In many ways, law departments’ delivery of contract management services is still like the Wild West – a lawless frontier. Within a single law department, approaches to managing contracts can differ wildly among practices or teams, if not among individual lawyers themselves. Some teams or lawyers are straight shooters: very disciplined, requiring structured submission of requests, using pre-approved templates, and capturing data and executed documents at the end of Legal’s involvement in the lifecycle of the contract. Most lawyers, however, still take requests by email, look to their personal stash of past contracts with “good” language, and file the latest version of the contract they had (often, not the executed version) within their personal email folder. Although both strategies may produce an excellent contract that achieves the client’s objectives, there is a bigger picture to consider: the risk of variations in negotiated terms across similar contracts and the inefficiency of lawyers spending time inserting key provisions that are regularly missing when the client submits a contract. As a result, law departments of all shapes and sizes are considering technology options to improve the delivery of contract services.
As a former head of technology consulting services to law departments and a professional now charged with instituting efficient contract management services, I am often asked to recommend contract management software. Although the lifecycle of a contract can be characterized the same way among most law departments, unfortunately, the role that technology plays within that lifecycle for a law department is not one-size-fits-all. I’ve led clients through the exploration of a variety of approaches and will describe four general approaches to consider.
Repository Approach – This approach is what I have most often seen within law departments. A common mantra is, “Legal is not the owner of the contract.” Here the law department purposely avoids technology and processes that might imply that Legal is doing more than reviewing/drafting a contract and providing legal advice. As such, the law department simply wants a central location to store its templates, the versions of the contract on which the lawyers worked, and the final version of the contract (in the event there are questions or disputes). The best technology to support this approach is a legal document management system that enables storage and profiling of documents.
Piggy-Back Approach – Some teams of lawyers believe in the benefit of having more visibility into the metrics behind legal contract services. Knowing the types and volumes of contracts that clients are requesting, understanding the turnaround time for a contract request, or having insight into how often certain/different types of players are involved can inform how the department should staff and approach contract service delivery. To achieve this insight, the department must gather some detail about the contracts on which they work. A database can capture key data points or business terms that describe a contract (the type of contract, date of the request, parties in the contract and value of the contract). However, with Legal as a cost center, purchasing tracking software can be tricky. Therefore, departments may look to “piggy-back,” leveraging software such as the department’s matter management system. Some matter management systems are not ideal for tracking contract terms. A better fit might be systems with contract management functionality, such as those used by Procurement (purchase-to-pay systems) or Finance/Accounting (ERP systems). Undoubtedly, corporate IT groups will thank those who choose to piggy-back on existing technology!
Point Solutions – In some cases, lawyers may seek to improve very specific processes, and there are tools that offer functionality to address a single need. For example, teams of real estate attorneys in the retail sector may spend inordinate amounts of time abstracting large volumes of leases. Why not use an automated abstraction tool to assist with quick and easy documentation of lease business provisions? Another group of lawyers may spend significant time reviewing large volumes of low-risk contracts. Document assembly software provides client self-service templates, along with the security that clients are using company-approved templates without changing the terms. There are a wide variety of point solutions to support document drafting, document comparison, document review, electronic signatures, workflow/request management, automated reminders, OCR and obligation management.
Full Contract Lifecycle Approach – In recent years, the number of law departments seeking full contract lifecycle management solutions has grown, often driven by increasing risk management and compliance remits. Departments now recognize their responsibility may not end once a contract has been executed. Increasing regulation and ever-present litigation risk means that lawyers are more often revisiting contracts after execution. Furthermore, in the spirit of improving client service, some departments are taking on greater responsibility in the management of terms and obligations. In these cases, full contract lifecycle systems are being considered. While there are well-known enterprise systems, there also have been a number of new entrants to the contract lifecycle management space that cater to law departments. Most of these systems offer software-as-a-service and work well with other law department systems.