Contract Management vs. Contract Administration: What's the Difference?

Date
October 13, 2022
Category
Date
October 13, 2022
Author
Gary Sangha | Founder & CEO
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Within corporate legal departments, procurement teams may hire a single administrator or manager—or an entire team consisting of both—to develop successful contracts. Contract management vs. contract administration are often used interchangeably and play important roles in the process, but they are two very different things. 

Understanding these differences will not only help in-house legal staff appropriately delegate tasks, but also create efficient workflows and implement best practices. With so many legal tools and technologies on the market today, teams need to know where to focus their investments for maximum impact.

Three business people involved in contract management vs contract administration.)

What is Contract Administration?

Contract administration involves the pre-execution phase of a contract and all the activities leading up to the signing of an agreement. A contract administrator is typically responsible for:

  • Sourcing potential business partners and managing proposal requests or bids
  • Seeing that the contract has been drafted to company standards and preferred positions
  • Negotiating with vendors and other parties to create mutually acceptable conditions
  • Defining the scope of work, deliverables, and overall expectations
  • Determining realistic timelines and final delivery dates, as well as payment terms
  • Setting up metrics to measure each side’s performance
  • Defining parameters for breach of contract and establishing jurisdiction 

Creating strong contract administration processes sets the stage for effective communication and working relationships. Beyond establishing a framework for mutual trust, this early contracting work provides the opportunity to increase the likelihood of contract fulfillment while protecting the company’s assets and reducing legal risks.

What is Contract Management?

Contract management focuses on contract implementation once it has been executed. A contract manager keeps an eye on key deadlines and deliverables to ensure the company honors its contractual obligations and adheres to all terms of the agreement satisfactorily.

Contract managers oversee the following stages of the contract lifecycle:

  • Creating templates for efficient contract drafting
  • Determining contract pain points, needs, and priorities
  • Overseeing contract drafting and administration work
  • Making sure both sides can agree to terms and sign
  • Implementing tracking efforts and automating reminders
  • Measuring contract performance with the company’s stated goals
  • Deciding whether to renew, renegotiate, or terminate contracts
  • Ensuring legal compliance and risk management throughout fulfillment
  • Uncovering areas of opportunity to improve the contracting process

Depending on the size and nature of the business, contract managers may oversee the entire contracting process from start to finish or they may focus on post-execution monitoring and renewal. Along the way, they may need to propose internal changes that increase the company’s ability to adhere to a contract and churn a greater profit.

Does LexCheck Assist with Contract Administration or Management?

Whether assessing technology for contract management vs. contract administration, LexCheck is a solution that can benefit both processes. Most organizations will have some type of contract lifecycle management (CLM) software in place to help oversee contracts from drafting to renewal, renegotiation, or termination. However, infusing artificial intelligence (AI) capabilities into the pre-execution phase of contract review can create a ripple effect throughout the entire contract management cycle. 

For example, LexCheck reduces common bottlenecks for contract administrators, including: 

  • Drafting: After a drafted contract is fed into the system, LexCheck uses natural language processing (NLP) to “read” it and make lawyer-quality redlines. The AI scans a contract draft  for technical errors, omissions, alterations, and deviations from the corporate legal playbook. 
  • Review: By taking the first pass on review, LexCheck greatly accelerates the contract lifecycle and reduces escalations. Instead of wasting time on menial review tasks, administrators can focus on strategically improving contract language to accurately reflect company capabilities and bargaining positions. Lawyers can also input custom “if/then” rules to automate future review processes and make effortless changes that bring new agreements up to appropriate, changing standards.  
  • Negotiation: LexCheck can provide a color-coded system to highlight areas of focus for administrators to reduce risk and improve contract value. Wherever issues are identified, the system includes contextual notes with links and suggested wording to help negotiators on both sides understand what needs to change and why. 

By addressing these key areas of the contract lifecycle proactively and early on, teams can almost guarantee a smoother rollout and greater likelihood of adherence. Contract administrators and managers alike can benefit from LexCheck’s single source of truth, which simplifies contract review for business growth. 

Best of all, LexCheck completes a full contract review in less than five minutes—keeping legal departments moving along toward their goals at all times. Recognized as an Associate Corporate Counsel “Value Champion,” LexCheck is a groundbreaking solution companies can’t afford to overlook.

Now that you understand the differences between contract management vs. contract administration, contact us at sales@lexcheck.com to learn more about inserting LexCheck into your contracting process, or request a demo to see our tech in action.

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