Pre-signature Contract Lifecycle Management: An Overview
Pre-signature contract lifecycle management (CLM) is essential to ensure optimal contracting outcomes. It covers processes and workflows of contracting stages right from bid to signatures.
Pre-signature contract lifecycle management (CLM) is essential to ensure optimal contracting outcomes. It covers processes and workflows of contracting stages right from bid to signatures.
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.
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.
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%.
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.
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.
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.