Contract Lifecycle Management (CLM) is the practice of overseeing every contract from initiation through negotiation, execution, performance tracking, renewal, or termination. Contracts are among the most valuable assets that any organization holds, as they have a direct and significant impact on the company’s relationships with others, legal exposure, and how it conducts its business.
Yet, many organizations lack a consistent system for managing contracts. Contracts live across shared drives, email threads, or fragmented tools. This fragmentation breeds version confusion, missed key dates, and weak compliance oversight.
The ultimate result of these is a silent but steady erosion of contract value. According to Deloitte, the average contract loses 8.6% of its value over its life span, while the best performers limit that loss to about 3%.
A robust CLM approach fights this decline. It centralizes contract data, standardizes workflows, automates reminders, and delivers analytics to highlight improvement areas. Many enterprises report measurable ROI within the first year of CLM adoption.
Risks Of Overlooking Contract Management
Poor contract management leads to real losses for an enterprise. Here are some examples:
- Renewal or termination dates are missed, resulting in lost revenues or unfavourable automatic renewals.
- The enterprise fails to meet regulatory and contractual obligations and faces legal exposure.
- Teams lose hours on manual follow-ups, tracking, and reconciliation.
- Unnecessary legal bottlenecks slow down business deals.
A well-deployed CLM combats these problems by centralizing data, standardizing workflows, automating reminders, and providing actionable insights in real time.
Best Practices For A Strong Contract Lifecycle Management Process
The benefits you will get from implementing and using the CLM systems successfully will depend on how well you are able to align processes, people, and tools. Here are some best practices that will help you to structure a CLM that will be robust and scalable as your enterprise grows.
Centralize Your Contract Repository
Your CLM system should act as the single repository for all the contracts, amendments, and related documents that your enterprise holds. It will serve as the single source of truth for your legal team. This secure and searchable repository will give them all the information they need and eliminate confusion over versions and jurisdictions.
A centralized repository improves efficiency and access while supporting compliance and audit trails.
Within the CLM, the contracts are organized by metadata, like contract type, counterparty, status, and region. You must apply role-based permissions, so that only authorized users can view and edit specific records.
Standardize Templates & Clause Libraries
Most CLM systems contain a library of re-usable contract templates and standard clauses approved by the Legal Head or the Business Head. The legal teams will be able to use these while drafting and revising the contracts. This library will give them a reliable foundation to work from and reduce drafting errors.
Allow controlled customization of clauses for deal-specific details, but limit unrestricted edits. You must monitor and review which clauses routinely get negotiated or removed and use that feedback to refine the clause library further.
Automate Workflows & Reminders
You have to configure the CLM system to automatically route the contract drafts through defined approval paths. It should trigger notifications for important dates like renewals, expirations, or performance deadlines. Automation reduces manual follow-ups and speeds handoffs.
The workflow logic should also handle simple exceptions. If a contract passes threshold limits or includes nonstandard terms, it must be escalated or flagged for review.
Clarify CLM Roles And Contract Approval Paths
Define and document the individuals responsible for approving each contract type. For example, the procurement teams may handle contracts whose value lies below a threshold, while legal or executive signoff is needed for complex and higher value deals.
These rules must be clearly programmed in the CLM so that contracts will advance only when the right stakeholders act. That removes guesswork and avoids ad hoc routing that delays deals.
Enable Cross-Team Collaboration
The system should let legal, sales, procurement, and finance work in one environment. Users can comment, redline, or suggest changes directly within the contract. It must also maintain full version history of the contracts and audit logs so every edit can be tracked and reverted back if needed.
Leverage Analytics & Contract Metrics
You must track some essential metrics to understand how well the system is being utilised by the teams. Some of these are:
- Average cycle time,
- Number of review rounds,
- Negotiation duration, and
- Renewal ratio.
The dashboards provided by the system will help you spot bottlenecks, like which is the slowest stage, whether certain templates cause repeated back-and-forth, etc. This will enable you to take quick remedial actions.
You must also compare performance across business units or contract types to prioritise process improvements. Over time, these insights will help you decide which automation or policy changes will yield the greatest benefit to your enterprise.
Support Digital Signatures & Execution
Integrate e-signature tools in your CLM so that execution happens from within. After a contract is signed, the system should archive the executed copy automatically.
It must also log signature metadata (i.e., who signed, signing method, timestamp) to maintain a clear audit trail. Executing the contracts digitally will reduce the delays that may occur between final approval and execution.
Proactive Risk Management & Compliance Handling
Embed proper controls so that risky or nonstandard provisions, such as unusually long auto-renewals or expansive indemnity clauses, are flagged by the CLM system before they go for approval.
Track contractual obligations and performance metrics so that missed deliverables or compliance gaps are caught early. Regular audits of active contracts will help in keeping them aligned with any changes in policies or regulations.
Continuous Training And Change Management
The adoption of any system by the users depends on how confident they feel in using it. Hence, you must provide role-based training, conduct workshops, and develop reference guides to make the users accustomed to using the CLM system. You can also designate a few CLM champions in different departments to support and advocate the system.
