For in-house legal teams, managing contracts can be a time-consuming and daunting task. With numerous contracts to keep track of, it can be challenging to stay on top of each one's terms and expiration dates. Inefficient management of contracts can lead to missed opportunities, term expectations being neglected, legal disputes, and financial losses. Fortunately, technology and software can automate contract organisation and streamline the process. This article will explore tips and tools for in-house lawyers to maximise resources, master contract organisation and ensure their organisation operates smoothly.
Contract organisation refers to the process of managing and keeping track of legal agreements made by an organisation. This includes drafting, reviewing, approving, negotiating, signing and storing contracts to ensure compliance with their terms and conditions. Contract organisation is a critical task for in-house lawyers, as it involves maintaining accurate records of all contracts and their associated information, such as parties involved, terms, and expiration dates.
Effective contract organisation is essential for legal functions to ensure that their business operations run smoothly.
A digitised contract management system allows legal functions to stay on top of each contract's terms and conditions, thus minimising the risk of legal disputes and monetary losses. With automatic alerts and notifications, in-house lawyers can ensure that all parties comply with the contract's terms and conditions, reducing the risk of penalties and reputational damage.
Having well-defined processes and procedures for contracts enables the business to identify when Legal's participation is necessary in the contract process, thereby minimising the likelihood of agreeing to a deal that entails considerable risk.
Furthermore, most of the platforms for managing contracts operate on a permission-based system and have end-to-end encryption to guarantee the security of all contracts.
In Plexus' latest survey among legal professionals over 50% stated that their legal function is asked to do more with less. Furthermore, 60% stated a much needed increase of productivity of their legal function thorough automation.
With an automated contract organisation system, Legal ensures that there is a single-source of truth for all contracts in the business. The centralised storage location makes it easier to access and manage contracts when required. Proper management of contracts ensures that the business can quickly retrieve vital information about a contract, such as its terms, expiration date, and obligations of each party. It also enables them to track the progress of a contract's execution and ensure that all parties are fulfilling their contractual obligations.
Collaboration between Legal functions, other business teams, and other stakeholders is crucial for efficient contract management. With a digitised contract organisation system, different parties can collaborate easily and securely, ensuring contracts are executed effectively.
Traditionally, contracts were stored in physical files, taking up space and making it difficult to locate specific documents. However, with the advancements in technology, a paperless, cloud-based storage system can provide numerous benefits. This system enables easy access to contracts from anywhere with an internet connection. Additionally, it saves space and eliminates the need for physical storage, reducing costs associated with filing cabinets and storage rooms.
Moreover, a cloud-based storage system provides enhanced security measures that keep contracts safe. In a traditional filing system, contracts can be lost, damaged or stolen, posing a significant risk to the organisation. Cloud-based storage systems, on the other hand, use advanced data encryption technology to ensure the confidentiality and integrity of documents. It also reduces the risk of human error, such as misplacing a file or accidentally destroying it. With all these benefits, it is clear that a paperless, cloud-based storage system is an excellent solution for Legal functions to organise contracts efficiently.
An effective contract organisation system will allow Legal to sort contracts by a range of variables including their type, expiry date, value or the parties involved. This allows Legal to sort through all contracts in their system and filter by what they need at any given moment. For example, contracts with a particular counterparty over time.
In addition to categorising and assigning ownership of contracts, Legal functions can use software to add a multifaceted layer to their contract organisation process. Contract management software can allow users to easily filter the entire database by the details provided when users generate their contracts such as contract value, and counterparties involved. By using contract management software to organise contracts, Legal has a richer insight to the details of the business’ contracts meaning they can find contracts quicker and more efficiently, while also reducing the risk of overlooking essential details or milestones which analogue organisation methods cannot support. For example, with contract management software, Legal can filter by all contracts in the database with expiry dates in less than 30 days in order to prepare for renewal contracts.
Naming contracts in a clear and concise manner makes it easier to locate them quickly. Without a standard naming convention, it is easy for files to become confused, misplaced or unusable. For example, a contract named "Employment Agreement" does not provide much context, as there may be several Employment Agreements within the organisation.
This is where a consistent naming convention comes in handy. A naming convention may include elements such as the contract type, the parties involved, the date of execution, and the contract duration. For instance, a contract with a supplier named "ABC Distributors" executed on 1st March 2021 for a duration of two years may be named "SupplierAgreement_ABC Distributors_010321_2yrs." Such a naming convention provides valuable information and enables easy retrieval of the contract.
To establish a consistent file naming convention, the Legal team should work with other departments or business units to ensure that the naming convention is universal across the organisation. Once the naming convention is established, it should be communicated to all employees and stakeholders who may be involved in creating or accessing contracts.
Of course, keeping every individual in the business compliant to the naming convention can be difficult. A benefit of using contract management software to organise contracts is that the common naming conventions are automatically generated when users create a new contract. The metadata and details they provide when creating the contract is used by the software to name the contracts according to the naming convention, thus eliminating the risks of human error when contracts are named and stored.
