A company’s contracts are its lifeblood. Without contracts, companies would not be able to function efficiently. Contracts facilitate relationships between two or more parties while outlining measures for dispute resolution if required. Being a core business function with operational and legal implications, contract management impacts all essential business relationships, including supplies, partners, and customers.
And yet, contract management remains a manual, paper-based task that is labor-intensive and grossly inefficient. In fact, 80% of counsels function without any automation or contract digitization. On top of that, nearly two-thirds of lawyers spend a whopping 40% of their time on creating and managing contracts. It is no surprise that 9.2% is the average loss in a company’s bottom line, attributed solely to inefficient contract management.
According to the International Association for Contract and Commercial Management (IACCM), nearly 60% of businesses reported moderate to severe impact on their contracts by mid-March last year, courtesy of the work-from-home mandate. Now, face-to-face conversations or sifting through file cabinets is no longer feasible and cross-functional collaboration is a challenge. The pandemic is bearing down on the legal industry, raising serious questions regarding contract review and management.
The sorry state of contract management today
Even though 90% of professionals in the legal industry are open to automation, more than 80% of legal professionals do not use automation. In fact, less than 10% have adopted digital contract management systems (CMS). According to a ContractPodAi study, nearly half of lawyers are willing to explore and implement AI-based contract management systems.
Whereas lawyers acknowledge that AI and automation would allow them to better manage their contracts, legal firms are yet to place these solutions on their to-do list. Due to this unwillingness to adopt change, companies are missing out on the opportunity to turn their “cost center” into a “value center.”
Some of the larger contracting challenges faced by legal departments today are concerning workflows, approval, retrieval, template control, and volume and resource management. Processing agreements promptly require streamlining priority management, signature process, and time schedule—all of which are currently found lacking. The biggest concern of deadline-driven, detail-oriented lawyers is the inability to get out of automatic renewals and missing deadlines. For example, lapses in insurance policies or letters of credit.
Without a central contract repository, lawyers are left blindsided, and transitioning to a new contract lifecycle management solution (CLM) can help change that. Locating, collecting, and cataloging existing contracts for contract review and extraction becomes seamless with a CLM solution.
Benefits of contract digitization
Creating Legally-Compliant Contracts
The process of manual drafting new contracts can lead to inefficiencies and inconsistencies that are often aggravated in remote work settings. By adopting a CLM solution, you can create standardized templates and pre-approve contractual language to ensure all contracts are generated quickly without compromising on compliance.
Streamlining contracts without delays
Contracts can get stuck in the “awaiting signature” stage, causing delays in contract cycles and impacting potential revenue. With CLM, busy executives can e-sign contracts from any device.
Engaging key stakeholders in a timely fashion
A CLM solution facilitates real-time collaboration, allowing users to leave comments, add attachments and make notes for future negotiations. Moreover, automated approval workflows ensure the right people are looped in at the right time.
Maximizing the value of contracts
A contract management platform enabled with AI, allows you to access key information such as terms, clauses, and dates in seconds, empowering you to make better decisions and minimize risks.
Leading the charge: How Cenza helps in the process of contract digitization
Our core services begin with a consultative approach to contract data extraction and CLM migration.
We assimilate information on CLM migration requirements, different types of contracts, record properties that need to be extracted to create a foolproof migration plan. With flexible resources and experience across the enterprise, midmarket, and small clients, Cenza has a proven track record in CLM solution implementation.
Our consulting services are founded on values of agility and collaboration, devoted to helping clients derive the maximum value from contracts. Ready to kickstart contract digitization in your company, get in touch.