Contract authoring is considered as the stepping stone to the entire contract lifecycle management process. In this blog, we take a deep dive into the ramifications of manual contract authoring and how an intelligent contract lifecycle management solution can expedite the authoring process and more.
Contract authoring is the inception of the contract lifecycle management (CLM) process, where the terms and conditions of the contract are established and finalized by both parties.
Although authoring a contract appears to be a simple task, it involves multiple stakeholders within the organization as well as external contracting parties. This makes drafting a contract even more complex and time-consuming.
According to ACC, 80.8% of in-house lawyers spend their time in drafting and reviewing contract documents.
There are several factors that need to be considered during contract authoring, including:
• The specific needs of the business or organization
• The legal requirements of the jurisdiction in which the contract will be governed
• The specific terms and conditions that need to be included in the contract
• Clearly-defined scope of work that includes duties and responsibilities of both parties
• Clarity of legal language while drafting contract clauses
• A comprehensive dispute resolution clause
• Details of banking and payment modes
Moreover, businesses are also required to store, manage, and extract key information from contracts, which could prove to be a major operational hurdle if they are using hard copies. In the current scenario, despite most organizations moving to digitized copies, the contracts are stored everywhere – emails, SharePoint folders, Google Drive, etc.
In the traditional scheme of things, a lawyer would author a contract by including legal workflows and clauses while coordinating between internal and external stakeholders.
The manual contract authoring framework can be time-consuming, error-prone, and lacks the necessary collaboration features. These challenges can result in delays, inefficiencies, and increased risk for organizations. However, with the advent of contract authoring software, businesses can streamline their contract creation process and enhance productivity.
1. Time-consuming and error-prone processes: Traditional manual contract authoring processes involve manually drafting, reviewing, and revising contracts, which can be tedious and time-consuming. Moreover, manual processes increase the risk of human errors, leading to inaccuracies, inconsistencies, and potential legal issues.
2. Lack of collaboration and version control: Collaboration among multiple stakeholders involved in the contract authoring process is essential. However, relying on email exchanges, scattered feedback, and offline document handling can lead to miscommunication, version control issues, and delays. The lack of real-time collaboration capabilities hampers efficient negotiation and slows down the overall contract authoring process.
3. Compliance and risk management: Ensuring compliance with legal and regulatory requirements is paramount in contract authoring. Failing to adhere to specific clauses, terms, or legal obligations can expose organizations to unnecessary risks and legal disputes. Tracking and managing compliance manually is a daunting task, prone to oversights and oversight.
4. Inefficient template management: Organizations often rely on standardized templates and clause libraries for contract creation. However, without a centralized system to manage and update these templates, maintaining consistency and accuracy becomes challenging. Inconsistent language and outdated templates can introduce risks and create confusion during the authoring process.
By using a contract lifecycle management software solution, businesses and organizations can streamline the contract authoring process and ensure that contracts are created effectively and efficiently. A contract authoring software provides multifold features that can help to streamline the contract authoring process, including:
• Guided requests: With all necessary information collected before the contract is created, users navigate complex legal language, reducing errors and improving the overall quality and accuracy of the contracts.
• Redlining & versioning: Redlining allows for easy identification and tracking of amendments made to a contract, while the versioning feature enables efficient management of multiple iterations of a contract.
• Workflow & approval: Establishes a predefined/customizable sequence of tasks and approvals for key stakeholders to review and sign off on contracts.
• Templates & clause libraries: Offers a repository of pre-approved templates and clauses that can be used to create contracts quickly and easily.
• Collaboration: Fosters seamless teamwork by allowing multiple users to edit and collaborate on a contract simultaneously, enhancing productivity and reducing turnaround time. This feature also enables key stakeholders to finalize critical parameters in the contract.
A typical contract authoring process includes the names of the parties involved, the scope of the contract, the terms and conditions, and the desired outcome.
Guided requests can be customized to fit the specific needs of the business or organization. For example, a business that regularly contracts with vendors may have a guided request that includes information about the vendor's products or services.
Redlining and versioning allow users to track changes to the contract and to revert to previous versions if necessary. Redlining allows users to mark up the contract with changes, while versioning allows users to save different versions of the contract.
Businesses need to track changes to contracts especially when contracts are negotiated between multiple parties.
Workflow and approval help ensure that the contract is reviewed and approved by the appropriate stakeholders before it is finalized. The workflow defines the steps that need to be taken to complete the contract authoring process, while approval allows users to track the status of the contract and approve or reject changes.
The workflow and approval process needs to be clearly defined for contracts that involve large amounts of money or that have significant legal implications.
Templates and clause libraries provide users with a repository of pre-approved templates and clauses that can be used to create contracts quickly and easily. Templates can be customized to fit the specific needs of the business or organization, while clause libraries can be used to add specific terms and conditions to contracts.
Contract authoring software can enable real-time collaboration among stakeholders involved in the contract creation process. It provides a centralized platform where users can review, comment, track changes, and maintain version control. This facilitates efficient negotiation, eliminates version conflicts, and speeds up the overall contract authoring process.
An end-to-end contract lifecycle management software has revolutionized the way organizations manage contract authoring, repository, and post-signature obligation management. By automating workflows, improving version control, enhancing collaboration, and promoting compliance, contract authoring software streamlines the entire contract lifecycle to reduce risks and improve overall operational efficiency.
Get started on your contract lifecycle management journey with SimpliContract’s intelligent contract authoring module.