The concept of automation, which is the use of technology to eliminate manual labour, has been around since the 1940s, when car manufacturers automated their assembly processes to keep up with demand.
Today, automation exists virtually everywhere, helping to make our lives much easier.
In terms of contract management, some departments within a business, like legal, have been resistant to utilise automation, instead they have stuck by the word processing software they've always used for contracts. They may believe having to deal with an automation project would be too challenging, especially if the legal department only consists of one person, especially within a business such as a growing tech organisation.
It doesn't need to be this way. If departments realised the time they could save, they probably wouldn't hesitate to make the switch.
In 2020, remote working became the new normal for many organisations. This began to uncover the problems of manual contract management and as a result, many businesses are starting to look to automation as a solution.
In this article we are going to look at some of the most common contract management myths of 2020, then explore the reality of what solutions could bring to your business, not only for next year but beyond.
Contract Management Practices to Leave Behind in 2020
Contract management myths will only keep us trapped. Break free, and learn how to improve your business next year using automated contract management. Here are some of the most common myths that could be holding you back.
It's Only Lawyers who Should Worry About Contract Automation
A lot of other teams can be involved with contract automation, for example, HR, sales, finance, operations and procurement.
We understand why many employees think it's only legal who should be dealing with contracts. After all, most legal departments write contracts using their own knowledge, rather than considering the end-users. As such, they tend to be the only department within an organisation able to actually understand them.
Some workplaces grow their teams significantly before actually needing to hire a lawyer. As such, some businesses may be signing high volumes of contracts per month, with little legal input.
Businesses need to realise that everyone in an organisation is responsible for contracts. They should encourage all departments to liaise well with legal and vice versa. Companies should also consider automated contract management to save time.
Automation won't just help your businesses legal team, it will affect all departments. When closing sales deals, sales teams can make use of forms and NDA's. When sourcing a new hire, people and talent teams can send contracts to new staff directly. Finance teams can track spending by regularly reviewing revenue.
Equally, legal departments are busy, and their time can be better spent elsewhere rather than on a bunch of routine contracts. In house lawyers are usually unnecessary and costly. Yet many businesses rely on their legal department to manage the entire contract creation process. Time is wasted chasing teams and completing low-value activities which eat up all their time. The goal of automation is to take away the low-value activities from high-value resources.
Bottlenecks tend to occur as a business grows. Two new staff may join the legal team, while hundreds of people join commercial teams. In these kinds of situations, contract automation already needs to be in place. Otherwise, existing issues may become out of control and very difficult to solve. Automation provides a new, self-service approach to dealing with high volumes of contracts.
We understand that some teams might have reservations surrounding the automation of contract management.
Making a genuine business case for software that may not provide immediate financial benefits could be challenging. It's usually the case that scaleups prioritise things which drive growth. Automation may seem unnecessarily costly as well, meaning lawyers typically have to make do with tools they discover themselves.
Use automation to allow all teams in your organisation to benefit. Self-service contracts take the pressure off a business’s legal team, whilst an easy to use workflow should make it easier for people to adapt to it. Legal departments will be able to use mass actions to manage workflow and sign off. Contracts can be sent to others in just one click.
Regardless of Automation, Template Documents Still Need to be Emailed
The truth is that anyone can compile a legal document quickly in a web browser, without the need for word processing or email software. If you're still relying on manual contract management, this is a change you should aim to implement next year.
So why are these changes necessary?
Compiling contracts from scratch in documents is time-consuming. In fact, if large volumes of contracts are being compiled in this manner, automation may need to be implemented as quickly as possible, it being the only viable solution.
Manually managing contracts is also unscalable. There are lots of different tasks that need completing during the lifecycle of a contract, like coding and mail merge, which may work well for one or two contracts, but not hundreds. Manual contract management can cause greater risk, and make search or tracking more complicated, as many different systems are probably used. Additionally, versioning problems are likely to occur because documents are unable to scale with the business.
When using manual contract management, investors are less likely to be able to see the information they require as a result of database limitation. Documents also have limitations. Teams don't have any other way to see if edits have been made, other than checking for 'track changes', or seeing if an email attachment was opened.
Time can also be wasted due to poor integration. Considering that many authorised signatories are not junior staff, it may take a while for contracts to be approved. Manual contract management rarely relies on one central system. Instead, separate departments tend to use their own systems. Businesses should aim to merge all data into one centralised system rather than depending on different systems where information has to be continually uploaded and downloaded.
Why are Some Teams Still Reluctant to Switch?
Some teams may worry about migrating static files to a new system. They might be concerned that files may no longer work after migration, or formatting could be messed up.
