While contracts are essential to almost every part of an organization’s business, a new survey finds that inefficient contract management processes are undermining the productivity of the general counsel. The survey of more than 90 general counsel examines the impact of contract management trends and challenges on productivity and risk management at organizations that handle large volumes of contracts.
Surprisingly, the findings revealed a majority of general counsel see gaps in their contract drafting and storage, highlighting the impact that poor management of corporate contracts can have on risk management. More than 75 percent of general counsel admitted to using “cut and paste” templates for the drafting process. The danger is that if a mistake is made early on in the drafting process, it will be repeated many times. Imagine the potential impact of a contract copied hundreds of times that was missing a liability clause.
General counsel are still lagging behind when it comes to adopting technology tools to help them with an enormous volume of contracts. While nearly 60 percent feel that their contract management process is slow, 47 percent still use paper filing for storage. Not only does this prevent the legal department from working efficiently, but it interrupts the contract management process enormously anytime somebody has to walk over to the filing cabinet and retrieve a document.
Contracts are a key window into a company’s finances, revenue, and risks. Using outdated processes and tools can impact a company anywhere from liability to profitability. Perhaps the biggest myth about contract management is that the activity itself is all it takes to get the job done. In reality, the treasure trove is the data that comes out of the contract, or how the language is interpreted. One solution is to implement a company-wide system, but organizational change is often difficult to manage, let alone train all employees to use the new system.
For general counsel looking to make some changes in their contract management process, there are a few steps they can take (that is, besides acquiring Legisway). A good place to start is to define your business processes by asking the following questions:
- Are the contracts centralized or decentralized within the organization?
- Who is responsible for the different contracts?
- What are the different contract types?
- Are the contracts located per department/business unit or region?
These are just a few questions which are very important when considering your organization’s approach to contract management.
Legisway, which is web-based, is a good tool to use to store your contracts in one place, so you don’t have to physically be in the office to access them. You can extract data using the detailed reporting capabilities and see where any holes exist. The result is that your legal department will be better informed of which business processes need updating.