Today’s contracts are more complicated than ever, with a number of contributing factors including market volatility, supply chain disruptions, ever-changing regulatory requirements, and even environmental uncertainties. Couple those outside factors with internal disorganization, diverse involved parties, and lack of fluid processes and you’re left with poor – and risky – contract management practices that yield unpredictable results.
World Commerce & Contracting has identified 10 Common Pitfalls with Contracting:
- Lack of clarity on scope of goals
- Legal team not involved early enough
- Failure to engage stakeholders
- Protracted negotiations
- Negotiations focus on wrong terms and conditions
- Contracts lack flexibility, insufficient focus on governance
- Contracts difficult to use/understand
- Poor handover from deal team to implementation team
- Limited use of contract technology
- Poor post-award processes and governance
And while it’s important to understand what the pitfalls are, it is imperative to know what you can do to avoid them and how you can build contract management practices that ensure effective, safe contracts every time. Below are just a few thoughts to consider:
Avoid Delays
Duh, right? Of course you don’t want delays at any point in your contract lifecycle!
In fact, WorldCC Benchmark Report 2021 revealed that over the last two years, there has been a 13% increase in the average cycle time to reach contract signature. You need to identify the right stakeholders from Day 1:Who is responsible for writing the contract? Executing it? Signing it? Do the right stakeholders have the bandwidth to take on additional work? Unfortunately, by misidentifying the right parties, you are nearly guaranteed delays, inaccuracies, and likely added costs or missed revenues.
Leverage Proven Technology 
The 2022 ACC Chief Legal Officer Study found that 43% of CLOs anticipate implementing new technology solutions in the legal department this year. One example of this technology includes contract lifecycle management (CLM). CLM facilitates better visibility, command, and control over your contracts and other legal documents while providing proven workflows to ensure the work gets done on time AND with accuracy, without exposure to risk or non-compliance. Not only does it deliver value to your legal team – but it also drives efficiencies across the entire business by providing seamless and secure self-service, automating repetitive tasks, and capturing data that can be turned into actionable intelligence.
Utilize a Smart Contract Repository
Does anyone actually enjoy reading a contract (other than the author of this post, who loves contracts)? While some find legal jargon sexy (hereunto a folly occurred) and interesting, almost 90% of business users find contracts ‘difficult or impossible to understand’. Why does this matter? If you can’t understand a contract, there is greater potential for misinterpretation, which can lead to dreaded litigation. A smart repository not only securely stores all of your legal documents, it allows users to search for clauses or terms that can be used in similar agreements. Another contract management practice to follow is using approved standardized language. This helps avoid ambiguity by providing clear, concise terms that can’t be argued.
Streamline Communication and Collaboration
Contracts impact every aspect of your internal business – sales, human resources, procurement, marketing, finance, and IT. And they impact your business relationships with partners, vendors, and customers. So, why do some companies rely on their legal department alone to manage the responsibilities? Identifying a platform that allows legal teams to negotiate, update, and finalize digital contracts in real time AND easily share and manage contracts from any device enhances negotiation efforts and improves agreement administration. 
Want to learn more?
Want to learn more? Join ContractPodAi at Associate for Corporate Counsel Annual Meeting in Las Vegas from the 23 – 26 October for an interactive conversation about your contract management practices. Can you relate to the contracting pitfalls listed above? Share your experiences and hear how others have overcome the challenges.
Stop by booth #203 to learn why we are the recognized leader in contract lifecycle management (CLM) and how our platform helps companies around the globe manage their entire legal contracting lifecycle.
