. This can be a great way to still benefit from a professional legal team while incurring lower costs, but it can make it challenging to integrate your outside counsel of choice with your AI software. Make a plan in advance about how you will make sure everyone can access what they need to, such as by adding a member of your outside legal team to the software, and make sure your outside counsel is on board with that plan.
Adjusting from a Fully Manual Process
Most companies start using software to manage their contracts after having essentially nothing in place, except perhaps a tool like DocuSign to manage digital signatures. The benefit of that is being able to jump right into the modern era with so many tools at your fingertips. The downside, however, is that shifting from entirely manual or even analog contract management processes to a digital system can come with some bumps in the road.
Getting everything set up to manage with software can be a challenging process. While you absolutely can move all your past contracts into Concord, and their team will happily assist you with that, it is usually the best use of your time to be forward-focused and learn how you can best use the software for current and future contracts. Then, once you’ve built some systems and your team feels comfortable with the tools they’re using, you can move toward adding previous contracts into the software.
Overcomplicating Contract Management
Especially if you haven’t used software for contract management before, it can be easy to overcomplicate the process and try to automate everything all at once. While automating as much as possible can be a great long-term goal, trying to do so quickly can lead to burnout and frustration because of the adjustments involved. In the beginning, it’s best to keep it small and start with the simplest tasks to make sure everything you’re setting up is actually helping you streamline your process. Otherwise, you may end up automating systems that aren’t serving your business in the first place, or worse, backfire and make your job harder.
How to Seamlessly Integrate AI in Your Contract Lifecycle Management
If you’re ready to start adopting contract lifecycle management software and AI in your own business, here’s how you can start to work on your change management and move toward adopting these tools successfully.
Manage Your Team’s Expectations
While it can be tempting for people to add every single contract into your software when they realize how much easier it is to manage them, it’s important to take things one at a time. Start with a single category of contracts, such as HR, and then once you have that system perfected, you can move on to other categories like vendor contracts and client contracts. This gives you and your team an opportunity to evaluate your new system before everything is moved over.
Focus On Current Struggles
What is currently bothering your team about how your contracts are managed, and how can you address that frustration first? Ask the department you’re starting with what they are frustrated by and focus on how the new software can help them with that unique challenge. Then, once you have solved that problem for your team by using your new software, they will be excited about that change and encourage other teams to implement this tool.
Seeing the Possibilities Of AI in Contract Lifecycle Management
Using AI in your contract management process can benefit your business at every stage, from making your team more efficient to reducing your operating costs. It can be tempting to implement it everywhere at once, but by starting small and fine-tuning your process with just a few contracts, you can start reaping the benefits of AI while minimizing any risks. By embracing technology as a powerful asset, you can ensure your contracts are accelerating growth and serving your business both now and in the future.
This episode of Contract Heroes was brought to you by Koho Consulting, your trusted partner in optimizing contract lifecycle management solutions.
