For most corporate law departments, contract management eats up a staggering amount of time. Why? I suspect it’s because they’re not adequately prepared for everything that contract management entails.
Contract management requires much more than simply creating contracts, of course. It’s a multi-stage process that extends beyond the task of actually assembling a document. Here are the stages I believe every good contract management process should encompass:
1. Request. During the request phase, your end users will submit the details of what they want the contract to include. This phase always results in significant wasted time especially if it is paper-based. End users fill out forms with the details of their desired contracts, and attorneys then have to enter the information manually into a corporate data system. These forms are often riddled with inconsistencies and inaccuracies that take time to correct.
2. Contract creation. With guidelines in hand from the contract request, attorneys will then draft the actual contract. The real value-added work is in writing the parts of the contract that apply to this particular business relationship. However, there will also be parts of the contract that contain standard clauses. Unfortunately, some corporate law departments don’t maintain a central clause repository, but instead attempt to re-write these clauses each time, or simply pull them from the last contract they can find on the network. Both approaches waste time and increase the risk of inaccuracy.
3. Approval. Once the draft of a contract is complete, the approval process can begin. Here, attorneys will route the contract to different departments such as finance, procurement, manufacturing, and HR. If corporate law departments don’t use a centralized solution to manage this routing, they’ll have little visibility into where a contract is at any given moment. Is the CFO holding onto it? Has the CIO even seen it yet? More emails and more phone calls mean more delays – and possibly a missed opportunity for the business.
4. Amendments and Change Orders. During the life of a contract, business circumstances typically change. The change order process often includes end users who provide incomplete information about what they want to see changed in the original contract, and attorneys must again scramble to fill in the gaps – taking time away from their strategic work.
5. Termination or renewal. When contracts approach expiration, attorneys will have certain tasks to perform. But unless attorneys have constant visibility into expiration dates, and receive reminders that these dates are approaching, the tasks around termination and renewal are often rushed – and rushed work is poor-quality work.
Corporate law departments can enhance all stages of cradle-to-grave contract management by following 10 simple best practices. Find out more in Elegrity’s free white paper, “Ten Best Practices for Efficient Contract Management.”