What is Contract Lifecycle Management?

Have you wondered what Contract Lifecycle Management (CLM) actually means? Let us explain and discover why leading organizations leverage CLM to digitally transform their legal department and company.

Generally speaking, CLM is the management of an organization’s contracts — from development, negotiation, and execution to performance, analysis, and renewal or expiry.

In any mid- or large-sized company, there is tremendous pressure on the legal department to stay on top of the organization’s contracts. Consider all of the legal and financial risks and obligations that may exist in just one agreement — or tens of thousands of agreements. Because contracts are so fundamental to driving revenue — the very ‘lifeblood’ of modern companies — the process of managing them are crucial to operations. CLM not only helps ensure that agreements are signed in a timely manner, but also makes certain that obligations are met and contractual opportunities are not missed.

More specifically, contract lifecycle management helps legal and other teams draft agreements efficiently, locate them quickly, and assess their risks and obligations accurately. However, the most effective CLM also involves gathering contractual data needed to advise on the overall health of the business. Without it, organizations could miss expiration or key milestones, and even worse, not realize the full value of every agreement.

 

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Who Uses CLM Systems?

The primary users of CLM systems are general counsels (GCs) and their legal teams, as well as other legal professionals. However, many departments benefit from the power of CLM, including M&A, sales, procurement, and human resources.

With so many potential users across the enterprise, it is crucial that CLM systems have the ability to handle both buy-side and sell-side contracts within organizations.

 

What is Digital Transformation?

 

Why Do Legal Teams Depend on CLM Software?

Embedded with AI technology, CLM software allows legal departments and companies to automate — and even accelerate — their contracting processes. It allows them to improve operational performance, scrutinize agreements, and receive timely alerts and reminders to meet contractual obligations and compliance requirements. As a result, it helps reduce manual work, costs, and risks, while ensuring compliance and security.

CLM software provides several key features and functionalities:

Smart contract repository

Clause library preferred language

Self-service contract authoring

Dynamic approval workflows

E-Signatures

Advanced search

AI-driven analytics

Reporting

What Are the Trends in CLM?

Artificial Intelligence (AI) and Automation. Today, the fabric of the legal profession is being refashioned by advanced legal technology, particularly in the form of AI and machine learning. Decades in the making, AI is the ‘bedrock’ of some of the more sophisticated forms of automation. Together, AI and automation serve as the universal engine of execution, redefining how legal and other teams carry out tasks, deliver value, and compete in the marketplace. They help companies increase productivity, and drive more revenue.

According to McKinsey Global Institute, when leveraged fully, AI and automation offers:

Insights

Distinctive insights to predict and improve performance drivers

Speed

Faster service to reduce processing time from days to minutes

Flexibility

Increased flexibility and scalability to operate 24/7 and scale up or down as demanded

Quality

Improved quality from spot-checking to 100%-quality control through greater traceability

Savings

Decreased costs and enhanced productivity leading to labor savings of 20% or higher

 

Gartner points out that AI and automation also have a transformational role in the legal value chain. It predicts:

Growth

By 2025, legal tech budgets will increase 3x

Automation

By 2024, 55% of corporate legal departments’ work on corporate transactions will be completely automated

Benefit

Also by 2025, 30% of the legal automation investments will be captured

CLM Process

1

Contract Creation

Dynamic contract assembly and automation help repurpose language from an integrated clause library, allowing existing clauses to be edited for the transaction at hand. As a result, contract review time is minimized significantly, and duplicate clauses, typos, and unapproved — or poorly worded — terms are eliminated. This adds a high level of professionalism to contracting, and leads to more cordial and productive negotiations.

2

Contract Execution

Secure, out-of-box integrations with electronic signature platforms, such as DocuSign and Adobe Sign facilitate the entire signature process. Workflows are defined by legal and business users and agreements are seamlessly updated. And upon contract execution, all legal data is kept in a central repository for future use.

3

Contract Analysis

A smart repository of contracts stores legal data, and digital tools — such as AI analytics, advanced reporting, and dashboards, allowing users to extract and display crucial information when it is needed most. It helps companies market to the industries or territories where they can get the best results. The tools help determine if suppliers are late on delivering necessary inventory or components to meet production goals. They also determine if contract stakeholders are not using approved terms or spending too much time negotiating agreements.

The Lifecycle of a Contract

With legal departments under pressure to speed up their day-to-day contracting, they need an integrated set of contract management tools to optimize every stage of the process, from creation to renewal or expiration.

Typically, the lifecycle of the contract is characterized by requests, generation, negotiation, analysis, signage — and, of course, effective management. All agreements tend to follow a circular flow, as seen below.

Key Steps in the CLM Process

Contracts represent and protect an organization’s interests. But for GCs, staff attorneys, contract managers, or other authors of agreements, it can be challenging to create, amend, and produce quality contracts and related legal documents efficiently.

Step 1: Contract Creation

Define the scope of the agreement, identify stakeholders, generate a contract, and prepare it for signature.

Step 2: Contract Execution

Monitor the contract’s progress, ensure that all parties recognize their contractual obligations, resolve any disputes that arise, and make signage as easy as possible.

Step 3: Contract Analysis

Determine if an agreement still meets the organization’s needs, make necessary contractual changes, gauge contract renewal trends, understand data-driven decisions concerning with which suppliers to do business, and discover customer churn by industry.

What is ContractPodAi?

ContractPodAi is the leader in contract lifecycle management. Our innovative software, ContractPodAi Cloud, streamlines and simplifies the full spectrum of in-house legal work. Serving as One Legal Platform, it facilitates contract and IP portfolio management, compliance and regulatory oversight, and RFP review, as well as other user cases. It offers advanced features, such as a smart repository, easy-to-use templates, guided workflows, auto-document generation, collaboration tools, e-signatures, and third-party document review. In addition, it provides AI analytics, reports, and alerts and reminders for important dates.

ContractPodAi also sets the highest standard for legal tech user experience. ContractPodAi Cloud is shaped with modern legal design thinking — and is built with the trusted technologies behind IBM Watson AI, Microsoft, DocuSign, and Salesforce.

Why ContractPodAi?

Unlike other contract management solutions that may have evolved from other systems, ContractPodAi Cloud was developed to support legal and other teams within the organizations. By using One Legal Platform, legal and other professionals can be ‘ready for anything’ — from contracts and RFPs to claims and governance — and have complete visibility, command, and control over the legal lifecycle of the business. They can simply deploy one of our platform’s pre-built applications, like the best-in-class CLM tool, and manage any legal scenario in mere seconds. Or they can build a custom legal application — in just a few clicks — within minutes.

ContractPodAi supports legal and non-legal users alike — in both medium- and large-sized businesses. We offer all-inclusive pricing and comprehensive, best-in-class implementation, which includes legal engineering and contract migration. This is where ContractPodAi truly helps customers. Our legal transformation team removes the pain and confusion around legal digital transformation altogether. By partnering with ContractPodAi, customers work with the legal and software experts that conceived and built our platform — not third parties that must familiarize themselves with the technology.

Ultimately, ContractPodAi’s solution is best for legal-led contract management initiatives that require end-to-end, AI functionality and call for incremental, outcome-based digital transformation. In fact, Gartner listed ContractPodAi as a Visionary in its CLM Magic Quadrant and highlighted us as a “cool vendor” because we embed AI throughout our platform.

Want to learn more about AI-powered contract lifecycle management? Ready to start your own legal digital transformation?

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