In the course of their day-to-day role, a General Counsel is expected to have oversight of the entire legal function of an organization. Aside from managing the operations of an organization from a legal perspective, a General Counsel is also expected to protect the business from risk. As an organization grows, a General Counsel is typically unable to be involved with every contract negotiation taking place. As a result, contract creation, negotiation, and execution are often performed by a range of individuals in the organization, with varying levels of understanding of the contracting process.
The importance of contracts
Contracts are at the heart of every business relationship. They document the commercial agreement between the parties to the transaction. It is imperative that each contract accurately reflects the agreement and is executed properly. As the parties to the contract will have an ongoing relationship, the contract may need to be referred to throughout the life of the transaction.
What is Contract Lifecycle Management?
Contract Lifecycle Management, or CLM, helps an organization manage its contracts from inception to execution and beyond. A CLM platform such as Scribe Zero lets users create or upload contract content, negotiate the content with the counterparty, monitor and review the internal approval process and monitor the contract on an ongoing basis.
How does this help a General Counsel?
By allowing technology to assist the contracting process, can help to:
CLM can help to mitigate a number of risks associated with the contracting process. First, by having a centralized, easily accessible, and searchable repository of executed contracts, it becomes easier to understand and track the contractual obligations of an organization. Secondly, the room for error is reduced as a CLM software such as Scribe Zero provides a clear audit trail showing the progress of the contract negotiation and the status of each particular contract (e.g. in the draft, for review or approval, etc.). A contract will not be able to be sent for external signing unless the relevant internal approvals have been obtained.
It is critical for all organizations to have a clear understanding of their contractual obligations to avoid a breach of contractual terms. This is relevant both on an ongoing basis, as well as prior to the entry into new transactions. CLM software can assist with this by providing search functions for existing contracts signed on the platform. Additionally, CLM software is able to provide customizable reminders of ongoing obligations (e.g. payment) throughout the life of a contract.
By using standard form templates, which have been pre-approved and signed off by the Legal Department, can help create greater efficiency in the contracting process. Less Legal Department resources will be required for drafting, reviewing, and approving routine contracts, freeing up Legal resources to assist with more substantive work. Businesses will be able to transact with counterparties with greater speed and confidence, helping to create a competitive advantage.
In short, CLM uses technology to transform the contracting experience. CLM frees up valuable resources to be applied to more challenging legal issues, enables greater contractual compliance, and reduces risk by providing greater visibility and structure around the contracting process.