A contract review and renewal schedule ensures that contracts are regularly reviewed to identify any potential issues or opportunities for improvement and that they are renewed on time to avoid any legal or financial consequences. Without a schedule, contracts may be forgotten or neglected, leading to missed deadlines or obligations.
While it is possible to create a review and renewal schedule manually, there are limitations to this approach. It can be time-consuming and prone to error, especially in organisations with a large number of contracts. Additionally, it may be difficult to keep track of changes to contracts, such as amendments or terminations, which can affect the review and renewal schedule.
This is where technology and software can be especially useful. Contract management software, like Plexus, can automate the contract review and renewal process, schedule automatic reminders of upcoming milestones and provide a centralised platform for storage for associated secondary documents and amendments relating to the contract. This not only saves time but also reduces the risk of missing important deadlines or overlooking critical details.
In-house lawyers need to ensure that contracts are only accessible to authorised personnel, and that access is limited based on the roles and responsibilities any particular user has within the organisation. This is especially important in terms of confidentiality, as some contracts may contain sensitive information that should only be available to a select few.
Contract management software can be configured to assign user permissions based on the user's role and delegation of authority. For example, Legal team members may have full access to all contracts, while other employees may only have access to contracts relevant to their department or project. This not only ensures confidentiality but also streamlines the contract review and approval process, as relevant stakeholders can quickly access the contracts they need.
Version control ensures that involved parties are always looking at the most up-to-date version of a contract, which is especially important when changes or amendments are made. However, manually managing version control can be time-consuming and prone to human error. It can also be difficult to remove old versions of a contract, leading to confusion and potential legal issues.
Fortunately, contract management software can automate version control, making it easier for contract owners to manage changes and ensure all stakeholders are working with the latest version of a contract. The software can also provide a history of changes, making it easier to track the evolution of a contract over time.
Implementing a contract management system within an organisation is a significant change that requires effective communication to ensure a smooth transition. It's essential to educate employees on the importance of contract management and how the software or technology will streamline the process. Communication can take the form of training sessions, email updates, teaser videos, workshops highlighting the benefits of the new system and how it will positively impact the organisation as a whole.
It's also crucial to provide ongoing support to employees as they adapt to the new system. Encouraging feedback and addressing any concerns or issues raised will help employees feel supported and invested in the change, increasing the likelihood of successful adoption. By communicating the benefits and providing support, organisations can ensure that employees are compliant in using the new contract management system effectively.
One of the most widely used tools for contract organisation is Plexus. The contract management software helps lawyers manage the entire contract lifecycle, from creation to execution, then renewal.
Plexus’ contract analytics capability gives Legal functions valuable insights into the entire contract management process. Users can easily extract key information, such as contract values, obligations, deadlines, expiry and renewal dates. This not only saves them a significant amount of time but also helps them identify potential issues before they become actual problems.
Other useful features include electronic signature which simplifies the contract execution process by allowing users to sign contracts electronically, eliminating the need for wet-ink signatures. This can save time and increase efficiency, especially for contracts that require multiple signatures. Plexus includes an e-signature feature, allowing users to securely sign contracts from anywhere, at any time.
Furthermore, Plexus is a modular software solution that can be tailored to the specific needs of an organisation. Along with contract management, add-ons such as matter management and workflow automation are available to help legal teams streamline their processes even further. Matter management allows organisations to easily track and manage their legal matters, while workflow automation can help automate repetitive tasks and improve efficiency.
Plexus ensures that in-house lawyers can customise their software to best suit their needs while still benefiting from the core contract management capabilities.
With the help of technology and effective communication, managing contracts within an organisation can be a seamless and straightforward process. By taking the time to invest in a robust contract management system and utilising the various tools available, Legal functions can focus on what they do best.
Implementing a contract organisation system within an organisation can bring numerous benefits to the table. With the help of technology, lawyers or legal professionals can automate the entire process and make their contract management more efficient. Here are a few benefits of implementing a contract organisation system.
Easy Access to Contracts: With an automated contract organisation system, it becomes easier to access and manage contracts from a centralised location. No more searching through piles of paperwork or emails to get to the right contract.
Improved Efficiency: Automation of contract management can significantly reduce the time and effort required to manage contracts. It eliminates the need for manual data entry, reduces errors and minimises delays in contract review and approval.
Better Visibility: A contract organisation system can provide better visibility into the status of contracts, making it easier to track the progress of each contract in real-time. This helps to ensure that all contracts are being executed within the required timelines.
Enhanced Compliance: Compliance with legal regulations and company policies is essential in contract management. An automated system can alert users of potential compliance issues and ensure that all contracts are reviewed and approved in accordance with legal and company regulations.
Improved Collaboration: Collaboration between legal professionals, business teams, and other stakeholders is crucial for efficient contract management. With an automated contract organisation system, different parties can collaborate easily and securely, ensuring contracts are executed effectively.
Plexus' matter management software gives you everything to your team needs to deliver faster and more scalable legal support. Capture better briefs, automate your triage, reach resolutions faster and improve visibility into matters.
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