Is Your Contract Data Secure? A CLM Security and Compliance Checklist
TL;DR
- Contracts house sensitive data across pricing, IP, PII and commitments.
- CLM security is an evaluation gate. A secure CLM holds SOC 2 Type 2, ISO 27001 and supports GDPR. HIPAA where applicable.
- Most vendors hold all certifications. Scope, hosting across regions and AI data processing is where scrutiny should be focused.
- Core controls to seek: Encryption at rest and in transit, granular access control, audit trails, SSO and clear data residency.
What makes a CLM secure?
A secure CLM is equipped with a host of certifications and features to ensure contract data is protected. This includes SOC 2 Type 2 and ISO 27001 certifications, strong encryption, both, in transit and at rest. It should also offer granular role based access, clear data residency and complete audit trails. Transparency on how AI processes texts is a must in today's world. Further, it should support frameworks such as GDPR and HIPAA for regulated teams.
Today, established CLMs are broadly comparable to the above, the distinction is discovered when one understands the scope of each certification, data hosting and AI guardrails. The below literature and checklists exist to enrich your understanding and scope out the right CLM for your organization’s needs.
Understand SpotDraft’s security posture and more. Book a personalized demo.
The CLM security checklist
The below is a broad overview of what you need to look for:
- SOC 2 Type 2 certification
- ISO 27001 certification
- GDPR
- HIPAA
- Granular, role based access control
- SSO/SAML
- SCIM
- Audit trails
- Data residency
- DPA (Data Processing Agreement)
- Documented incident response
- Breach notifications SLAs
- Public status page
- ESIGN & eIDAS
- AI text processing transparency
A closer look at certifications
Certifications are important but merely a starting point. Scope, audit period and exceptions matter too. Our guide to CLM security certifications offers a deeper walkthrough.
Confirming the substance behind certifications
Use the below checklist to carry out a thorough evaluation of your vendors under consideration:
1. Under an NDA, request for the actual SOC 2 Type 2 report
Look for three things once received:
- Audit period, typically ranges from 6 to 12 months
- Scope, outlining what systems and trust principles are covered
- Exceptions
2. Read beyond the ISO 27001 claim
Look for three things:
- Certification body
- Expiry date
- Scope statement
3. Request the penetration test summary
This should answer:
- How often is testing done?
- Who carries it out?
- How quickly are findings remediated?
4. Review the sub-processor list
This should answer the following about your data:
- Which third parties, cloud, emails and AI providers access it?
- Which regions access it?
5. Read the DPA
Confirm the following:
- Processor terms
- Notice of sub-processor changes
- Data deletion on termination
- Defined breach-notification timeframe
Look out for these red flags
Vendors can broadly claim anything. Inspect for specifics to reveal the depth of understanding and reality of compliance:
Asking the right questions on AI data privacy
Access to AI review is table stakes. Where your data is processed however is not currently a standard across vendors. Demand specific answers to these questions:
- Is contract text shared with an external model? Is it processed within the vendor’s own environment?
- Should it be processed, is it retained? Or is there a zero data retention arrangement available?
- Is data ever used to train and enrich the vendor’s model? Or any other model?
- Is the AI provider a named sub-processor covered by the DPA?
It goes without saying a privacy focused approach to maintain sensitive data close to home, making it a key differentiator to look out for. SpotDraft’s AI is designed to review and extract without utilizing any of your contract text for third-party training.
Security, a shared responsibility
While a vendor ensures safety through certification and features, exposure can take many forms. Broad permissions, shared logins and access that isn't revoked in a timely manner when someone leaves. Always plan the use of the tools your CLM provides, enforce SSO, control access through the repository’s role based controls and frequently review audit trails.
Why legal teams depend on SpotDraft for their contract security
Not only does SpotDraft hold a SOC 2 Type 2 and ISO 27001 certification, it is GDPR-aligned and uses PCI-compatible encryption, offering granular access control, complete audit trails and a truly differentiating hosting across the US, EU, India and the Middle East. It's native and unlimited eSignatures meet ESIGN and eIDAS standards. You can read more and verify at our public Trust Center.
Understand SpotDraft’s security posture and more. Book a personalized demo.
Frequently Asked Questions
Is CLM contract data secure?
What certifications should a CLM have?
How do I verify a CLM vendor's security claims?
Where is my contract data stored in a CLM?
Does CLM AI put my contract data at risk?
Is SOC 2 the same as ISO 27001?
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