The old adage “change is the only constant” fits perfectly when it comes to legal agreements. This is why version controlling contracts is paramount to a streamlined contracting process. The in-house legal ops teams and, in some cases, legal counsels that oversee the entire contract lifecycle are engrossed with revisions and updates that need to be published to notify the company and the customers.
You might think how hard this can be. But contract versioning, if done manually, can get tedious and have severe implications for your organization.
Considering the bigger picture, version control is a crucial element in contract lifecycle management. With multiple teams involved in the contract authoring process, it’s obvious they need to know whether the version of the contract they are working on is the latest.
Working on the older versions could bring serious implications to the organization such as revenue leakage, missed contractual obligations etc.
Why Should Organizations Version Control Contracts?
The in-house legal teams author contracts every day. And it’s quite rare that a contract is approved and executed without any iterations or amendments from stakeholders.
So, what do they do?
During the contract authoring process, multiple iterations of a contract are documented. Since the umpteen rounds of suggestions and iterations have become inevitable, contract authors could find it hard to track multiple versions and edits.
Version controlling a contract essentially involves tracking changes at every stage of the iteration to ensure all stakeholders are working on the latest version.
Typically, organizations assign numbers in an incremental fashion for every iteration of the contract. This helps the parties involved to track the contract and compare iterations.
Some CLM providers even offer “deviations” and “redlining” features to compare different versions on the same screen.
Unifying Multiple Business Units with Contract Versions
With Legal, Sales, Procurement, and Finance teams involved in contract lifecycle management, managing multiple versions of contracts efficiently has become the need of the hour.
In the current scheme of things, how are your contracts organized and edited while working with multiple stakeholders:
- Does your organization have multiple nomenclature styles across teams for your contracts?
- Have you made changes to an existing draft and accidentally saved it over the older version?
- Did you browse through your Google Drives or SharePoint folders to even find a contract you’re looking for?
If the answer to any of these questions is in the affirmative, the time is ripe to make a paradigm shift in your version control process.
Without version control, the multiple iterations made are brushed under the carpet and it would become incredibly difficult to search for any amendments made in the contract.
In the next section, let's explore how a robust version control framework can help.
5 Benefits of Version Control in Contract Authoring
1. Universal Naming Convention for Contracts
A universal naming convention brings clarity and consistency to the contract authoring process. By adopting a standardized format for naming contracts, including key information such as contract title, date, and version number, users can quickly understand the purpose and status of a document. Clear and consistent names also make it easier to search and locate specific contract versions, reducing confusion and saving valuable time.
2. Streamlined Collaboration
Contract authoring is typically a collaborative effort involving multiple parties, such as lawyers, clients, and stakeholders. With version control, all participants can work concurrently on the same document without the risk of overwriting or losing vital information. Each modification is tracked, attributed, and accessible to authorized users. This fosters a streamlined collaboration process, as it eliminates the need for lengthy email chains or the confusion caused by multiple document versions.
Stakeholders can easily view the progress of the contract, understand the changes made, and provide input where necessary. By centralizing and organizing all contract versions, version control systems simplify collaboration, saving time and reducing the likelihood of miscommunication or errors.
3. Comprehensive Audit Trail
The complexity of legal contracts makes them susceptible to errors, whether they stem from human oversight or miscommunication. These errors can have severe consequences, leading to disputes, financial losses, or even legal ramifications.
Version control helps mitigate such risks by maintaining a comprehensive audit trail of every change made to a contract. It enables authorized users to compare versions, identify modifications, and understand the evolution of the document. In case of any discrepancies or errors, it becomes easier to trace their origin and rectify them promptly.
CLM providers offer features including role-based access and permissions to keep the integrity of the contract intact.
4. Compare Multiple Versions Simultaneously
CLM technologies allow users to revert to previous versions effortlessly, compare document changes side by side, and merge modifications seamlessly. Additionally, they often incorporate automated workflows, notifications, and approval mechanisms, ensuring that the contract progresses through various stages promptly.
By eliminating redundant manual tasks and offering intuitive interfaces, version control empowers contract authors to focus more on the substance of the agreement, accelerating the contract authoring process.
5. Compliance and Risk Management
Version control aids in compliance and risk management by allowing users to track and document all changes made to a contract. This comprehensive audit trail acts as evidence of compliance efforts, showcasing that the document underwent proper scrutiny and approval processes.
Moreover, version control enables organizations to avoid missed obligations and revenue leakage. This ensures robust governance and reduces the risk of unauthorized changes, tampering, or unauthorized access to sensitive contract information.
A robust CLM platform can automate the entire contract authoring process, improve version control with inbuilt chat and redlining features, and manage contracts better.
Get in touch with us to learn how SimpliContract can improve your contract authoring and version control framework.
Frequently Asked Questions
1. What is Contract Versioning?
During the contract authoring process, multiple iterations of a contract are documented. Version controlling a contract essentially involves tracking changes to ensure all stakeholders are working on the latest draft.
2. What are some of the challenges in manual contract versioning?
The manual process of version controlling a contract can be time-consuming, error-prone, and could also leak revenue. Here are some of the major challenges:
- Absence of a universal nomenclature
- No audit trails
- Lack of collaboration with all parties involved
- Lack of a central repository
3. What are some of the benefits of version control?
- Streamlined Collaboration
- Compliance and Risk Management
- Comprehensive Audit Trails
- Enhanced Accountability and Transparency
- Compare Multiple Versions Simultaneously
4. How does the “redlining” and “versioning” feature in a CLM help?
Redlining allows for easy identification and tracking of amendments made to a contract while efficiently managing multiple iterations of a contract. Users can save 100+ hours of clause-level comparisons against internal templates by leveraging the power of AI.