Most corporate counsel feel overwhelmed by the volume of work being thrown at them. As well as the increased demands for increased efficiency, insights, metrics and reporting on their work. Amongst the vast array of legal tech options out there, Contract Lifecycle Management (CLM) technology for corporate Legal teams that process large volumes of contracts is an ever-growing daily requirement. With all the noise in the market and the overwhelming options, coupled with the endless demands of a day job, probably the hardest part of the CLM journey is knowing where to start.
This article will show you how you can get started today and create a Contracting Policy for little or no additional cost to your organization.
The CLM Simplified Contracting Framework
No matter how tight budgets may be right now and whether CLM technology is even on your roadmap, you can solidify your contracting foundations for essentially little to no extra cost to your organization.
From our contracting framework below, you’ll see the foundational aspects of contracting and good legal operations housekeeping. You need to get a good grasp on who is doing what, and the why and how, and then scrutinize whether there is room for improvement and optimization.
When tackled together, it is the combination of improvements to these various aspects that brings the greatest impact. Then considering the technologies that can enable improvements becomes almost like an engine booster to a well-built rocket.
Do you want to learn more about how to optimize your CLM? Join us at the CLM Simplified Academy in New York on March 10th, where we will be providing attendees with a full day of education and CLE credit learning to streamline your contracting processes and get ready for automation. Register here and use promo code FRIENDS200 for free admission.
Step 1: Legal Review Policy
A Legal Review Policy (aka Contracting Policy) is a document which records what transactions Legal must review. It’s essentially a set of rules that let the business owners know which transactions Legal must get involved in and which transactions the business is empowered (by Legal) to handle on their own.
The fundamental question which drives the need for a Legal Review Policy is “what contracts should the Legal team spend time on, and what contracts should it not spend time on?”
The problem is that Legal team lawyers often find themselves trapped in a reactive role when they review the contracts sent to them by their company. Somehow the business owners determine what Legal should and shouldn’t review, yet the attorneys are in the best place to make that determination. So, why don’t more Legal teams take a proactive role in defining what should land on their plates?
Eventually the sheer volume of commercial contracting work will mean Legal teams are restricted in how they spend their time. They often arrive at this step only because they reach a breaking point and cannot keep up with demand.
The goal of a successful Legal Review Policy is getting Legal out of the way when there isn’t significant risk to consider or mitigate. How much risk and what types of assumable risk are dependent on the nature of each contract as well as the organization’s culture and appetite for risk.
Step 2: Contract Templates
The second step (although it can be done in parallel with the first step) is designing and using templates. Templates are often the easiest place to start for Legal teams that want to streamline their company’s contracting work. They are easiest because they fit precisely within the skillset of the attorneys. Attorneys know the words that go into contracts; actually, they know lots of words (maybe too many). Therein lies much of the problem.
Contracts are complicated, and generally not very user friendly. So, bad templates are often the source of contracting woes. But a simple, easy to read, and reasonable template will go a long way to making the contracting process more efficient.
Step 3: Contract Playbooks
Playbooks help simplify contracting because they are used in conjunction with contract templates. Playbooks can take many forms; differentiating between the necessary types and numbers of playbooks is possible, without making the process too complex.
Briefly put, they are used to create standardization across a law department, and they also empower the business. Playbooks educate, create consistency, and are a requirement for any type of outsourcing contract review.
There are four main types of playbooks: the Law Department Playbook, the Empowerment Guide, the Playbook for Outsourcing Contract Review, and the Playbook for Negotiating Third Party Paper.
Playbooks, like templates, take time to create. They also need to be written in plain language, and thus easy to read. They should be living documents that you can modify to ensure they are up to date. The more you modify them, as you learn more throughout your negotiations, the more your playbooks will evolve. Most importantly, be sure to actively use the playbooks! The best way to learn what should go into your playbook is through data gathering.
* * *
Once you’ve successfully tackled these three foundational steps, you’ll be well on your way to building a stable foundation for ongoing, sustainable CLM success. We always recommend starting with baby steps, taking one manageable, practical step at a time to enable effective and meaningful change while gaining internal supporters and sponsors. The reality is that contracting is so complex at most companies that any changes are positive changes in the right direction.
Simplifying the processes that comprise CLM is at the core of everything we do at the InnoLaw Group. It has been our mission to help lawyers and Legal teams understand, improve and ultimately simplify their CLM functions and processes, most often with the ultimate goal of preparation for the selection, implementation and successful adoption of a CLM System – ensuring that there is a strong foundation before automation.
We hope to see you at the CLM Simplified Academy one-day conference in New York on March 10th where we will review the latest CLM technologies while providing best practices for improving processes and gaining efficiencies today. Register here and use promo code FRIENDS200 for free admission.