Automating Contract Management: The Key Benefits and Risks
Companies with large volumes of contracts to manage have everything to gain from automating their contract management. Indeed, this is an issue that affects the company on an organizational, strategic and financial level.
Why automate your contract management? Does this operational shift present any risks for the legal profession?
Four reasons to automate the management of your contracts
No more contracts lost in the ether between contributors, no more hours wasted looking for the right document, the right clause, or scrambling to find out how much a service costs. Here are the benefits that a CLM can offer you for your contract management needs.
#1 – Saving time
This is, without a doubt, the most frequently-mentioned benefit of automating contract management. And for good reason: managing contracts manually is an extremely time-consuming task, not only for lawyers, but also for all other employees who have occasion to handle contracts!
Thanks to the automation of the most tedious tasks, all employees are freed up to spend more time handling their core business instead. What is more, the time saved during the negotiation and approval stages allows contracts to be signed that much faster, allowing the company to negotiate more than ever before. The result is an overall improvement in the company’s productivity, with lost opportunities due to slow-moving processes now a thing of the past.
#2 – Improved knowledge of contracts
All too many companies fail to keep a firm grasp on their contracts: they are unaware of the deadlines they are bound to, along with the risks inherent in the contracts, and documents often go astray!
Automating contract management allows companies to consolidate everything into a single, smart tool, finally addressing this lack of knowledge once and for all. Thanks to a smart feature which can identify the key information in a contract, you will never again have a single deadline or unusual clause slip past you!
What is more, you can maintain a better, more comprehensive overview of the performance of your contracts, thanks to the constantly-updated KPIs and dashboards produced by the tool. This overview is a key strategic asset, especially at a time when companies need to have a firm handle on all their data and extract useful information from it.
#3 – Modernizing your legal department
Legal departments have recently overhauled their image. In recent years, as legal tech has begun to truly flourish, the legal profession has established itself as an important contributor in addressing the modern business challenges faced by companies today.
Thanks to dashboards and automated audits, legal departments can now report on their business performance: a factor that was previously unmeasurable. With contract management software, lawyers are now quickly catching up with other professions in terms of digitalization and data management!
#4 The benefits of centralizing contracts
Automated contract management also has the advantage of allowing you to consolidate all the information regarding your contracts into a single platform. The digital (and smart!) equivalent of the huge filing cabinet overstuffed with paper contracts that many of us are all too familiar with.
Having a centralized database has multiple benefits. The contract management platform:
- complies with the strictest security standards in force, helping prevent leaks, losses and unauthorized changes to your contracts;
- allows multiple contributors to collaborate remotely on the same document, making changes quick and easy without endless email chains;
- facilitates searching for information and sharing knowledge.
As a result, your list of daily organizational tasks will be significantly pared down!
Despite the many advantages of automating contract management, some people in the legal community have their doubts, pointing out the risks that come with this technology, from humans being replaced to data security being compromised. But is there really any cause for concern?
The risks of automating contract management
Will this technology replace human beings?
The answer is no! While the term “artificial intelligence” may seem alarming, the truth is that these technologies could never take the place of a skilled legal professional. Their only purpose is to relieve the burden of tedious and repetitive tasks that has previously been borne by humans. The tool exists to serve and assist the professional, not to compete with them. Indeed, the professional expertise of a lawyer could not, under any circumstances, be replaced by an algorithm.
Are these digital tools reliable?
According to Alexandre Grux, co-founder of Hyperlex — which has been acquired by DiliTrust — repetitive tasks actually end up harming humans, reducing their capacity for attentiveness and increasing their risk of error. With this in mind, a computer program that never tires of its job, its concentration never slipping, is an excellent ally! It can repeat the same verification or copy/paste task millions of times without ever being affected. And of course, the human is always free to check over the work produced by the software, as the user always has the final say!
As far as the security of your stored contracts goes, there is nothing to worry about. It should come as no surprise that data protection is a chief concern for legal tech solutions. All rigorously encrypted and safely backed up, your contract data are in good hands! Even in the unlikely event of a leak, the encryption would make the contracts wholly unreadable.
Is the implementation of the tool complex?
Any new tool requires a little time for installation and adjustment, during which the pace of work will inevitably slow down somewhat. That said, SaaS software like the Contracts module in the DiliTrust Governance suite is incredibly simple to implement, as it requires no technical infrastructure whatsoever – just a stable Internet connection!
Without a doubt, the more challenging part is getting the staff used to working in a new way. In this regard, proper training and communication are paramount. As such, legal tech companies always do their best to help you make the transition as smooth as possible. Be it support, advice or tutorials, some form of assistance is always available and highly recommended.
Is it expensive to automate my contract management?
Some legal departments are hesitant to take the leap and go digital due to the budgetary requirements it might entail. That said, when you consider the fact that companies lose an average of $100 billion every year due to contracts being mishandled — according to Aberdeen — it quickly becomes clear that automation offers incredible value for money!
After all, the errors, oversights and countless hours wasted as a result of inadequate contract management are infinitely more costly in the long run than simply modernizing the way the department is run. An ironclad argument worth bringing to your higher-ups!
To find out more about our contract management software, get in touch with us!