Given that contracts are considered the ‘lifeblood’ of any enterprise, a vital function of today’s corporate legal departments is having complete contract visibility.
Being able to store, organize, and access all legal documents — within a central location — is simply necessary for legal teams to review important contract terms, obligations, renewals, and terminations. But having a contract repository that provides full visibility to everyone involved in contract management processes is not just extremely handy. Having a repository also reduces manual work and saves copious amounts of time and costs.
At a very basic level, a typical contract management system (CMS) provides a place for legal teams to store and find contracts and related documents quickly and without hassle. With a software-enabled contract repository, legal departments can automate legal processes, better track key obligations, and significantly reduce risk within organizations. This, of course, removes the need to search for keywords, and renewal and termination date manually.
Let’s explore the practical steps that corporate counsel should take when beginning the journey of setting up a central contract repository.
1. Knowing What to Look for — in the First Place
First of all, it’s crucial to recognize the fundamental need for a contract repository these days. In other words, you need to recognize what caused you to get to the point of considering a solution that offers this service. Corporate counsel and other legal professionals, for instance, need to wholly participate in the contract management process — beyond using an Excel-based tracker (or loose paper files in cabinets!)
Next, ask yourself what will make contracting a far easier process. In other words, what is missing in the current process, and what are the core things that a CMS must offer the legal department and organization?
Also, keep in mind that the purpose of a contract repository is to get contracts and related documents in one place. This way, it’s easier to see what contracts you have — and the terms and conditions contained within them. Besides, it’s perfectly normal for companies to want to scale up and enhance the workplace with more advanced technology eventually. (This is when you begin to consider investing in a contract management solution, in general!)
2. Choosing the Right Central Contract Repository
When it’s finally time to choose a contract repository and decide on the specifications, there are other important questions to ask. Are you looking for a repository that is more document-based or record-based, for example? As a purchaser, you really need to understand the difference.
A document-based repository is more basic and doesn’t represent a major change from the file system you may currently use. It (may) allow your legal documents to be stored in one cloud-based location, and (might) offer some workflow abilities and minimal automation. But if a specific term or keyword needs to be found, you still have to search manually (That isn’t all that efficient anymore!) Because of this, a document-based system is nothing more than an enhanced file system. It still makes legal teams entirely dependant on themselves, and it takes plenty of effort and time to search through hundreds of contracts just with the human eye.
A records-based system, on the other hand, is set up more as a database. Within such a system, each contract is given its own record, so when a user views the repository, they can see a list of their affiliated document types, companies, counterparties, and so on. With this tool, it’s a lot easier to search for keywords, obligations, and risks because you can narrow down the search without the user actually having to know what is in the contract. Having a records-based system also lets you know how many agreements you have, as you’re able to have a functional view of them all and extract the necessary information. Here, contracts and other legal documents are stored and organized easily within sub-records.
3. Testing Your Central Contract Repository
The core element of setting up a contract repository is understanding what exactly you need to see in it. Consider doing the following, then:
- Search the entire contract database, making sure you can find what you’re looking for within it
- Make certain that your stakeholders and colleagues like the new system — and know how to use it
- Get started organizing contracts and related documents, based on their specific characteristics, clauses, terms, and conditions, for timesaving (This will only optimize your contract management process!)
- Ask whether the storage space is big enough or will need expansion in the future
- See how every contract is connected — all the versions, workflows, and audit of all changes made (This is key!)
- Determine if contracts are stored in numerical order based on when the record was made (It is also key to know what contracts are old and new, before narrowing them down and pulling any relevant information.)
Taking the First Step
At the end of the day, having a contract repository allows in-house lawyers to gain full control of the hundreds — if not thousands of contracts — within a company. It goes a long way in reducing risk, too. Just think any legal user can see all obligations, keywords, renewals, and terminations, as well as other critical contract information. Adopting and implementing a contract management solution— and migrating all legal documents into a contract repository — pay off rather quickly and benefit organizations in the long run.
ContractPodAi Cloud’s own central contract repository (a record-based repository, by the way!) provides fuller contract visibility, by helping legal and other teams create, store, and manage documents in one secure place. It. For more information on ContractPodAi’s One Legal Platform, download our brochure and talk to one of our legal experts. We’d love to discuss your digital transformation journey.
Author:
Jerry Levine
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