Legal Risks With Poor Contract Lifecycle Management

Inefficient contract lifecycle management can lead to an organization facing various legal risks. Here’s a quick overview of the possible risks legal teams face with poor post-signature contract management.


Umashankar Natarajan


1 min read

The more a business grows, the more contracts they sign. From enterprises to SMEs this rule applies to all. But what happens when these contracts are not properly managed? The result could be poor management, inefficient use of time, and prevailing contract risks. 

Most organizations are invested in a contract during the negotiation phase, once the deal is done, more often than not, contracts are tossed to the side only to be looked at again during renewal. This especially has a negative impact on legal teams. Here’s why:

Legal risks that come with poor contract lifecycle management

Breach of contract 

Monitoring contracts after they’ve been signed isn’t something companies manage seamlessly. Post-signature, contracts are set aside and not given much thought. This leads to greater contract risks that teams are generally prepared for. A breach of contract, even when it’s accidental can lead to possible litigation. Post-signature contract obligations are something organizations need to thoroughly keep a tab on. 

Missed milestones and deadlines

Adhering to contract dates is as important as signing of the contract. Poor contract lifecycle management can easily lead to missed milestones and deadlines. If an organization allows a contract to expire and continues to use the product or service, they are at a liability. Contrary to that, if organizations have an auto-renewal system in place they might end up renewing contracts of products and services that they no longer use. In each of these cases, the organization is at loss. 

Casual access controls 

It’s obvious that only the stakeholders in a particular contract should have access to it. But casual access controls by organizations are widespread. Unfortunately, this means more people than actually required have open doors to important and confidential information. This can lead to some employees mishandling valuable and classified knowledge like IP, pricing, and company data. As a result, data theft is prevalent and can be avoided by tightening access controls.

Failed compliances 

Enterprises invest heavily in solving problems like unpredictable spends and regulatory compliance. But, it’s no news that sometimes people fall short in meeting deadlines and delivering obligations. An efficient contract lifecycle management system can help solve these problems with ease. Not only does it look into data confidentiality, privacy, arbitration, and other regulations that impact business, but it also keeps contracts up to date on important dates and actions, which reduces the scope of compliance failure marginally. 

The number of risks that actually come with inadequate contract management are many. Right from losing or misplacing the original contract to non-compliant contracts, a business can be at risk if contracts are not adeptly managed in the post-signature stage. An efficient CLM platform is the answer. Apart from taking care of digitally storing contracts on the cloud, keeping track of deadlines, and highlighting possible risks - a contract lifecycle management solution does it all.