While corporate legal departments have long struggled with the labor-intensive task of managing contracts, COVID-19 has placed the challenges of traditional contract management into focus. Remote work scenarios, tightening budgets, and the potential for increased risk and liability have made it nearly impossible to manage contracts in a manual manner.
As if COVID-19 were not enough, another challenge looms on the horizon. At the end of the year, the London Interbank Offered Rate (LIBOR)—which is the rate banks charge each other to borrow money—is set to expire. LIBOR accounts for hundreds of millions of dollars in contracts. Prior to its expiration, those contracts will need to be reviewed and, in many cases, updated.
Given these challenges, there’s no time like today to implement a system that provides complete visibility into contracts and the ability to access contracts remotely. Neither of those is possible when paper contracts are stored in file cabinets and desks in empty office buildings. Let’s take a closer look at why it’s no longer feasible to rely on emails, spreadsheets, and paper for contract management—and why now is the time to implement a contract lifecycle management (CLM) system.
Remote work requires fast, easy access to contracts
COVID-19 has emphasized the need for electronic access. Employees can’t or won’t go into offices and sift through multitudes of files to find the information they need. They require a searchable repository that’s easily accessed from remote locations and a simple and fast way to find information on clauses, current obligations, contract status, and more. Attorneys must also be able to create, author, review, approve, and execute contracts wherever they are, whenever they need to.
A CLM system with a centralized dashboard allows legal operations professionals to maintain an effective workflow right from their home desktops. This will be essential even after offices reopen, as many employees elect to continue to stay home. It’s also critical for organizations with multiple or regional offices, as it allows all team members to easily access and work on the same contractual information, regardless of where they are located.
Tightening budgets mean greater efficiency today, with an eye toward revenue tomorrow
We’re all familiar with the concept of corporate legal departments (CLDs) doing more with less, but the economic impact of COVID-19 has made that even more pronounced. Law firms have been cutting back for months, and those cutbacks are likely impacting their corporate partners. The belt-tightening we were seeing in 2019 and before has given way to an even stricter focus on cost reduction and efficiency gains.
CLM software helps improve process efficiencies and reduce administrative costs. It eliminates the need for attorneys to scour for the information they need amongst reams of legal documents. Clause libraries allow legal professionals to simply drop in previously approved legal language, and rules engines can ensure that workflow processes are automated to comply with an organization’s specific guidelines. All of this can expedite the cycle times involved in contract reviews, approval, and execution, reducing how long it takes to get revenue in the door and leading to a substantial and quantifiable ROI.
While increasing savings today, CLM software can also help CLDs keep an eye on—and secure—future revenue opportunities. At a glance, teams can ascertain what they are contractually obligated to deliver and plan their resources and actions accordingly. This will help them stay on top of servicing their customers’ needs, thereby increasing the likelihood their contracts will be renewed.
Regulatory changes introduce the need for lock-down risk management
Everything from audit inspection to disclosure requirements to corporate governance rules has been impacted by the pandemic. In this fluid and dynamic environment, CLDs need to be able to quickly update their contracts to reflect the changes taking place within this environment.
Moreover, corporate legal teams must have complete visibility into current regulatory requirements so they can deliver what is expected. They need to be able to respond to pending audits quickly and effectively. If they do not, they may risk being noncompliant themselves and subject to heavy fines.
CLM software can provide CLDs better contractual visibility for comprehensive oversight. This offers them a mechanism for managing and tracking potential risks, thereby protecting them from potential legal exposure.
Don’t become a casualty
Gaining better visibility and transparency into contract management is critical if CLDs are to navigate the challenges they’re facing. Without a good sense of contract status, upcoming renewal dates, obligations, and the potential for risk, CLDs will not be able to manage their contracts effectively. They’ll be yet another economic casualty of COVID-19.
Implementing a CLM platform can help them avoid these very serious issues. By automating and streamlining their contract management processes, CLDs can drive better business outcomes and meet today’s challenges head-on while mitigating potential risks and saving money in the long run.