LawHawk Blog

Contract Lifecycle Management (CLM) solutions often boast an enticing feature known as auto redlining, enabling the automatic review of draft contracts by artificial intelligence (AI) to suggest changes. While this functionality may seem promising, its utility and effectiveness warrant closer examination.

I approach this feature with a degree of scepticism. Contracts represent a record of the collaborative arrangement between parties, leveraging their unique skills and experiences to create shared value. The question arises: Can AI, based on the analysis of countless contracts, truly capture and enhance the maximum value that can be achieved through collaboration by these two or more particular parties?

One of the standout features offered by comprehensive Contract Lifecycle Management (CLM) solutions is the ability to create and utilise playbooks within Microsoft Word. This functionality allows users to identify clauses they may disagree with and replace them with preferred alternatives or approved language, adding a layer of customisation and flexibility to contract drafting.

While this feature appears highly valuable, its practicality and adoption within teams may be questionable. Many organisations struggle to fully adopt and utilise even basic CLM functionality, making enhanced features like playbooks seem like a nice-to-have for future implementation rather than an immediate necessity.

Collaboration functionality is often touted as a significant advantage of Contract Lifecycle Management (CLM) solutions, enabling seamless internal and external cooperation during the contract process. However, external collaboration, in particular, has its challenges. While it may seem impressive in demos, the reality is that it often requires the other party to change their established processes and work on a platform chosen by you. In practice, people are generally reluctant to change and may prefer to work on the contract in their own environment until they are satisfied, ultimately emailing it back. The functionality may not get used as much as hoped for.

The purpose of a contract is not to create a mere piece of paper or electronic document stored in a contract library. It also goes beyond just enabling a party to sue the other party when things go wrong. Instead, it serves as a tool to facilitate collaborative actions between parties, helping to achieve shared objectives. To achieve those objectives, effective contract management requires timely and accurate information about the agreed terms presented in a format that is easy for those responsible for delivering the contract objectives to comprehend. This lets parties understand their responsibilities, deadlines, standards, and financial obligations.

Within the Microsoft environment, there are key options available to enhance contract reporting and analytics:

If an organisation is a collection of contracts that cover everything the organisation buys and sells, then contract data is the new oil. But there can be a lot of data!

Utilising document automation to generate contracts provides the advantage of transforming every question in the questionnaire into valuable data that can be input into a contract database. Additionally, the capabilities of the document automation solution enable the creation of various additional data points through complex calculations on the initial data. However, when confronted with a multitude of data columns in a document library, it can be challenging for users to leverage this wealth of information effectively.

Fortunately, there are several options available to enhance the usefulness of contract views in SharePoint:

An essential requirement expressed by legal teams for their contract database, apart from the ability to perform easy full-text searches, is the ability to quickly identify upcoming expiry dates to avoid any omission and have sufficient time to take necessary actions.

How can this be done in a Microsoft environment?

One critical challenge any contract management system faces is how to incorporate contracts and associated data into the system’s database. As discussed in this earlier post, a document automation solution like Cognito Forms with Power Automate makes it relatively easy to automatically populate signed copies of documents and desired metadata directly into a contract library in SharePoint.

However, what about contracts that have already been signed or are being signed outside of a complete end-to-end workflow? Are there options available for automating the entry of these contracts into the system?

Digital signing presents many benefits, effectively resolving numerous issues that typically plague the contracting process. It eliminates the cumbersome tasks of printing, signing, scanning, emailing, and compiling counterparts of documents. With digital signing, the constant need to chase signatories for completion is eliminated.

Once a digital signing process is completed, each party automatically receives a copy of the contract via email and a secure PDF. The encrypted PDF ensures that neither the signatures nor the document’s content can be altered without invalidating its authenticity.

Various solutions provide access to digital signing functionality, each with its own set of features.

For many legal teams, managing approvals remains a significant pain point in contract management. Surprisingly, numerous organisations still handle approvals in much the same way they did in the 1990s. Paper-based documents summarising key contract details are circulated among several approvers sequentially, resulting in delays when documents get stuck on someone’s desk. In other cases, documents are emailed around, and signatures are copied and pasted into the document, offering little certainty and auditability as to who actually approved (and when and how they did it). Approvals may even be confirmed via return emails, requiring someone to compile and save the scattered responses for future reference.

Managing compliance with delegated authority frameworks under these outdated approaches proves incredibly challenging, often leading to missed approvals that should have been required. From a productivity standpoint, many approvals are also sought unnecessarily, causing delays and inefficiencies. Simple transactions that raise no concerns should be able to go straight through.

Again, the management of approvals is core to CLM solutions. Still, not everyone wants or can get a full CLM solution, and sometimes the CLM solution is not flexible enough to meet the requirements of the organisation and more flexibility is needed.

While Cognito Forms has proven to be a valuable solution for moderately complex documents and streamlined contract requests and can be a better option than many CLMs offer (as shown in this earlier post), there may be better choices for some use cases.

When faced with more complex documents or the need to generate multiple documents simultaneously, as well as the requirement for seamless data integration from other systems, alternative solutions become necessary. That’s where specialist document automation software, such as HotDocs, shines.

HotDocs offers robust capabilities to handle even the most intricate and complex documents we’ve encountered. With its strong APIs, it can seamlessly integrate with other systems (including SharePoint lists), bridging gaps in document generation wherever needed.

Knowing when a simple document automation solution within a broader CLM solution will suffice and when a more powerful solution is required is not easy and requires extensive experience in the field. If you don’t live in this space, it’s easy to screw it up. When working with the wrong solution, and trying to push it to do things it wasn't designed to do, you can easily find yourself in a situation where you're 90% done, 90% to go.