What Is Contract Lifecycle Management and Why Does It Matter?

icon-contractContract lifecycle management (CLM) is the process businesses follow to manage contracts from their creation up to their expiration. It’s a simple definition; unfortunately, many CLMs do not account for everything that’s involved in the life cycle of a contract. Any reasonably sized corporate legal department or firm will have thousands of contracts to manage—all with different dates, provisions, retention schedules, and involved parties.

Many departments attempt to tackle this combination of different tasks and specialties via a single, uniform strategy. For example, some resort to using one software system to manage every stage. But the reality is that once you understand the true scope of contract lifecycle management, leveraging a suite of products designed to work in unison is a far better approach to handling complicated legal tasks.

 Pile of legal documents signifying the need for digitization and automation.

What is Contract Lifecycle Management? 

One thing that’s often overlooked in the contract lifecycle process is how many parties are involved. CLM is treated as the purview of legal operations, but it’s an enterprise-wide need comprising multiple steps. 

 

Description 

Departments involved

Request

The parties consider an agreement and a contract is requested to record it.  

  • Sales
  • Finance
  • HR

Draft

The contract draft is created and shared. 

  • Legal
  • Operations

Negotiate

The involved parties evaluate terms, make offers, and target mutually beneficial arrangements. 

  • Legal
  • Sales
  • Finance
  • HR

Review

The contract is evaluated for accuracy before a final draft is sent to the involved parties. 

  • Legal
  • Operations
  • Management 

Approve

Stakeholders agree to the terms and sign the documents. 

  • Management
  • Operations 

Comply

The contracted parties perform their duties under the contract. The contract is stored and key dates are tracked.

  • Operations
  • Sales
  • Finance
  • HR

Renew

The contract expires and is either destroyed after an appropriate retention period, or it is renewed. 

  • Operations
  • Sales
  • Finance
  • HR
  • Legal

 

Every stage of CLM involves at least two departments, if not more, usually with different needs, responsibilities, expectations, time-frames, and authorizations. That’s why it’s often impractical to address these different needs with the same software. In many cases, a combination of products is a better choice as it can meet the diverse needs of CLM. 

Putting Together a Tech Suite To Support CLM

Legal technology has come a long way in a very short time. Today, it’s an invaluable tool for addressing staff shortages and increased workloads (among many other things). When choosing legal tech, organizations reported 5 top goals in Bloomberg Law’s 2021 legal tech survey:

    • Remote work support: 56% of respondents said remote work support is a key factor when evaluating the value of legal software  
    • Routine task reduction: 55% of respondents indicated that legal technology with the highest returns reduces lawyers’ time spent on routine tasks 
    • User experience: 33% indicated that the value of the tech was determined by lawyer and staff feedback 
    • Resource allocation: Technology that allows lawyers to focus on more sophisticated matters was considered a value driver by 32% of respondents  
    • Well-being: Finally, increased lawyer well-being was considered a key benchmark of legal tech's value by 26% of respondents. 

When selecting legal technology to address the stages of contract lifecycle management, it’s important to keep these goals in mind. Doing so can help legal teams make the right choices for support at each stage. 

Practice management software

Client management systems

This is a broader software designed to help legal operations teams manage scheduling, time tracking, and associate billables. It may also be used to track contract status very broadly, such as when contracts are about to expire and require action. 

These tools cover the individual workflows involved in the phases of a contract for all parties. Associates may track various conversations and agreements as they work toward finalizing the contract details.

E-Signature and records management

Automated Contract review

E-signature is no longer used simply to sign documents. Many platforms can verify all stages (through blockchain-enabled systems) and even help in records management by tracking the individual details of contracts. 

AI-powered, automated contract review technology can fully redline contract drafts in the pre-execution phase. These solutions allow legal departments to control a multitude of time-consuming tasks by offloading much of them to technology. Some of the more robust and advanced solutions can even provide lawyer-quality review in less than 5 minutes, highlight areas of concern, and escalate agreements to appropriate legal staff when necessary.  

 

These solutions address the key stages of contract lifecycle management while also providing genuine value for businesses across multiple industries. Practice management and case management improve workflows and communication. E-signature and records management programs simplify routine tasks and support a strong user experience. Finally, AI contract review allows lawyers to focus on more value-adding work while obviating time-consuming review tasks. 

Proper contract lifecycle management separates successful businesses from those that fail. It doesn’t just address contracts; with the right tools, it can improve the employee experience and drive real value for the entire company.

LexCheck is the automated contract review and negotiation solution that’s redefining how legal teams tackle contract lifecycle management. Contact us at sales@lexcheck.com to learn more, or request a demo to see how it works.

gary-sanghaGary Sangha | Founder & CEO

Gary Sangha is the Founder and CEO LexCheck. He's a serial entrepreneur and an academic. Gary previously founded Intelligize, a legal technology company that was acquired by LexisNexis. He's affiliated with the University of Pennsylvania and Stanford University and started his career as an attorney at Shearman & Sterling and White & Case.