Managing contracts is an integral part of your law department's functions. This vital work becomes much more difficult if you don't have a contract management system (CLM) in place.
Unfortunately, many companies use outdated or inefficient systems, slowing down their business and potentially impacting key vendor relationships.
Here are four steps to implementing a contract management system (CMS) to help ensure your internal processes will support your success.
1. Assess the current state of contract management for your business
Before you can implement a new CMS, you first need to accurately assess the current state of your system, identify its shortcomings, and propose a solution to key decision makers within your organization. You also need to enlist the help and support of other users of the current system outside the legal department, such as the sales team, IT, and finance.
Here are some questions to ask during your contract management assessment:
- Are contract activities conducted in a fragmented or ad hoc manner? That is, are contracts drafted from templates created by individual counsel or managed simply by aggregating them in filing cabinets?
- Is there a consensus that contracts take too much time? Are they too manual? Do they involve too many steps? Are they difficult or time consuming to get approved? Are they disorganized, especially when it comes to tracking due dates? Are they supported by too few personnel, causing bottlenecks in the system?
If the answer to any of the above questions is yes, further consider:
- Are any of or all the current contracting tools — like filing systems, policies, procedures, spreadsheets, databases, and information technology — inadequate for the required tasks?
- Where within the contract management process can automation help?
- What other systems, technologies, or best practices in use elsewhere could help improve the current situation? Can they be integrated into a future CMS?
Once you’ve conducted your CMS assessment and assembled the information, document your findings and solutions in a report. List all your requirements so they are clear to stakeholders as well. This report will help you make the business case for change to your senior leadership or any company budgetary authorities.
2. Get sponsorship from senior leadership
Implementing a contract management process affects many people across the enterprise. It can involve changing employees’ roles, corporate processes, or culture, so you must obtain sponsorship from senior company leadership outside the law department.
Senior leadership can help:
- Articulate the importance of a contract management process to all stakeholders involved.
- Set clear objectives and expectations regarding strategy, financial performance, and legal and compliance requirements.
- Drive the organizational changes needed to build a streamlined and successful contract management process.
- Direct stakeholders to implement and support the contract management process.
- Allocate resources such as funding, personnel, and technology to implement the system.
- Improve corporate strategies, policies, and practices for best-in-class CMS capabilities.
3. Engage internal business partners
When it comes to improving contract management, it’s vital to engage your internal business partners. Bringing them on board at the beginning promotes buy-in, which is essential for the successful development and implementation of your CMS.
These business partners include:
- The legal team. This team comprises partners, associates, paralegals, file clerks, and other administrative roles.
- The audit team. This team assesses your contracts to eliminate risk and offers checks and balances for your firm.
- The compliance team. Members of this time will guarantee that you fully uphold regulations and your company's standards.
- The sales team. Employees on the sales team must be familiar with how your contracts work in order to sell your services.
- The procurement team. When making any purchases for your company, the procurement team will be involved in and must have access to the contract management system.
4. Strategically manage the process by engaging the people
You’ve done your careful analysis, received sponsorship from senior leadership, and obtained buy-in from colleagues in other key departments. Congratulations! You have now successfully developed an improved contract management system. But the real work has just begun, as you must now implement and maintain this system. The continued involvement of your legal department is crucial in doing so.
Specifically, the legal department:
- Ensures all principal stakeholders receive training on the new contract management process. They can set up the trainings and update stakeholders as needed, such as when a newer system version is released.
- Engages the right business personnel at appropriate stages throughout the contract management process. They will contact partners and associates when needed, push contracts to compliance and audits, and make sure the contract management process runs smoothly all around.
- Maintains and updates the templates, policies, and procedures that underpin the contract management process. They are available to review processes and determine what's working and what's not while making the necessary changes.
Looking for more insights into contact management systems?
These four keys will provide a framework for your law department to develop and implement a successful contract management system.
For additional best practices in contract management, read the white paper, Smarter About Contracts, or request a demo of a CLM solution.
