How to Automate Contract Workflows With APIs

Key Takeaways:

• Contracts require inputs from many different teams in an organization.
• APIs enable automated workflows that allow all teams working on or with contracts to have the information they need in the systems they are already using.
• Proper implementation of APIs takes intentional planning.

Contracts are fundamentally business documents that describe commitments around operational responsibilities, not legal documents. Which is why effective contracting relies on touchpoints with many different teams including legal, procurement, finance, marketing, sales, legal ops, security, delivery, HR, and more.

Contracts are fundamentally business documents that describe commitments around operational responsibilities, not legal documents. Which is why effective contracting relies on touchpoints with many different teams including legal, procurement, finance, marketing, sales, legal ops, security, delivery, HR, and more.

For example, a customer form received by a company that provides managed services will have custom obligations around the services, security, background checks, third-party tools, and more.  Legal will not be able to take a position on those obligations without first having checked with the teams responsible for meeting those obligations. Even for more standardized engagements, like SaaS offerings, when legal creates the contract form for its SaaS offering, it needs to check with other teams like support, engineering, and security to understand what commitments can be made around availability, support responsiveness, and security practices and with finance to understand the preferred payment and refund clauses and with customer success to understand what commitments can be made around renewal notifications.  The list of required inputs goes on and on.

Why CLM Is Not Always (Or Usually) the Answer

Contract lifecycle management (CLM) providers seek to facilitate this cross-functional process by enabling enterprise access to their platform. But CLMs will never be the platform of choice for most business stakeholders because it means learning a new system or process that most team members only need to use sporadically.

Change management practices tell us that adoption success is highest when you enable stakeholders to stick with the systems and processes they are already familiar with. This can be achieved by CLMs when they leverage application programming interfaces (APIs).

As Forrester Research analyst Josh Walker said, building software without APIs is like “building a house with no doors.” APIs act as bridges between systems and people. CLMs leveraging APIs can be powerful.

Even better is when companies use APIs to leverage the best of multiple contracting and business systems to create automated flows that fit each teams’ current operations.

Advantages of Using APIs to Automate Contract Workflows

There are big advantages to this type of automated flow for contracts.

• Teams actually get the information they need, where they need it and when they need it.
• No team is doing data entry because the data is automatically extracted and transferred.
• It makes it easier to engage deal partners like customers or vendors.
• It increases responsiveness of internal teams and Legal. Awareness of, and therefore adherence to, contract terms improves.

Snapshot: An API-Integrated Contract Workflow

Let’s take an example of what an integrated contract management workflow could look like:

Intake

Dave is in sales at a consulting company and needs to have a customer agreement reviewed. Dave submits his request to the centrally managed intake ticketing system used by the whole company.

Since Dave is in sales and he has selected “contract review”, two automations are triggered. First, the customer form agreement he submitted goes straight to an AI contract review tool (not all CLMs have great AI contract review today) (API #1). 

Second, a contract review ticket is opened in the CLM used by Legal (API #2). Then, the ticket is populated with deal data from the customer relationship management platform (API #3) and marked as “Pending AI Review.” 

Human Review and Negotiation

When the AI review is completed (which will likely depend on API calls to one or more LLMs), the AI contract review tool sends the reviewed contract to the CLM (API #4). Then, a message goes out to Sarah, the legal reviewer, through Legal’s preferred communication platform (e.g. Slack, email, CLM, etc.) that the contract is ready for human review (API #5).

Sarah reviews the contract and flags sections for review by subject matter experts such as tax, security, privacy, delivery operations, sales, and finance. Each team is pinged through their preferred communication platforms (e.g. Slack, email, CLM, CRM, etc.) that their inputs are needed on the contract and are giving the deal information they need to provide their responses (APIs #6-11ish depending on how many teams are involved and how many different systems are being used across teams). 

The subject matter experts respond through the same platform or through the CLM. Sarah incorporates the subject matter expert inputs, updates the agreement, and sends a completed review back to Dave (through the API with the intake ticketing system or the CRM) to send back to the customer.

Every subsequent turn of contract redlines has the same flow.

Execution and Post-Obligation Management

Finally the contract is completed and Sarah uses the integration between the CLM and the e-signature platform to initiate execution (API #12). When the contract is fully executed, the contract is automatically sent to the AI contract extraction tool (not all CLMs have great AI extraction today) (API #13).  The AI contract extraction tool extracts the contract data and sends relevant contract information to each team’s customer or enterprise management platform (finance, delivery operations, billing, security, legal, sales, etc.) (APIs #14-20ish, again depending on how many teams are involved and how many different systems are being used across teams). This means, for example, when the support team receives a customer ticket, they can see at the same time when they need to respond to the customer and if there are any restrictions on what information they can access or where they can access it from. It means that customer success or procurement can automate notifications of term expiration and renewal. It means that when something goes wrong, the data is already there to adhere to reporting requirements or satisfy credit obligations.

Learn More: Important Provisions of API License Agreements

How to Implement APIs

Of course, this doesn’t happen automatically.  To get started, follow these steps:

1. First map out your existing processes.
2. Then, start talking to all of your partner teams to find out what systems they are using.
3. In addition, talk to your vendors to understand what APIs they have available.
4. Talk to your IT team to understand what integration tools they have available and what integrations they will be able to support and manage.
5. Talk to the owners of each system that you want to connect about what data can be exchanged, where the data lives and where it will go, and how it can be managed and supported.
6. Then, start with enabling the most impactful integration. Design your new processes and validate again with the involved teams and vendors for that integration whether the new process will work for them and how it will be managed and supported.
7. Then test the new process and API. 
8. Lastly, find your internal champions and see how they like it.
9. Then fix it and begin your full rollout.  Is it working? If so, move on to the next most impactful integration.

APIs can open the door to seamless workflows, less manual effort, more collaboration, faster contracting, and better post-signing contract management.  To achieve these benefits, you need to start with internal preparation and collaboration and make sure you have the right vendors to support the integrations you want.