Contract Life Cycle Management (CLM)
CLM for compliance requirements, minimizing risk and organization governance
Written by Knowledge Team, posted on March 19, 2019.
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Pillars of Contract Life Cycle
Every law firm needs to maintain contracts, and managing them can be a tedious task. The Contract Life Cycle Management (CLM) streamlines the contract process, making it easier for general counsel or law firms to deal with thousands of vital contracts and giving a better control over them. An essential part of contract management is being aware of the pillars of the contract life cycle.
1. Planning and Standardizing the Process
The planning, preparing and standardizing phase is the foremost pillar of contract management life cycle. Here an organized approach is decided, all members of the firm are made clear about the system to be followed and the procedures that are established for contract management and the key roles and responsibilities of each member is defined. A standard workflow for contract-related practices is set up. Contract Templates for standard agreement types are developed in this phase. A proper implementation plan is created and contract performance is evaluated.
Effective planning and preparation in addition to procuring the right Contract Management Software paves way for an organized approach to contract management.
2. Creating Online Repository for Contracts
Having an online repository for contracts (for existing and newly created contracts) gives the best Contract Management Experience. Various levels of permission ensures that only authorized personnel create, edit and read documents and contracts. The Contract Repository supports the storing, tracking, versioning, searching and management of contracts securely and is an important pillar of the Contract Lifecycle Management.
Online Contract Repository – create anything once. For amendments, just pull it from the clause library and make the changes the smart way.
3. Binding agreements through contract negotiations
This phase involves creating or generating contract or agreement document which includes all clauses, terms and conditions. The online contract repository can contain clauses that are most popularly used for contracts and legal agreements. These clauses are populated into contracts automatically to save countless human hours and to free up much more attorneys’ time to focus on the other portions of each contract. It is usually in this stage Contract Approvers and Signing parties come to an agreement about the scope of the contract, goods or services included in it, the obligations of each party, contract milestones and contract termination. These mutually-agreeable terms are captured in the contract document. Only upon satisfactory negotiation a contract should be signed.
Contract negotiations are important to ensure things go smoothly and the project succeeds
4. Contract Period
During the contract agreement, timeframe during which contract is valid is known as the contract period. During this period, the chief objective is ensuring that all terms, conditions, deliverables, milestones, and objectives outlined within the contract are taken care. In this period, all deliverable dates have to be identified and automated reminders to be set.
A contract administration plan and monitoring schedule should be in place during the contract period to ensure the contract is fulfilled as specified in the agreement.
5. Contract Renewal
Once the contract period ends, it must be renewed to stay in active status, based on business needs. When renewing contracts, it is important to include everyone so as to prevent any contradictions or problems in terms of legal obligations and billing. During contract renewal, it should be checked to find out if there are any standard clauses or terms to be added to the contract.
A contract administration plan and monitoring schedule should be in place during the contract period to ensure the contract is fulfilled as specified in the agreement.
Contract Management Software
As contracts make their way through the organization, operational and legal teams must manually create the contracts, manually maintain contract status, while also correcting whatever inconsistencies and inaccuracies they’re able to catch as it progresses through the negotiation and approval process. More wasted time.
Dedicated contract management software can help identify revenue opportunities such as renegotiating terms and eliminating costly legacy agreements. PageLightPrime Contract Management software takes away much of the drudgery involved with signing and executing contracts and makes the contract management workflow more orderly and predictable helping to lower costs and manage budgets better.