Thereafter, monitor the usage metrics. Checking the login frequency, how many drafts are created daily/weekly, and contract completion rates will enable you to understand how well the system is getting utilized. If certain groups lag, survey their pain points and adapt training, workflows, or templates accordingly.
Implementation Tips & Mistakes To Avoid
Rolling out a CLM system in a large organisation is a major activity and a change that needs to be managed well. The success of the implementation will depend as much on process and people as on technology.
Here are some essential guidelines and do’s and don’ts for enterprises implementing a CLM solution:
Start Small And Scale Later
Do not try to implement the system across the entire organisation at once. Start with one department or contract type. This will help you to control the project tightly and understand what worked and what didn’t.
Thereafter you can use the lessons learned to refine your workflows and templates before going for a broader enterprise-wide rollout.
Cleanse Legacy Data Before Migration.
Enterprises often have thousands of contracts scattered across drives, emails, and shared folders. Old contracts often have missing metadata, inconsistent naming, or poor structure.
Before starting the migration, filter active or high-value contracts, tag them with attributes (counterparty, start/end date, department, status), and discard or archive noise. This will ensure that your CLM starts with quality data from day one.
Secure Support From The Leadership Team
Change at scale needs visible support from leaders. They must communicate the strategic importance of CLM to the whole organisation. Once they make the stakeholders understand how the system will help in risk management, operational efficiency, and cost savings, interdepartmental standoffs and resource conflicts will get resolved faster.
Define Clear Goals & Benchmarks
Before implementation, decide what success will look like. For example,
- It will reduce contract approval time by 25 %,
- eliminate renewal misses, or
- automate 50 % of standard contracts.
Thereafter, capture the baseline metrics so you can compare post-launch performance. These goals will help the implementing team take decisions faster, and make any necessary changes quickly.
Assemble A Cross-Functional Team
The CLM system is a cross-functional system that will be used by many departments, not only legal. Hence, form a governance team with representatives from the legal, procurement, IT, operations, sales, and finance teams. Each function will bring in domain insights and help in ensuring that the system reflects real workflows. Their engagement will also help with adoption across the company.
Plan For System Integrations
Your CLM must seamlessly integrate with the tools already being used in your enterprise. These include CRM, ERP, procurement systems, e-signature tools. Map integrations early in the process, so that you don’t face any roadblocks later.
Don’t Over-Automate Too Soon
You must avoid trying to automate every variation of contract process from day one. We recommend that you automate the common workflows and handle exceptions manually at first.
Manage Resistance To Change
Many users will feel very comfortable with their current workflows and may resist shifting to the new CLM system. You will have to train them, monitor their usage, and quickly address their pain points to get them to use the new system.
Avoid Feature Overload
The CLM system may offer many features, but you must not turn them on all at once. The better idea is to start with only the core features such as repository, workflows, approvals, alerts, and e-signature that will deliver real value to your enterprise. Once these have been adopted properly, introduce advanced modules.
Test Thoroughly Before Going Live
Conduct thorough testing at the end of the implementation phase with sample contract data to validate workflows, integrations, and data migration. This will give you the confidence that the CLM system will work as expected when it goes live.
Monitor, iterate and improve
The implementation process does not end with the launch. You must track metrics like login frequency, number of contracts drafted, and bottlenecks being faced. You must also schedule periodic reviews with the users, incorporate their feedback, refine processes, and evolve your system over time.
Next Steps And How Legistify Can Help
Implementing a CLM solution transforms the contracts from mere legal documents into strategic tools. The organisation gains clarity, speed, and proactive control over the entire contracting process and is able to grow faster.
If you are ready to adopt a contract lifecycle management solution for your enterprise, then explore Legistify’s Contract Management software. It has been built to automate drafting, tracking, execution, and reporting with AI-powered tools with minimum hassle.
If you want help implementing CLM or want to see Legistify’s CLM in action, then book a call with our team. We’ll help you assess how it can help your organisation, map your processes, and guide your rollout.
Frequently Asked Questions
- Who handles contract management in a company?
In most companies, the legal team takes care of contracts after they are signed. They make sure that everything is stored safely and the deadlines are met. Other teams, like procurement or sales, help create and review contracts before signing. Apart from this, a contract coordinator or administrator often acts as the central liaison.
- What are the main stages in the contract lifecycle?
A contract usually goes through a few clear steps: request, drafting, review and approval, signing, tracking performance, and renewal or closure. Managing each step properly helps avoid confusion and keeps contracts on schedule.
- What happens if contracts are not managed well?
If contracts are not managed and tracked properly, deadlines can be missed, renewals may happen by mistake, and obligations might be forgotten. This can lead to serious financial losses, compliance issues, and even legal disputes. Having a clear process helps prevent those problems.
- How can I explain the need for CLM to management?
Show the time and money your company loses with manual work, repeated follow-ups, and missed dates. Then explain how CLM can fix those problems by automating approvals, storing all contracts in one place, and sending alerts before important deadlines. Running a small pilot project can make the benefits easy to see.
- What should I look for when choosing CLM software?
A good CLM system should be easy to search, let teams work together, and send reminders automatically. It should include secure storage, approval workflows, and e-signatures. Extra tools like reports or risk alerts are helpful once the basics work smoothly.
