A Quick Guide to the Contract Review Process
Most businesses have adopted electronic signature technology to streamline contract signing. But signing is just one part of the contract lifecycle. Before an agreement can be signed, it needs to go through the process of review and negotiation.
The contract approval process, including the crucial steps of contract review and negotiation, is by far the most time consuming portion of the contract lifecycle. Read on to learn more about the contract review process and how a digital contract lifecycle management (CLM) solution can improve contract reviews and negotiation.
The contract review process
Contract review involves the internal and external negotiation, assessment and approval of the contract's terms and conditions. During this stage, multiple revisions may be made to ensure accuracy and compliance.
Collaboration during negotiation helps to facilitate effective communication and consensus-building among stakeholders. The negotiation and review process is often time-consuming, but it is crucial for ensuring that the final contract meets the needs and objectives of all parties involved.
How does contract negotiation work?
Contract negotiation is a process between two parties trying to come to an agreement in the form of a contract. It involves discussions, exchanges of proposals, and modifications to reach mutually acceptable terms.
During negotiation, each party presents their desired terms and objectives while considering the interests and concerns of the other party. Both sides engage in give-and-take, making concessions and seeking compromises to find a middle ground.
Successful contract negotiation results in a final agreement that balances the interests of both parties and creates a solid foundation for a mutually beneficial business relationship.Once this is achieved, the contract is signed by authorized representatives from both sides.
The contract negotiation process takes longer than any other step in the contract lifecycle. In fact, according to our research, nearly half of companies spend more than 20 hours in the negotiation stage of the contract lifecycle and 71% generate 3 or more versions of a contract before it gets signed.
Using contract lifecycle management for contract reviews
To expedite and streamline the contract negotiation and review process, organizations can use a contract lifecycle management (CLM) solution. CLM tools digitize and centralize contract reviews and negotiations, offering many features to make the contract negotiation and review process more effective.
Comments and tasks
CLM platforms enable faster collaboration during contract negotiation by providing features for adding comments and assigning tasks. This streamlines the review process and helps stakeholders reach consensus and approval more quickly.
Version comparison
A CLM solution will offer version comparison tools that allow users to visualize changes made from one contract version to another, making it easier to understand who made what changes and when, even across multiple versions. This enhances transparency and reduces confusion during the contract review process.
Send for negotiation
Once the internal contract approval process is complete, a CLM platform can automatically send the contract for review to external parties. This accelerates the overall negotiation process and ensures efficient collaboration between all involved stakeholders.
Clause libraries
A CLM solution will often offer a centralized repository of pre-approved clauses that can be automatically added to a contract. Non-legal users can access this library during contract generation and negotiation to add new clauses as needed, speeding up the process while ensuring compliance with approved language.
Slack integration
A best-in-class CLM will offer integration with collaboration platforms like Slack. This allows all parties to receive notifications, complete tasks, approve edits, or suggest changes directly within the tools they already use. The end result is better collaboration and a seamless negotiation process.
Contract Analysis with AI
Docusign CLM+ includes over 100 pre-trained AI models to extract, analyze and report on key contract data points and legal topics—to enable risk scoring, power workflow steps and provide portfolio-level visibility.
Benefits of streamlining the contract review process
By implementing a CLM solution, businesses can achieve multiple benefits throughout the contract review process:
- Time and cost savings: A CLM can automate elements of the contract review and negotiation process. This reduces the time required for manual processes, ultimately saving valuable resources and accelerating the overall contract lifecycle.
- Increased efficiency and productivity: CLM tools streamline collaboration, improve task management and enhance communication among stakeholders on all sides.
- Simplified compliance: A CLM’s version comparison and centralized clause library options can dramatically simplify compliance with approved contract language and policies. Organizations can use these tools to ensure consistency and avoid costly mistakes that result in the need to redraft portions of the contract.
Improve your contract review process with Docusign CLM
Docusign CLM equips organizations to digitize and centralize contract reviews, accelerate negotiation and enhance collaboration. Ultimately, this leads to significant time and cost savings, increased efficiency and productivity, simplified compliance and enhanced collaboration and communication.
Discover all the benefits of Docusign CLM for yourself.