Contract Solutions Defined
Contract solutions refer to a suite of services, processes, and technologies designed to improve the negotiation, execution, storage, and management of legal agreements. From a technical standpoint, contract solutions may include document management systems, workflow automation, electronic signature tools, and artificial intelligence (AI) applications. But their function is much broader than any one tool or process, helping companies streamline their business activities at every stage of the contract lifecycle.
Contract solutions can be differentiated according to their purpose. For example, they may be used: Contract solutions are often employed as part of enterprise resource planning (ERP) software, used alongside other digital tools. All of these systems can help companies safeguard their finances, protect trade secrets , and reduce the risk of commercial disputes that could cause reputational and operational damage. Contract solutions are important in modern business because of the growing need to control corporate data. Companies create and exchange more documents than ever before, and many contracts involve transnational business. These and other areas of risk need to be managed by setting and implementing policies, standardizing performance, and tracking compliance. As companies become larger and more complex, diversified, and globally active, the laws and regulations influencing their design, negotiation, and administration also become more complex. Multi-stakeholder negotiations, partner collaborations, and supply chain management add to these complexities and risks. Moreover, a comprehensive approach to risk management can help companies to secure investments, maintain favorable borrowing arrangements, and enhance their market credibility.
Types of Contract Solutions
There are several categories of contract solutions, each with its own unique value proposition. The following is a breakdown of the different categories and descriptions of when and why to use them.
Software Contract solutions typically offer contract creation, automated workflows, and real-time collaboration features in a software tool. Contract Briefcase is designed to leverage Third Party Contracts, a complete in-network contractual data source, to allow for customizable, scalable, and real-time management of all contractual obligations and milestones. It saves users the time of having to review hundreds of pages of contractual terms, helping set contract expectations. Why is it used? Because it’s a single-source solution that allows users to easily find and intelligently analyze their contracts.
Legal Contract solutions deliver off-the-shelf legal services for a fixed fee. You can find virtual counsel solutions for a variety of channels e.g., contract reviews, negotiation, licensing agreements, VC funding, or other ceaseless Minute-Man activities.
No-Touch Contracting allows you to outsource the entire contract process to professionals and systems specializing in contract management e.g., contracting for cloud based CRM solutions, app building, legal tech enabling various SaaS solutions, and embedded services.
Template Contract solutions (equivalent to the office template printer, this category of a contract legal toolkit) provide document templates or checklists that can act as a guide to creating a given contract type. Research platforms, which include contract templates for a flat-fee or subscription based service model, have additional content beyond the templates giving insight into optimizing the use of the templates for sides involved.
Integrated Legal Management (iLM) platforms enable a network of independent service providers to deliver contract solutions that cover a range of legal services. iLMS also provides networking tools that facilitate cross-selling to a client base.
Advantages of Contract Solutions
The benefits of implementing contract solutions go far beyond pure efficiency. For one, the cost savings associated with decreased contract review times quickly mount up. Using automation not only scores them in record time but also offers useful insights on their financial values for completeness in performance tracking and strategic multi-year modeling and planning. This directly results in significant savings. Additionally, contract solutions ensure that no one is subject to the risk of knowing too much or too little. Sure, the legal and business teams may know all about the fine points of a contract, but if they leave team members in sales or other areas without sufficient information on terms and conditions, risks become apparent at a later date which, could have been avoided with a more judiciously calculated allocation of duties. Not only do contract solutions provide streamlined document review and analytics, they also create a centralized repository, preventing the all-too-common lapse into using improvised or non-standard documents, increasing risk while diminishing value. These solutions provide easy storage and access to agreements related to key commercial relationships, help solve interpretative and auditable problems, and track compliance over time, keeping the organization informed and updated on status at all times. Looking at the benefits from a broad business development and relationship management viewpoint, it cannot be denied that contract solutions can help you shorten the qualification period for new contracts, save time in the deal closing process, and make it possible to improve customer relations by allowing you to respond rapidly to customer needs and inquiries. Furthermore, by taking a proactive approach to best practices, your compliance efforts gain a real advantage, giving you an edge in the market.
Key Features to Seek in Contract Solution Software
When evaluating prospective contract solution applications, there are certain features that are indispensable in the modern business environment. To begin, user-friendly interfaces are essential. Companies already under pressure to produce more with less cannot afford the disruptions often associated with software re-training. An intuitive interface with technology supports ease of functionality across the organization.
Second, the ability to customize the software meets the distinct preferences of the company. While some contract software is built on highly-regimented work-stream processes, many industries and functions use language and nomenclature that do not lend themselves to a rigid, standardized workflow. Customization allows for the software platform to be adapted to the specific needs of the department.
Next, security is paramount. Contracting is the lifeblood of many companies, but also is a point of weakness if key documents are ever lost or accessed without authorization. The right contract solution will exceed best practice standards for data protection of client and employee information.
Finally, the capacity to integrate with other software gives customers far greater capabilities. Although contracting is an important part of any business operation, it is only a piece of a much larger puzzle. The capacity to communicate with other applications makes the process of contract management much more efficient.
