Pre-signature Contract Lifecycle Management: An Overview

Contracts are integral for enterprise value creation. Lesser focus on contract development affects achievement of ideal outcomes and creates issues down the line.

Research indicates that 26% of contracts fail to meet their objectives on average. Such weak paper is a result of the tendency to view contract drafts as mundane and repetitive tasks. Often, this inattention extends to upcoming contract renewals (or terminations) as well. Pre-signature contract management using Intelligent CLM tools prevent such situations.

Studies show that a lawyer may spend up to 40% of his or her work on tasks that do not require legal expertise. The need for automation and digitization of contract portfolios is at an all-time high due to these reasons.

Technology can reduce contracting costs and turnaround times. For instance, giving self-service capabilities to business users can reduce non-core work. Automation of repetitive routine tasks will free up skilled legal staff for higher value assignments.

Organizations follow a five-step pre-signature contract lifecycle management process. It includes

1. Contract Request
2. Contract Authoring
3. Negotiation(s)
4. Approvals
5. Signature and Execution

Initiation of the Contract Request

Contract request initiation is the first step of pre-signature contract lifecycle management. Information gathering is a prominent aspect of contract initiation. It establishes expectations, objectives, and deliverables from the contract.

Information gathering requires supporting documents, stakeholder interviews, and even comparisons with earlier contracts. Other details include contracted values, dates, and milestones. Required terms and conditions are usually included as part of the request. Critical aspects like provisions for renewal are also established at this point.

Technological enablers like CLM software streamline contract request initiation in enterprises. Intelligent CLM tools enable this phase with capabilities like:

• Self-service contract request capabilities for business users

• Users can define tasks, due dates, and stakeholders

• AI- and NLP-powered data retrieval from existing contracts

• Stakeholder collaboration over Chats for information gathering

• OCR capabilities for faster digitization and analysis of data

• Easier supporting document uploads

• Upcoming contract renewal and expiry alerts

• Integration with enterprise apps like ERP, CRM, S2P, and P2P finetune scope

 Contract Authoring matters

An initial contract draft is the goal of contract authoring. Standardization of contract terms, conditions, and clauses is critical during this stage. It must result in a relevant draft that ensures measurable and achievable outcomes.

Contract usability and functionality are the latest authoring focus areas for businesses. This marks the exit of lengthy complex contracts. Clarity and functionality in agreements is the desired result on this front. Simpler contracts ensure higher compliance, better obligations management, faster partner onboarding, and fewer customer negotiations. Technology-driven CLM enables legal teams on all these fronts.

Use of Intelligent CLM during the authoring stage can reduce Contract approval times. In fact, SimpliContract's clients report an increase in revenues when contract authoring times are reduced by up to 40%.

Intelligent CLM solutions like SimpliContract enable these pre-signature contract management objectives using:

• AI powered contract authoring wizards

• Dynamic enterprise playbooks decode third-party paper

• Fallback clauses from integrated templates and library

• Deviation tracking

• Simpler authoring using Microsoft Word and Office 365

Simplify Negotiations

Contract negotiations are the most critical aspect of pre-signature contract lifecycle management. Stakeholders from all parties finalize the most favorable contract terms during this process.

Virtual contract negotiations have become the order of the day. Negotiations over email are most common, followed by teleconferencing, and video calls.

Successful negotiations ensure the best possible contractual outcomes for all parties involved. This requires a fair number of discussions, reviews, concessions, and revisions. It calls for access to each contractual negotiation’s status. This can be a challenge in complex deals that involve many stakeholders.

Among all these, manual contract reviews are time-consuming tasks for legal professionals. Contract reviews involve in-depth assessment of contract details and possible contractual risks. These reviews are often conducted by internal and external legal professionals. Distributed contract information over applications further complicates reviews. As a result, reviews can prolong contract approval turnarounds.

Protracted negotiations often create delays in pre-signature contract lifecycle management. Intelligent CLM can streamline many of these discussions with capabilities like:

• Collaborative contract reviews using a single platform

• Automatic redlining for negotiations

• Clause extraction for third-party contract reviews

• Version control to ensure the most up-to-date version

• Knowledge management using a contract repository

• Centralization of revisions and comments across stakeholders

• Smart search with conversational and advanced search

• Custom dashboards for a single source of truth

• Risk scoring models using AI

• Access to supplier data during reviews

Time for Dynamic Approvals

Signatures from authorized stakeholders confirm business approval of the contract. The contract terms become legally binding for all parties involved during this contractual stage.

Evaluation of the contract’s audit trail marks the start of the execution stage. The final draft's review ensures that it fulfils the expectations of all parties. Post approval and signatures, the contract becomes active. E-signatures are now replacing physical signatures for contract approvals.

Intelligent CLM tools feature dynamic approval capabilities for faster approvals. These capabilities include:

• Centralized contract approvals

• Dashboards for insights on pending drafts

• Customizable approval workflows

• Creation of clause-level approvals

• Audit logs to track document access and edits

• Approval previews

• E-signature support for the faster signature acquisition

 Transform your organization’s contract lifecycle management capabilities with the end-to-end capabilities of Intelligent CLM solutions from SimpliContract. Contact us today for more about how next-gen enterprise CLM solutions improve efficiency and revenue generation across contract cycles.