Is unorganized contract data causing chaos in your legal department? Do you worry about missed opportunities, lost relationships, or important tasks falling through the cracks? You're not alone. The lack of effective contract data management is a ticking time bomb for businesses, leaving them vulnerable to costly mistakes that can make or break important relationships.
As the volume and complexity of contracts continue to increase, it's essential for in-house legal teams to have the right tools and processes in place to efficiently track, manage, and analyze contract data. A centralized contract data repository can empower legal teams to quickly identify issues, manage routine tasks, and make informed decisions that create real business value faster.
We spoke with legal industry leaders to gather insights and create a guide to help you maximize your in-house legal team's impact with effective contract data management. Read on to discover the strategies and tools that will help your in-house counsel succeed.
Today’s in-house counsels are dealing with contract data overload
Although technology has helped ease the burden of manual work in a lot of ways, it has also created a strange situation for the modern legal counsel:
- Business today moves faster than ever, thanks to online communication.
- Unorganized contract data is spread everywhere from Slack, Teams, and email threads to employee computers, hard drives, and cloud storage options.
- Legal teams are often constantly playing catch up to business priorities, putting out fires, and trying to locate lost files and context.
The cost of bad contract management doesn’t end at disorganization. Mismanaged contract data leads to:
- Financial losses, due to loss of business data critical for meeting deadlines, managing risk, and maintaining compliance.
- Loss of business relationships and damage to image, due to unsatisfied stakeholders or customers and legal disputes arising out of failure to meet contractual obligations.
- Missed opportunities, due to lack of visibility over contract status and opportunities for upselling, renegotiation, etc.
- Process inefficiency, due to duplicated effort on repetitive work and lack of bandwidth for strategic work.
- Friction between cross-functional teams, due to long turnaround times and a burnt out Legal team, which ends up causing Legal to work in a silos.
“Try to glean as much info about what causes friction as possible. Your biggest wins will come from addressing these knowledge gaps or hesitancies that are blocking/slowing deals.”
— Sue So
Head of Legal, Hopin
What is contract data management?
Contract data management is the effective management and storage of all contracts and contract data of an organization. It streamlines contract analytics and reporting, automates data extraction, and provides a framework for the contract repository.
What contract data should you be tracking, and how?
”You can either be part of the cleanup crew or do stuff to avoid that cleanup situation altogether."
— Gitanjali Pinto Faleiro
General Counsel, Company Secretary & CCO at Greenhill & Co.
The first step towards avoiding cleanup duty and creating business impact is to get the contract data in order — in a centralized place where everyone who needs it has instant access.
For a lot of companies who are starting out with contract data management, this may be a more homegrown solution made with a variety of tools such as spreadsheets and Google Drive folders. Others may opt to directly onboard a contract data management system or CLM software instead.
“It's good for a SaaS lawyer to be tech-savvy because it helps to know what tools are at your disposal and how to use them best. Go to the people who know how to use these tools well and ask them if it's possible to set up the workflows/automations you want within them.”
— Sue So
Head of Legal, Hopin
Whichever solution you decide to choose, you must ensure that you are capturing the well of data your contracts include in the most efficient and accessible manner.
11 key contract data you should track:
- An attachment of the contract, supporting documents like renewal notices, and relationships with other contracts or agreements, if any.
- Information of the parties involved.
- Important dates for delivery, renewal, expiration, etc.
- Deliverables or products and services being exchanged.
- Contract value and payment terms as well as schedule.
- Terms of renewal, outlining the renewal process, renewal options, and any relevant conditions or clauses.
- Terms and conditions for any breaches, defaults, or other issues.
- Specific terms and conditions that were negotiated and may not be the standard versions for the organization.
- Contract metadata such as contract type, reference ids, labels, responsible legal/business team members, category, and status.
- Audit trail and related correspondence, notes, or context from other platforms.
- Contract amendments, addendums, and modifications, if any.
Once you have visibility over all this data, you will be much better positioned to streamline legal processes and create a culture where Legal is an integral part of enabling business instead of a cost center.
P.S. Check out our Contract Tracking and Management Spreadsheet Template.
3 stages of an efficient contract data management process
An efficient contract data management process should account for the following steps:
#1 Capturing and storing contracts
Gather all your contracts from the various channels they may be spread across. This may include channels like email and telephonic correspondence, messaging and collaboration apps like Slack, hard copies of physical documents, collaborative documents and folders online, etc.
Once you have collected all your contracts, organize and store it in a centralized location to make it easily accessible while also protecting it against unauthorized eyes. To begin with, this may be a spreadsheet or a Kanban board, but you may also want to consider investing in a CLM system to create a single source of truth.
#2 Analyzing contracts and monitoring data
Your task doesn’t end at simply creating a repository of all contracts. You must now analyze these contracts to extract key contract data (as outlined above) to ensure visibility over any potential risks, important dates and deliverables, special terms, etc. It’s also important to continually update this data to ensure that only the latest information is available.
Monitoring these key data points will help you keep track of upcoming renewals and expiration dates, look for opportunities for cost-saving and upselling to clients, identify agreements that must be renegotiated, etc.
#3 Reporting contract performance and optimizing process
Contract reporting and analytics is an essential part of an efficient contract data management process, as it helps Legal showcase their value to the business, understand contract performance, and identify areas of improvement. You should also continually optimize this process to solve for inefficiencies and bottlenecks, which will be enabled by contract data analytics.
