Managing Contracts in a Crisis

Managing Contracts in a Crisis

5th May 2020

Managing Contracts in a Crisis

By Charles Dimov, VP of Marketing at ContractPodAi 

Contract management systems (CMS) truly shine during times of crisis.

A recent IACCM report on crisis management during the COVID-19 (coronavirus) pandemic supports this point. "COVID-19 actually points to a persistent and endemic issue associated with extracting and using contract-related data and analysis," Tim Cummins, President IACCM, says. "It is a fact indicative of the need to improve the resilience and adaptability of organizations in a world of increasing uncertainty." Managing Contracts under Covid-19, 15Apr2020

Right Now, Crisis Management = Contract Management

During a period of crisis, work needed from the legal and contract teams is intensified. Whether on the buy-side or sell-side, they must provide the senior leadership team with quick answers to questions about individual contracts. This, while providing a big-picture analytical view of an organization's contracts as a whole.

From IACCM's perspective, during this COVID-19 pandemic, "contract management technology has delivered greater speed and ability to better manage the risks resulting from the pandemic."

This is precisely where solid contract lifecycle management (CLM) solutions help, both in the short and long terms.

Crisis Pains

It is no surprise that nearly 80 percent of the companies in IACCM's research saw their contracts impacted - moderately to severely - during this uncertain time. The four biggest challenges are:

  • Force Majeure clauses - locating and reviewing the details.
  • Reviewing commitment levels.
  • Determining rights to terminate or delay obligations.
  • Analyzing key performance terms in agreements.
  • Answering management questions.
  • Responding to information requests on contractual matters.
(“Extent to which Finding and Analyzing Contracts has been important” – Managing Contracts under Covid-19, IACCM Apr2020, p4)

(“Extent to which Finding and Analyzing Contracts has been important” – Managing Contracts under Covid-19, IACCM Apr2020, p4)

 

Challenges Facing Legal Professionals

Managing contracts in a crisis is challenging for specific reasons. During this COVID-19 crisis, in particular, there is heightened demand and an intensification of business in certain industries - think grocery, supply chain, and e-commerce. And there has been a simultaneous collapse of demand in other industries, such as airline, holiday travel, entertainment, and events). In both cases, "visibility of contracts has been essential to inform what actions need to be taken."

There are also the added challenges of shifting to working from home (WFH) and ending all in-person (face-to-face) meetings.

Contract Management in a Crisis

In IACCM's own words, "contract management technology has delivered greater speed and an ability to better manage the risks resulting from the pandemic." They go on to state that "the most significant benefits have been gained by those who have undertaken a holistic deployment within a consistent process." Only 38% of medium-level enterprise level organizations have invested in CLM technology.

Interestingly, out of 507 responses, 64 percent told IACCM that they did not have a meaningful CMS with contract automation. This is very much aligned with ContractPodAi's own research report, Corporate Counsel’s Employment of LegalTech 2020, which was published earlier this year. It showed that only 38 percent of medium-sized and enterprise-level organizations have invested in CLM technology.

Digital Contract Transformation

Managing contracts in a crisis is more than going out and buying new software. In fact, it is extremely important to adopt and implement a CLM system the right way. The IACCM report also highlights four prerequisites when deploying a system:

  • Clearly defining and improving the existing contract management process
  • Creating a standard process across the organization
  • Standardizing on an accepted clause library
  • Developing better contract templates (for automation)

Truly, this is where CLM vendors distinguish themselves - those interested in assisting you instead of just selling you a piece of software. After all, legal digital transformation is a journey that should not be taken alone.

So reach out to us today, and find out how ContractPodAi can help you overcome your current contract management challenges.

AUTHOR:

Charles DimovCharles Dimov
VP of Marketing 
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