With 2018 winding down we are reflecting on what a great year 2018 was! We’ll have a bigger announcement soon but our Blog recently won The Expert Institute’s Best Legal Blog for the Legal Tech category! We’ve heard the “12 Days of Christmas” repeatedly this month so as 2018 comes to a close here are Nimble’s Top 12 Blog Posts from 2018:
At Nimble, we use a contract management system to create, negotiate, execute, and manage contracts for our clients (and ourselves!). We offer this as part of our Contract Review Managed Service. Automation and data are two of the great benefits provided by a contract management system.
Impediments to Execution
When I was a General Counsel, our internal clients dreaded how long it took for contracts to be reviewed, negotiated, and signed. There are many impediments to getting a contract signed including:
Law departments are increasingly expected to be business partners, collaborating with executives and other functional experts to drive results. Often times, the legal function struggles (or doesn't know where to begin) to develop metrics and data to provide business related legal intelligence to its business partners. One of the quick ways for law departments to provide valuable data to its business partners is to implement a Contract Management System, whether licensing it directly or working with a service provider that uses one currently.
The legal world has been slow to embrace technology to help solve business problems. For example, the contract. Even some of the most sophisticated organizations are still creating and working with contracts in Microsoft Word. Sometimes using an agreement from the last deal that has specific negotiated provisions for that last deal that have nothing to do with the current one. Email remains the primary means of delivery and sometimes...even storage of the contract. See "The Future of Legal Work" by Constantine Limberakis of Corporate Counsel.
Great! Let's go get a Contract Management System!
If only it were that easy. There are no shortage of Contract Management System or Contract Lifecycle Management System providers. Each solution comes with its positives and negatives. Some charge you for storage. Some charge per user. Some charge for you to invite third party collaborators to use the system (such as the other party to the contract). Some charge by number of contracts. It's difficult to do an apples to apples comparison.
And while there are all of those (and many more) issues to review and identify, you also need to know what is the current end-to-end process internally for initiating, drafting, negotiating, executing, storing and analyzing contracts. Who touches these contracts in one way or another? Who will want access later? What other information systems are currently being used and will your functional business partners (HR, Finance, Business Development, Operations, etc.) want to pull data from the Contract Management System into the systems that they use?
7 Key Contract Management System Features
With all of that said, here are 7 features that should be a part of any Contract Management System you select:
1. Multiparty Collaboration - You want a system that allows the other party to the contract to access the contract you're negotiating within your system. You also may want access for advisors like lawyers and accountants.
2. Electronic Signature - Why go to all this effort if the contracts can't be signed electronically within the system? You might as well go back to faxing.
3. Workflow Management - An excellent feature that provides transparency about where the real bottlenecks in the process are.
4. Contract Compliance - Can you audit who made what changes and when? Also great for enforcement of terms.
5. Contract Storage - Get away from shared drives, external hard drives and your email inbox for contract storage. There's nothing worse than the scramble to find "anyone that has a copy of that contract from 5 years ago" and it's a random redline that someone found lingering in their email inbox. The accessibility for all users is also great.
6. Analytics and Data - Want to know how long it takes your form supply agreement to get negotiated and signed on average? Most Contract Management systems will arm you with that data. Identify what data you'd like to have and use that to weed out some of the providers that are unable to deliver.
7. Integrations - Any Contract Management System that you are considering should integrate easily (at no additional cost) with systems like Oracle, SAP, or Salesforce. You should work with your Information Technology team to identify what other systems you might want your Contract Management System to integrate with.
The right Contract Management System can streamline legal operations significantly, standardize the contract process, and arm the legal team with useful legal business intelligence to share with its functional business partners.
At Nimble, we use a contract management system to create, negotiate, execute and manage contracts for our clients (and ourselves!). We offer this as part of our Contract Review Managed Service. Automation and data are two of the great benefits provided by a contract management system. These systems typically enable you to automate the contract process by:
- the creation of contracts,
- setting up approvals and workflows,
- negotiating contracts within the system,
- executing contracts within the system,
- having a searchable contract repository, and
- managing executed contracts with notifications.
Besides automation of the contract process, one of the other great benefits is being able to run reports and analyze data. We review a lot of Non-Disclosure Agreements ("NDAs") as part of a Managed Service. We thought it would be interesting to look at the average Execution Cycle Times for NDAs for the fourth quarter of 2016. Here we're measuring the amount of time from a request to create or review an NDA until it has been executed by all parties.
Here are our numbers for the fourth quarter of 2016:
- Average Execution Cycle Time for NDAs: 3.95 days
- Average Execution Cycle Time for October 2016: 1.83 days
- Average Execution Cycle Time for November 2016: 4.67 days
- Average Execution Cycle Time for December 2016: 6.4 days
3.95 days seems like a great Average Execution Cycle Time to us. Particularly, when NDAs are typically the initial hurdle to a sale to a new customer or perhaps the exchange of ideas for the development of a new product. But, you'll note that the trend from October through December for Average Execution Cycle Time was getting longer. This is what makes it great to be able to look at the data because 3.95 days could be misleading or mask a negative trend. And while, 6.4 days doesn't seem too bad, the trend could be a little concerning. In this case, we think the reason behind the negative trend is due to the Holiday season and many taking vacation time and winding down for the year.
For some additional NDA related analytics. See this previous post entitled "Non-Disclosure Agreement Pain Points and Analytics". In addition to the recommendations in that post, here are some additional best practices:
- Automate as much of the contract process as possible. The more manual the process is, the longer it will take and leaves room for mistakes.
- Analyze the contract process and remove as many redundant steps as possible.
- Simplify your contracts. The more complex and confusing - the longer the contract process will take.
- Monitor the data from your contract process frequently. This will help identify areas for improvement.