Smaller teams might be concerned about the amount of work involved in making the switch. Perhaps prioritising other tasks are deemed more critical. Some lawyers are also reluctant to adopt new systems, instead continuing to use the same ones they're comfortable with.
Businesses have concerns that employees simply wouldn't want to adapt to the new platform, especially if they've suffered past experiences of poor technical implementations. Teams may lack understanding about what a new platform could help a business achieve and therefore be resistant about such changes.
How can these Issues be Overcome?
Businesses should start with a pilot scheme that enables better control and iteration. The best types of contracts to begin with are high volume, low complexity ones, like MSA's or NDA's.
Businesses should opt to use a browser-based, end to end tool which enables management of the entire contract lifecycle from beginning to end. They should also move away from using word processing software to create contracts.
Simply gathering data won't add value for any kind of contracting activity. It's how the data is used and analysed, which provides the advantage. For example, discovering bottlenecks.
Automation Could Take Too Long to Implement or Adopt
The reality is that legal teams who use automation are usually able to achieve value more quickly and empower other teams in the process.
Common misconceptions surrounding contract management software amongst teams dealing with complex information and data, such as legal teams, are that implementation takes too long, too much disruption could occur, or the chosen solution might not deliver. They may have had negative experiences with past change management projects which offered little training, were poorly coordinated or encountered frequent mistakes.
For automation to work for you next year, an integrated, API first approach should be adopted, which can quickly connect contracts with important business practices.
Why are Businesses Continuing to Struggle to Adopt to Automation?
It's not uncommon for some businesses to get their customers to value within six months. For others, this might seem more of a challenge, particularly for startups, who would need much longer to achieve this.
There are many reasons why the implementation of contract management software may be slow.
Businesses might need to see results straight away, particularly in sales organisations where changes in processes are seen as disruptive and are less likely to be approved. Small legal teams may not see the value of spending heavily on a new type of technology that won't necessarily bring immediate results.
In the past, contract management software experienced low uptake due to its poor user experience and feeble first impression. With this in mind, organisations must choose software that's easy to use for all users, particularly considering that human-centric brands dominate more commercial functions.
Integration or setup of the software may also prove too challenging. For example, if various departments have to merge their systems and workflows, they may require many weeks’ worth of IT support.
Why are Some Businesses Unable to Quickly Implement Contract Management Software?
A lack of IT support is a significant reason for this. Despite legal tech becoming more mainstream, these departments may struggle to find the resources to meet their requirements.
Equally, many in-house legal teams don't have sizable budgets or may be unable to move faster. Contrastingly, commercial teams tend not to appreciate having new software imposed on them.
Legal teams may feel overwhelmed by the large backlogs they are experiencing, meaning projects stall even before they've begun.
What are the Solutions?
Businesses should implement software which uses non-coded contracts that enable legal teams to move agreements along more quickly, or a platform that integrates with other systems, eliminating the need for various departments to learn how to use new software.
Also consider software which allows contracts to be quickly searched through or tagged, and platforms which enable quick migration of contracts.
Things to Do to Automate Your Contracts in 2021
Wondering if contract automation is the right approach for your organisation next year? Think about whether the types of problems you're currently suffering could be eliminated with this kind of technology.
Answer the following questions to see if your organisation could benefit from automated contract management.
Is Your Organisation Suffering Different Pain Points?
It is usual for organisations to suffer from many different kinds of problems when they're managing contracts manually. For example, they might be:
- Spending too much time on repetitive tasks, meaning that important members of staff are wasting their days on unimportant tasks and could be completing more essential business activities.
- Trying to manually establish an audit trail by manually trawling email chains to discover different versions of contracts. Or performing metrics manually.
- Suffering friction between teams or different staff as employees are increasingly seeing different teams as a bottleneck.
Are Your Existing Contracts Suited to Automation?
Companies who mainly deal with heavily negotiated or complex contracts may be reluctant to automate them. They may believe that contract creation and negotiation would take the same amount of time regardless, and viewing the automation process as a waste of time.
The truth is that any organisation dealing with high volumes of contracts will benefit from this type of technology. Existing agreements tend to be highly compatible with browser contract automation, and many platforms allow bulk upload, including legacy PDF documents. If that wasn't good enough, metadata could also be tagged as well.
Does Your Organization have Support to Implement Contract Management Software?
You'll need a sufficient budget for the new software. Otherwise, you'll need to compile a compelling business case for why it would benefit your organisation. To back your argument, you'll need to explain how contract management software would benefit the entire organisation, and your argument should be supported with reliable data.
Consider having other people in your organisation who can back your argument and support your case. As well as benefiting you, it will enable them to learn aspects of the platform, and perhaps even debunk some of the myths they previously associated with it.