Contract Management: how to choose the right legal technology
The role of legal technology in contract management is increasingly important. Due to COVID-19 the adoption of legal and business technology solutions has accelerated, as most organisations move to remote and distributed ways of working. In line with basic economics, this increase in demand has led to an increase in supply, making it more difficult for decision-makers to choose the right application for their organisation.
The role of legal technology
Contract management is an umbrella term used for all parts of the workflow relating to a contract. Once the need for a contract is identified, this workflow starts with drafting or, if drafted by a counterparty, reviewing of the contract, continues with the negotiation of the contract with a counterparty, and leads to an agreement that is evidenced by a signature in the execution phase. This workflow is completed by the storing and monitoring phase where the executed contract is stored and the obligations imposed by the contract are extracted, monitored and performed.
Legal technology has a key role to play at each stage. By removing menial and duplicative tasks, increasing efficiency and compliance, contract management tools make contract workflows less time consuming and more enjoyable for those involved.
Different software applications are available to assist with drafting. Often these applications start with an interactive questionnaire. The responses to that questionnaire are used to generate the relevant document(s). As no one size fits all, different applications are designed to assist in different use cases.
There are three key considerations when evaluating the different applications: (1) how complicated are the documents that you draft and can the application handle that level of complexity; (2) what are the integration possibilities with applications that you already use (such as entity management systems, document management systems or e-signature platforms); and (3) what is the expected return on investment and can it provide you with sufficient data to report on these figures.
The three main benefits of investing in legal technology that assists with drafting are time savings of up to 90%, increased compliance and quality assurance.
Reviewing and negotiating
Whereas creating first drafts or execution forms of contracts is often an activity suitable for standardisation, the reviewing and negotiation of contracts often needs to take place on a case by case basis. However, there are plenty of examples of contracts for which the reviewing and negotiation activities are similar every time, with non-disclosure agreements probably being the best example.
Technologies such as Artificial intelligence (AI) and robotic process automation (RPA) can assist with these activities. Often the AI tool is trained or the RPA tool is configured to identify key provisions in the document received, match these against your set parameters and either accept the provision, triage to the responsible team or even come up with a counter-proposal.
This is very much an area where legal technology is still in development and the three key considerations are therefore: (1) what is the volume of contracts that require a time-intensive review and/or negotiation; (2) how standard are these negotiations; and (3) what is the expected return on investment and can it provide me with sufficient data to report on these figures.
The three main benefits are similar to those at the drafting stage, being time savings, quality assurance and reducing the need for human involvement in menial tasks.
The execution activity is the area where legal technology is already very familiar to most of us. E-signature platforms such as DocuSign and Adobe Sign have replaced the need to print documents and sign them manually with a pen. The key consideration for the platform that you choose is whether it can seamlessly integrate with the application that created the contract for execution and that stores your contracts.
Storing and monitoring
Finally, the storing and monitoring stage. Once a contract is executed, it is key for you to store it in a place where, a couple of months later, you can easily find it, but that also allows you to track the main provisions, for example the term of the contract. Functionality that alerts you once the term is about to expire is very important.
The three key considerations when you evaluate these applications are: (1) how configurable is the application to meet your specific needs, as this typically depends on which obligations are most critical to your organisation to monitor; (2) the ability to upload and trace all contracts already in place; and (3) how easy it is to search and find contracts that have been uploaded and extract data in a user-friendly format.
The three key benefits of having an application that stores contracts and assists in monitoring obligations are increased compliance, time savings and transparency on all contracts in one place.
The benefits of adopting and implementing a legal technology solution in the contract management workflow are clear. By giving careful consideration to the needs of your organisation at each stage of the process and asking the right questions of your contact management provider, you’ll be certain to choose the right solution.
About the author
Bram Kocken is the product manager of CC Dr@ft within Clifford Chance Applied Solutions. CC Dr@ft is a document automation offering that allows legal and business teams to quickly and independently generate tailor-made documents from their desktops. In this capacity, Bram is responsible for the overall product and overseeing the customer base of CC Dr@ft, varying from large financial institutions to large corporates