Benefits of efficient contract data management to business
In a lot of ways, legal teams working without a centralized contract data management system are working blindfolded. Efficient contract data management enables business by helping make informed decisions, driving growth, and minimizing risks. Below are 6 ways efficient management of contract data creates business value:
#1 Mitigating risks
Contracts contain critical information around compliance, delivery, payments, and more. Without tracking this data, businesses put themselves under unnecessary risk of non-compliance, missing renewals or deadlines, and more. Tracking this data helps mitigate these potential risks and prevent disputes.
#2 Streamlining the contract lifecycle
The first step to efficient contract data management is creating a single source of truth for your contract portfolio and tracking all contract data in a centralized repository. This helps streamline contract lifecycle management and make the process swifter, easy to track and analyze, and more cost-effective.
#3 Reducing legal dependence and freeing up resources for strategic tasks
The legal team doesn’t have to spend crucial hours of their time sifting through files, cabinets, email threads, and more, and contract data is instantly accessible to every stakeholder whenever they need it. This helps reduce Legal’s workload and frees them up for more strategic initiatives that can directly contribute to generating business impact.
#4 Identifying missed opportunities
Contracts contain a goldmine of information. Businesses lose out on a lot of opportunities for maximizing revenue and minimizing cost when they’re not actively tracking contract data. By continually tracking contract data, the legal team can have a greater impact on business by identifying opportunities for upsells, cost-saving, renegotiation, and other ways to improve their contract portfolio.
#5 Enabling actionable insights and driving performance
Contract data is essential not just to create a data-driven legal team but also for deriving actionable insights by tracking various metrics to improve performance, make informed decisions, remove bottlenecks, and drive growth. It also reduces the chances of manual errors, enabling humans to let go of the grunt work.
How a CLM or contract data management system like SpotDraft enhances your contract processes
“When you’re spending multiple hours a day on redundant tasks, it’s a good sign to see small improvements to that process yielding tremendous results. The CLM tool helped our legal team work more efficiently and the sales team to see what we were doing to enable them. Also, we got the bandwidth to prioritize commercial work and strategic thinking. It also helped us document the work and learn from it, and as a side benefit, it helped make a solid business case to scale the legal team at Pinwheel.”
— Ryan Nier
General Counsel, Pinwheel
The most effective way to manage contract data is to implement a contract management system. A CLM software will help you untangle the chaos of contract data management and streamline it for greater efficiency and business value. Here’s how:
#1 Reducing legal burnout and increasing productivity
In-house legal counsels often face an overwhelming volume of contracts that require repetitive grunt work instead of mindful, strategic tasks. This can lead to higher chances of burnout within the legal team, and subsequently lower productivity and compromise performance.
#2 Providing a single source of truth
CLMs like SpotDraft offer comprehensive, thoughtful contract repositories to enable organization of all contract data in a centralized and convenient location. This way, legal teams don’t need to spend valuable time on locating files, searching for context, or creating manual reports — they can just have the CLM do it for them.
#3 Facilitating instant report generation
Many CLMs provide features to help you generate reports and simplify data reporting. For example, on SpotDraft, users can use filters to instantly create a data set (or save custom views) then instantly export that data as a report. This significantly reduces the human effort that goes into creating reports for contract audits, review requests, etc.
#4 Bringing contract collaboration to one platform
CLMs help in bringing transparency into the contract collaboration process. Visibility into this process is incredibly important to preserve contextual information and related correspondence for each step of the contract lifecycle, which helps legal teams and stakeholders easily understand the context of each contract without having to go digging.
#5 Automating contract metadata tracking
Some CLMs also allow for streamlining contract metadata tracking. SpotDraft, for example, solves for this through our key pointers feature, providing easy access to the important details of each contract without having to look through the actual agreement. You can even search and create reports by filtering contracts via these key pointers.
#6 Staying ahead of renewals and expiry
With a contract management system, you can ensure that you don’t miss critical contract dates and deadlines, preventing non-compliance and unwanted auto-renewals. On SpotDraft, you can track these through your contract dashboard and set reminders to get notified for all important dates and upcoming renewals ahead of time.
#7 Enabling use of contract data for actionable insights
A huge advantage of hosting all your contract data on purpose-built software like contract lifecycle management tools is that many of them come with their own insights dashboards to provide greater visibility into the contracting process.
For example, on SpotDraft, we provide thoughtful, visually represented analytics and insights into turnaround times, contract lifecycle efficiency, team performance and bottlenecks, opportunities for improvement, and more. This helps legal teams become more data-driven, automate the time-consuming data analytics process, and easily showcase their work to stakeholders by sharing relevant metrics regularly.
“You need to tell stakeholders what your team is up to. Leverage tools such as CLMs to showcase how your team has contributed to closing deals effectively.”
— Juliette Thirsk
Head of Legal at Peach Payments
#8 Solving for business stakeholders and teams’ pain points
Besides bringing greater efficiency into legal processes, operationalizing contract data through contract management software also helps business teams and stakeholders. (As a bonus, this further helps the legal team stay top of mind within the organization and demonstrate their value.)
Some examples of key stakeholders who benefit from contract data include:
- C-suite executives, who rely on up-to-date contract data to inform business decisions and understand performance.
- Sales leaders, who require accurate data on contract closures against performance metrics.
- Sales teams, who need visibility into the contracting process and data to identify opportunities for upselling and cross-selling.
- Finance teams, who use contract data to create accurate financial forecasts and provide business recommendations.
- Procurement teams, who need visibility into vendor contracts and data to efficiently manage renewals and expiry.
Let SpotDraft help you manage contract data
“SpotDraft’s reporting capability is very valuable for showing data around contract lifecycle, turnaround times, bottlenecks, etc.”
— Nicolette N.,
Contract data management is a crucial yet often overlooked aspect of legal processes in modern business. If you’re looking to transform the contract data management processes at your organization, we can help. Get in touch with our experts today to learn how.