Steps for Successful Implementation of Contract Solutions
The first step is to create an inventory of all of the types of contracts that are used within your company or firm. For firms, this will be contracts on the client side (such as engagement letters with clients) as well as the employment contracts with associates or other staff. For businesses an inventory of contracts will include vendor agreements, consulting agreements, employment agreements, NDAs and any other agreements that are used. These contracts will then need to be categorized by type in order to determine what the most likely issues are that will arise when these contracts are engaged.
Once the contracts are categorized, then they must be sorted by their current level of risk. This is generally where contract review software can play a very big role in the process of implementing contract solutions. Contract review software can serve as a gatekeeper to make sure that all contracts go through the review process. Contract review software can alert people that contracts have been reviewed and jump into action if a date has been missed. Contracts can also be flagged if there are inconsistent terms or clauses in order to eliminate problems before those problems even have time to occur.
New contracts need to be channeled through the system that has now been implemented so that nothing falls through the cracks . You still need to do the due diligence to look for every contract or that may be in the process of being created within the firm or company. In particular, vendor agreements, consulting agreements, employment agreements, NDAs and any other agreements that are used will need to be marked so that nothing escapes the process.
There may be more than one party involved in using the contract. For example, in a law firm an engagement letter may be used several times per week. For a business counterpart, that same business may use the same or a similar agreement constantly. Even during an individual contract review, it’s important to notice any potential procurement issues, whether there have been any lawsuits associated with the supplier/vendor and whether the vendor provides a warranty or guarantee of quality.
Once the contracts have been reviewed and the associated risk has been properly recognized by the practice or business, it is time to determine how breaches will be enforced. While what is practical will vary from jurisdiction to jurisdiction, there are always ways to ensure that any breaches enter into evidence in a court system. The key is to strengthen the parties that have been breached against by increasing the enforcement that comes from the threat of judicial action.
Common Setbacks and How to Overcome Them
Despite the apparent ease with which a contract solution could be implemented, many organizations still face resistance in the early stages when they start thinking about purchasing an Enterprise Contract Management (ECM). A number of those organizations have common problems. The primary challenge is the buy-in from all types of stakeholders, which includes legal, procurement, finance and third party management. This can be a particularly tough crowd to please when you consider the variety of needs each of these groups have and the inter-departmental friction that may occur as a result of an ECM implementation project.
The second most common issue is the existence of long, historical contracts that are difficult to get the owners of those contracts to review and ‘give up’ to the ECM. One might argue that these agreements could be transitioned over a period of time but the truth is that by failing to transition the legacy contracts, the ECM may never deliver on its promises related to contract abstraction, renewal, expiry and compliance.
There are a number of strategies that can be used to overcome these challenges. Here are five of them:
1. Inform and educate
Inform and educate your stakeholders about what an ECM does and why it’s important, including the types of efficiencies the organization will experience as a result of the ECM implementation process. While it is not practical to give everyone a PhD on ECMs, they do need to understand whether their immediate needs will be met through the ECM project, and they will need to understand why it’s important to adhere to timelines in implementing the ECM.
2. Incentivize participation
While many departments see the benefits to the project, they may resent some of the additional work that will be requested of them. It’s important to reward departments for participating in implementation, and to document the benefits of the implementation in order to recognize those departments who participated. This will encourage similar behaviour in the future.
3. Recognize the impact on existing processes
Getting buy-in is not always as simple as showcasing the benefits that will arise by streamlining an organization’s contract processes. The reality is that some processes will have to be done differently, and some stakeholders may need to buy into new processes. Show your stakeholders how their old processes will be improved with an ECM implementation.
4. Make it fun
Change is difficult. Celebrate the success of major milestones and tasks completed. Host something fun to thank people for participating in the project and bring everyone together. This shows people that their efforts are worth it, and that it is appreciated.
5. Jump into the deep end
Make a decision on an ECM and work hard to complete a pilot and get it in the hands of the users. As an executive sponsor, you should be steering the engagement at the start. PEAK Purchasing Solutions, Inc. recommends that you "Select a contract organization that has experience selling to you, has delivered a successful implementation to a company like yours (size and industry), and is committed to making the transition and getting it right." If you follow this strategy, you won’t be disappointed. Getting to the "Good Stuff" is worth the effort.
Future Directions in Contract Solutions
The future of contract solutions looks promising, with several key trends set to shape the industry in the years to come. One such trend is the growing use of artificial intelligence (AI) in contract management. AI has the potential to revolutionize contract management, with predictive analytics capable of identifying potential risks and opportunities within contracts. This not only saves time but also helps businesses to make informed decisions in real time.
Another trend is the increased adoption of blockchain technology in contract solutions. Blockchain provides a decentralized ledger that offers enhanced security and transparency for contract data. This allows for easier sharing and collaboration among stakeholders and helps to reduce fraud and corruption . By leveraging blockchain technology, businesses can also create smart contracts that automatically execute once certain conditions are met.
In addition, we can expect to see the continued use of cloud-based contract solutions, which are both scalable and accessible from anywhere. This will allow businesses to manage their contracts from remote locations and streamline the entire contract management process.
Other trends include the use of automated document generation and e-signature software, which will further simplify the process of contract creation, negotiation, and execution. With the right contract management solution in place, businesses will be able to better track and monitor their contracts and make data-driven decisions.
