A Centralized Contract Repository Streamlines Processes and Reduces Risk
Contract management represents one of the single largest resource drains for organizations of all sizes.
The American Bar Association tells us that “according to the Institute for Supply Management, a typical Fortune 1000 company manages between 20,000 and 40,000 active contracts at any given time, at least 10 percent of which are misplaced, difficult to find… or otherwise unmanaged or forgotten.”
Drilling down into the details of the contract management challenge, the situation appears even worse. A 2022 DocuSign survey of more than 1,300 contracting professionals worldwide revealed that:
- Contract professionals take 45 minutes on average to find a completed contract
- 46% of respondents have been unable to locate a contract
- It takes 1 hour and 24 minutes, on average to find specific information within a contract
- 68% of respondents need to access completed contracts at least weekly
The challenge is acute, even for moderately-sized teams. When considering the most common steps of the contracting process, it takes an average of 30 hours of staff time to generate, negotiate and locate a contract. For a mid-sized organization that manages around 500 contracts a year, that works out to 7 full-time employees worth of annual labor.
Fortunately, a solution is at hand. A modern, centralized contract repository can have a significant and positive impact on the organization’s contract management processes. Digital contract repositories have proven highly effective at improving efficiency and reducing the number of hours organizations spend searching for contracts.
What is a digital contract repository?
In simplest terms, a contract repository is a place where contracts are stored.
Whereas historically, this has meant physical storage locations that held thousands of paper files, today it has come to mean a digital, cloud based, centralized storage system for completed agreements. To be most efficient and productive, a contract repository must be searchable by extracted fields and key terms, and able to be easily updated and amended with contract amendments, renewals, and legal or regulatory changes. It is a living, breathing tool, rather than a static location where contracts and agreements go to “die."
Whereas some organizations have leveraged basic tools like Microsoft SharePoint, or even a shared drive to electronically store contracts and other critical documents, this method leaves much to be desired. A modern, digital contract repository is designed to be more than a simple, static “digital file cabinet.” Properly used, it is a powerful tool that improves departmental efficiency, collaboration and accuracy across all stages of the contract lifecycle, from documentation preparation and generation to storage and management. And the benefits only increase if the repository is centralized and accessible by approved administrators across multiple functions throughout the organization.
Why do you need a digital contract repository?
Today’s office of general counsel is generally encumbered by inefficient document generation, review, management and storage processes. In-house attorneys are shackled to manual workflows and disconnected systems for negotiating, reviewing and approving contracts prior to signature and managing renewals, obligations and risks post-signature. Part of the difficulty lies in not knowing where contracts are kept, and part of the problem is the lack of searchability for key data.
According to Gartner, contract generation, negotiation, review and approval can take up to half of a law department’s time. In addition, siloed functions and departments make it harder for legal departments to manage and locate the thousands of agreements and contracts held throughout the organization. This challenge has been exacerbated during the pandemic, as the growing remote and hybrid workforce has heightened the need for online collaboration – now more than ever. Moreover, the office of general counsel is charged with ensuring that proper security and confidentiality are maintained through permission-based access, and contracts are accessed on only a need-to-know basis.
Traditional contract storage systems represent an unbalanced and inconsistent approach to risk and obligation management, whereas a digital, centralized contract repository introduces advanced collaboration features, along with greater transparency and efficiency to the contract management process, and security for the organization’s critical information
A digital contract repository solves for many common legal challenges
A modern digital contract repository can address many of these pain points, accelerating the contract lifecycle and reducing burden on staff by:
- Speeding up contract location: with a single source of truth, finding contracts doesn’t have to take hours just to locate the contract you need.
- Reducing the number of systems used: Eliminate the need for constant “swivel chairing” among multiple systems and applications where contracts may be stored and managed, including Microsoft Word, email, CLM and customer relationship management (CRM) solutions.
- Simplifying handoffs among multiple parties: for legal review, approval and signature.
- Enhancing monitoring of existing contract provisions: by tracking obligations and treating contracts as codification of their business relationships.
- Identifying current vendor relationships: Post signing or during contract creation, easily identify prior contractual relationships with the counterparty, or with a competitor.
- Screening for non-standard terms and clauses: Quickly comply with requests to identify the number of current contracts containing provisions such as non-standard payment terms, force majeure clauses, or non-disclosure language.
- Fostering remote working relationships: Through centralized, online access to templates, ensuring consistency and providing access to a broader wealth of resources.
- Providing multiple departments with real-time access: Legal departments often don’t have permissions to use Salesforce, which limits their ability to access contracts and other critical documents and communication. With CLM’s built in Salesforce integration, legal, sales and other key functions gain real-time access to contracts, as needed.
- Standardizing common sales agreements and contracts: Like NDAs, to reduce legal or finance intervention and manual review.
A “crawl – walk – run” approach to implementing CLM
While e-signature has changed the way that many organizations execute a contract, the lifecycle before and after signature is often managed through manual processes, spreadsheets, and emails—slowing the pace of doing business, increasing risk, and frustrating customers and employees.
Without a CLM solution to tame the growing complexity of contracting, organizations are stuck with manual processes that cause wasted time, unnecessary risk and dissatisfaction for customers and employees. Yet, earlier editions of CLM solutions tended to either be expensive to implement and difficult to use or limited in their ability to solve problems outside of a single use case or a small number of workflows aligned to a particular business function.. The result has been heavy investment, little return and ongoing frustration from customers, counterparties and employees.
Fortunately, organizations now have the option of introducing the time-saving efficiency of CLM into their contract management processes in a modular, step-by-step way, and growing with you as your organization’s needs evolve. Modern CLM solutions are designed to be easy to implement, beginning with the simplest use cases, and scaled up to handle more complex workflows over time. Many companies find that tackling the need for a digital contract repository is a great step to start walking with an automated CLM. By taking a “minimum viable product” approach to deployment, organizations can capture quick wins and expand usage of the solution over time.
For a deeper dive into how a digital contract repository can improve efficiency in your office of legal counsel, login or register at our Momentum 2022 website and check out the session “Crawl, Walk or Run - Legal Teams Benefit from DocuSign CLM,” which is now available on demand. And then contact us to start a conversation about how your team can use a contract management solution. Our experts can help your team map out plans for an audit, implementation, training integrations, change management and continued support throughout adoption.