Successful in-house legal teams rely on a structured contract lifecycle management process to manage agreements, from initiation through fulfillment and renewal. Given the American Bar Association's (ABA) finding that 60% of corporate lawsuits are contract-related, it is crucial for legal departments to prioritize an efficient and comprehensive contract lifecycle management (or CLM) process to mitigate legal risks and potential disputes. In addition, good process eases the smooth administration and execution of contracts and plays a significant role in supporting successful business relationships.
Stage 1: Contract Initiation
In this CLM stage, in-house counsel identifies the need for a contract and outlines the goals and expectations of the involved parties.
Consider CLM software that includes Legal Ticketing
Legal Ticketing from Legisway not only streamlines the contract request process, it gathers relevant business goals and agreement details. It even offers an AI-driven analysis for quick review of the terms and conditions.
Stage 2: Contract Creation and Negotiation
This CLM stage encompasses the drafting, reviewing, and negotiation of contract terms, ensuring alignment with the interests of all participating parties.
Consider CLM software that supports contract creation and negation and makes edits visible and accessible.
Legisway supports contract templates, document version control, editing with MS Word, and even AI-powered review of term changes.
Stage 3: Contract Approval
After reaching a consensus on the contract terms, the process advances to CLM stage 3, the approval phase, ensuring the agreement meets the needs of the stakeholders and other business requirements.
Consider CLM software that offers automated workflows and integrated e-signature.
Legisway offers flexible workflows to gather required approvals based on contract type, department and even spend threshold, with fully integrated AdobeSign or DocuSign for signature, both internal and external.
Stage 4: Contract Execution
Once all necessary approvals and signatures have been secured, the contract is set for implementation. This CLM phase involves implementing the agreed-upon terms, such as delivering goods or services and meeting contractual obligations.
Consider CLM software that provides visibility to the larger business.
Legisway is a collaborative platform that provides legal and business users with automated alerts and the access and visibility they need to ensure contracts are fulfilled and milestones are met.
Stage 5: Contract Monitoring and Management
The contract lifecycle management process extends beyond execution, encompassing ongoing monitoring and administration. This critical stage consists of scrutinizing the contract's performance, safeguarding compliance, and promptly addressing any discrepancies or deviations.
Consider CLM software that indexes your contracts by type, negotiated terms and performance.
Legisway’s integrated AI takes the work out of indexing contracts, automatically populating your database with terms and obligations that are fully reportable. And even if contracts are not already indexed, the contract audit function powers a search across your contracts for opportunities and risk.
Stage 6: Contract Renewal or Termination
Contracts have a limited duration, and this CLM phase entails determining the proper course of action—whether to renew, modify, or conclude the agreement. Moreover, this CLM stage encompasses the potential renegotiation of terms, if needed.
Consider CLM software that makes contract renewals easier.
Legisway’s supports automatic and negotiated renewals. Let Legisway process those automatic renewals, well, automatically, without losing oversight. And, for negotiated renewals, receive reminders in advance and review past negotiations with single click access to the contract archive for that party.
Conclusion and takeaways
Contract lifecycle management requires a structured process that helps organizations navigate the complexities of contracts effectively. Each CLM stage plays a crucial role in ensuring that contracts are created, executed, and managed efficiently. By optimizing these stages, corporate legal departments can minimize risks, maximize benefits, and contribute to building strong, enduring relationships.
To improve your corporate legal department’s contract lifecycle management process and master each stage of the process, consider Legisway, an all-in-on legal information management solution that offers contract lifecycle management tailored to meet your organization’s needs.