Contract Lifecycle Management, commonly known as CLM, has become an essential technology for law firms and enterprises to create and manage their agreements. Previously, it was used to simplify the management of bulk contracts, but its potential goes far beyond just creating and signing agreements. Effective CLM involves a set of integrated processes that continue even after the conclusion of a contract. With the advent of better technologies and rapidly changing dynamics between contracting parties, enterprises are realising that contract lifecycle automation can accomplish much more for both their contract management and contract performance.

Execution Automation with Contract Lifecycle Management

Enterprises use contract lifecycle management systems to efficiently manage complex agreements, including detailing liabilities and pricing and ensuring the seamless execution of contracts. However, once such agreements reach the execution stage, the contract lifecycle management process ends, and parties may lose track of their responsibilities, deadlines, renewal dates, and timely payment of dues.

As contract lifecycle management tools continue to evolve rapidly, more enterprises are focusing on how they can help monitor overall contract performance management and risk prevention. CLM tools can identify and address the exact stage of a contract once it is in the post-execution stage. This can help enterprises assess their obligations beforehand, plan ahead, and react better to contingencies.

Centralised Archive of Contracts

Enterprises often have to deal with a large number of contracts that may be in different stages of the contract lifecycle. With the help of AI-based contract management software, enterprises can create a centralised archive of all their contracts, making it easier to implement their provisions accurately. The software can also extract key terms from bulk contracts and generate reports for timely performance monitoring. This enables enterprises to enforce their contracts, fulfil their obligations, renew or terminate agreements on time, and add/remove/amend provisions as per their requirements. Tracking Renewals/Terminations/Amendments with Contract Lifecycle Automation

Contract lifecycle automation with AI can also help enterprises track their requirements relating to renewal, termination or changes to a contract and then notify the legal teams as and when such renewals, terminations and amendments are needed. Contracting parties can also analyse the content of their contracts to identify critical legal data instead of manually going through each agreement.

Tracking Value and Liabilities under a Contract

One of the primary challenges of contract lifecycle management is tracking the time a contract may take to come into force. Parties may not be able to identify when their liabilities and rights have begun until the contract is actually executed. However, contract lifecycle automation can achieve more than this. Parties can realise the benefits and responsibilities that come with their contract even before the contract is operationalised. CLM can use the structured data identified at the time of contract drafting to pre-define the value of a contract and what the practical implementation of each contract term would be like for each party.

Contract Storage

A large number of enterprises end up with multiple teams using multiple drives and data units to store contracts. This can wreak havoc on the business as the risk of losing vital data with legal implications for the company. Further, oftentimes than not, such unorganised contract storage can lead to teams missing contract deadlines and payment dates. Contract lifecycle management can create a single space for such record-keeping for enterprises by storing all of the active contracts in one place for teams to track and execute.

Automated Notifications with Contract Lifecycle Management

An effective contract lifecycle management tool can also automate notifications and reminders for parties about when their liabilities come into play. It can inform the parties when and how they need to act upon a particular contract clause. Contract management teams can get a holistic picture of the different actions that they need to take for different contracts to be simultaneously executed by the enterprise. Not only this, but contract lifecycle management can also help them define responsibilities, segment contracts that need to be renewed or terminated, prioritise high-value agreements, and automate contracts that do not require constant observation.

Execution of Administrative Functions

Additionally, the work for contract management teams does not end with the end of a contract. There remains a lot of administrative tasks and general maintenance to be done, including payment of final invoices, contract storage for future reference and careful termination of liabilities. Contract lifecycle management can help enterprises perform such post-contract completion handling work and minimise their legal risks by automating these functions.

Document Migration

Document migration is one of the most challenging tasks for enterprises, especially when they have thousands of contracts in their storage. CLM can help enterprises execute this function by profiling and segregating contracts based on different parameters. Companies can use contract lifecycle management to classify their contracts as per the contract type, client name, date of creation, date of execution, contract managers, etc.

Post-Execution Negotiations

Once a contract is executed, the parties may want to amend, add or remove a provision. Unfortunately for large companies, this means going through each contract, negotiating with each party and making such changes manually one by one. With online collaboration through contract lifecycle management, enterprises can quickly make such changes, control who has access to make such changes, automate the implementation of such changes, and digitally sign the contract without stalling its execution.

Risk Assessment

Contract Lifecycle Management can also help companies audit their contract repositories and ensure that they follow all the regulatory and legal standards. They can also ensure that they comply with the latest data privacy laws, corporate standards, and other applicable legal standards when it comes to the execution of their active contracts.

Contract Lifecycle Automation: Beyond Contract Designing

Contract lifecycle management is no longer limited to designing airtight contracts. There lie endless opportunities for automating end-to-end contract execution and post-execution stages of a contract with CLM. The use of AI-based data processing, automated reminders and billing, and machine learning-based contract renewals and terminations are just the tip of this contract lifecycle automation iceberg.