Legal’s Role In A CLM Implementation

Any organization that does business relies on contracts to facilitate that business. However, despite the clear influence of contracts on the growth and success of business, many companies fail to manage them properly, leading them to miss out on both valuable data about the organization and possible ways to improve the overall experience of doing business with them. From any perspective in the organization, whether it be management, sales, procurement, or, of course, the legal department, contracts are a necessary part of daily life and fixing the contracting process may be key to unlocking your business’s potential.

 

Across every industry, companies are quickly grasping the importance of contract management, leading them to seek out ways to finally take control of their contracts. Contract lifecycle management (CLM) solutions have become a hot topic in the realm of legal technology, with more and more CLM products hitting the market each month. What company leaders may fail to realize, however, is the arduous process that often comes along with CLM implementation. If you do not take the time to first understand and renovate your contracting process prior to technology implementation, then these tools may not provide the results you expect. After all, technology alone cannot fix a complex problem like poor contract management, which stretches across so many different departments outside of just legal.

 

One of the most essential aspects of ensuring a successful CLM implementation in any organization is the input and guidance of legal experts. In this article, we will discuss why legal input is necessary to the purchase and implementation of CLMs and how lawyers can help you make the most out of this important investment.

Why CLM Requires Legal Input

Some CLM providers may claim that the implementation process for these tools will be fast and simple. But, the reality of the situation is that, if you want to see real value from your CLM solution, you will need to put in a great deal of work in order to make sure your organization is ready to properly utilize the software. Some CLM providers are focused mainly on the tech aspect of their solutions, failing to explain the necessity of first understanding your organization’s contracting process as well as the actual training of the tool itself. A CLM requires you to evaluate the way you are currently doing contracts and provide documents and information that allow it to also understand your contracting process. Partnering with a CLM provider alone without any legal guidance on your side may lead you to misunderstand the needs of the tool, thus not capitalizing on its full potential.

 

Every department that touches contracts should be involved in the process, from sales and procurement to higher ups in management. Each one is key to understanding the larger picture of your company’s contracts. That being said, the in-house legal team may be required to take the lead and guide the implementation in the right direction. Some in-house teams may not be fully equipped to handle this undertaking on their own, however, in which case outside legal input can be extremely helpful, especially from lawyers who have experience working with CLMs or other forms of legal-tech. Let’s examine a few of the ways that leveraging the input from these well-versed outside sources can help you capitalize on your CLM investment and make the implementation process much smoother.

Creating Templates

A crucial step in preparing for a CLM is the creation of templates. Templates serve as the means by which different types of contracts can be quickly and easily generated for new partnerships without the need for drawn out drafting processes. With standardized language already in place, sales and procurement employees need only plug in the necessary information to produce the agreement. No legal team intervention required!

 

However, input from the legal team is necessary in the actual creation of the templates themselves. In order to ensure that each new agreement meets the standards of the company and avoids generating unnecessary risks, the legal department must combine past instances of the contracts together to formulate the ideal version of the contract which can then be used as a template for future production. No amount of work from the tech company or sales and procurement employees can accomplish this without legal guidance, as only lawyers will have the in-depth understanding of law and risk required to create such a document.

 

The actual undertaking for making templates can be a daunting task, requiring review of numerous past documents in order to arrive at the best version for future use. Outside legal experts who have experience with how CLMs learn and process documents can be a huge help to the in-house team during this crucial step.

Adjusting Language

In a similar vein to the use of templates, many CLMs also offer the ability to easily adjust the language of a contract during negotiation. This is accomplished by pulling pre-approved clauses from a clause library that exists in the CLM’s database. If a certain type of contract is often met with resistance during negotiations, legal teams can prepare alternative language in advance that may meet the needs of the other party without requiring extensive changes to be made to the agreement. In this way, sales and procurement employees are empowered to push the contracting process along, as they do not have to consult the legal department to make these small changes, which can be made without fear of repercussions.

 

Though the in-house legal team best understands the unique needs and risks associated with the organization, a legal expert who has been trained with CLMs may be able to help them anticipate which clauses could be troublesome and generate multiple alternatives. Redesigning documents entirely might be necessary as well, and having a few extra hands with legal training to assist with the process can move things along much more efficiently.

Determining Priorities

As you head into CLM implementation, you will need to have a clear understanding of the overall goals for the company as well as the individual priorities for the legal department specifically. Obviously, the legal team has the best understanding of potential risk for the company. However, some risks may be necessary for growth, and a balance must be reached that pleases both the lawyers and the sales associates. Part of implementing a CLM is finding a way to combine legal priorities with business goals in order to create an environment that mitigates risk while also enabling commercial success.

 

Since the legal team and the sales team may be on opposing sides in some cases, an outside third party who is well-versed in the use of CLMs may be able to facilitate communication between the two and help them reach compromises. Having completed successful CLM integrations in the past, these experts illuminate multiple sides of the contracting process and allow different departments to better understand their own place in the process as well as the roles others play. After all, one of the main goals of CLM implementation is to actively define the legal department as a business enabler instead of a bottleneck in the eyes of the company.




Matter Management

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