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It's easier than you might think for contracts, even digital ones, to be lost, misplaced, or even accidentally destroyed.

Failure to secure contracts and the information included in them can jeopardize a business.

Imagine, for example, what could happen if you were unable to surface a client contract at their request? Not a good look, to say the least.

Contract security is the practice of taking reasonable steps to protect a contract against unintentional or unauthorized disclosure, modification, and destruction. It is an issue that any company that relies on contracts to do business will be concerned about. 

In this article, we'll discuss everything you need to know about contract management security so you can reduce your own risk when signing contracts with vendors and customers alike.

“Legal, security, and privacy are cut from the same cloth. We're about value creation but we're also a lot about value protection and stewardship. My department’s slogan is ‘Stewards of Seismic,’ and we take that really seriously; we're here to shepherd this business to the next milestone.

~ Celaena Powder, VP of Legal, Seismic

From Security to Sales: Building Cross-functional Bridges

What is contract management security?

Contract management security is a collection of methods and processes that ensure contract information is accessible only to required or eligible team members. 

At its core, contract management security is about keeping your agreements safe. Safe, in this context, means that contracts meet the following criteria:

  • They can’t be viewed by anyone who shouldn't be able
  • They can be easily located and surfaced at any time
  • They are securely encrypted to prevent fraud or data leaks 

Contract security measures help you protect sensitive data stored in contracts, thereby ensuring you remain compliant with various data privacy laws and safeguard your business’s best interests.

Contract security threats can be classified into internal and external risks. 

An internal risk, for example, is the possibility of an employee who shouldn’t have access to an investment agreement being able to view and share the details of the contract with other parties.

External risk is the possibility of a data leak or cyber attack that allows external parties access to your sensitive contractual data.

“If you're at a start-up, for every 3 projects you plan for Legal, 2.5 come at you by surprise. No matter how well prepared, how big your legal team, or how mature the company, there will be things that you can't anticipate. Because on that risk matrix, there are 100 different risks, from employment to data privacy to contractual to bank system collapse. As a legal team, budgeting for the surprises as well as for the day-to-day is a really delicate balance.”

~ Megan Neindermyer, CLO,
Legal Risk Management: From the Playbook of 11 GCs & Leaders

If left unchecked, these threats ultimately pave the way to legal liability or damage your reputation. 

Rightly implemented contract management security helps you protect contracts from hackers, eliminate data breaches, and avoid unauthorized access.

Why is contract management security so critical? 

With the world of work becoming increasingly digitized, it is perhaps of little surprise that new legislation consistently works to tighten up the restraints around data management and security.

Today, a small data breach or step out of line with a requirement like the GDPR can result in huge financial burdens.

“Contract access to unnecessary stakeholders always puts the business at risk. In fact, organizations end up paying lumpsum amounts or huge liabilities in the wake of security breaches.”

~ Supin Prem, Senior Manager, Legal Tech, SpotDraft

As such, keeping contract documents locked down has become a critical undertaking. Here are three reasons why many companies are still at risk.

Also read: The Perfect Contract Risk Assessment Checklist

Reliance on physical documents

Physical contracts are notoriously hard to track down and easy to misplace, damage, or destroy altogether.

Of course, they themselves pose a risk to access control (more on that shortly), in that anyone who gains access to their storage facilities gains access to all contracts.

More than that, however, physical documents don’t come with the ability to encrypt or protect data, something which we’ll see is a critical part of a good contract management security tool.

Also read: From Paper to Pixels: Persuading Clients to Embrace E-Contract Signatures

Lack of access control

Even for those companies that are operating digitally, access control can put contract security at risk.

Without granular role controls or even individual-level access controls in place, companies are at risk of allowing anyone in their organization access to sensitive data they shouldn’t be able to touch.

In this case, they often resort to locking down all documents to only the contract owners, which improves security but inevitably creates bottlenecks and roadblocks when documents do need to be accessed by those who should have the authority to see them.

Also read: How In-House Legal Teams Can Safeguard Company Data and Mitigate Security Risks

Use of general-purpose tools

It's pertinent to consider that contract security fails in most organizations today because they are seen using general-purpose shared drives for contract storage. They don't provide adequate guardrails on access controls for team members. 

A common example of this is when companies use cloud storage sites like Dropbox or Google Drive as their solution to what should be a contract repository.

They can, thus, potentially expose sensitive contract information, eventually resulting in security vulnerabilities.

What are some common best practices for contract management security?

Below are four methods you can use to secure your contracts. Now, let's dive in.

Common techniques for protecting your contracts

Centralized electronic contract storage

Recall that your contracts get dispersed among many file cabinets and folders. A crucial step in ensuring contract security is creating an online and centralized repository. A cloud-based contract database curtails unnecessary access. 

Also read: Contract Repository: Everything You Need to Know
Contract repository

Role-based permission to contracts

You could reduce risk and protect sensitive data by ensuring only key stakeholders have access to the information and contracts they need to perform their duties. Setting role-based access controls augments security. That means certain contract types are accessible to a specific set of users, thereby trimming down unauthorized usage.

Role-based access control

AES 256-bit encryption

Another significant step your company could embrace is to encrypt all contract data at rest and in transit. Encryption prevents malicious attacks, whether stored in your server and transferred to or taken away from your contract lifecycle management (CLM) solution. 

Encrypting contract data

Digital signatures

Fully encrypted signatures also allow you to detect any changes made to the contract after signed. Moreover, eSignatures are more secure and swifter than paper-based ones, as the former supports audit logs. 

Also read: A Quick Introduction to eSignatures

The eSignature regulations that SpotDraft complies with include ESIGN (USA), eIDAS (Europe), and ECA (UK). To learn more about SpotDraft eSignature software, click here.


Platforms like SpotDraft make this seamless.

“We've been using SpotDraft for most of our contract flow and signing. It has made getting agreements out for signature much easier.”
~ SpotDraft Reviewer (via G2)

What types of tools and features help with contract management security? 

Contract repository

The first important feature of any security-focused contract management platform should be a robust repository, serving as a secure, centralized hub for document storage.

Here, contract data should be encrypted and the database easily searchable, though agreements must be available to view only by those with the right permissions.

This leads us to our next point: 

Role-based and individual access control 

The ability to customize access control is a critical feature of good contract security.

First, look for the ability to create role-based permissions.

That might mean, for instance, that anyone on the legal team can view all contracts in play, but sales reps can only access customer sales agreements.

Then, for an additional level of security, look to add individualized permission sets. For example, perhaps only the CLO should have access to all documents, with legal team members being provided permission to view the documents that pertain to their particular workflow.

Self-service contract management portal

A good contract management system can help facilitate client collaboration without hurting security by providing a self-service portal where customers can view, sign, and manage the contracts that pertain to them.

This fulfills the legal requirement for customers to have access to their agreements and also provides the basis for an audit trail, as your contract lifecycle management tool can store information about the device used to access and sign the document.

Also read: Roadmap to Contract Audit Success: 5 Best Practices to Follow

Workflow automation

Workflow automation is a key tool that will help you better manage contract management processes, saving time and money while simultaneously improving compliance with internal policies.

For example, you might set up an approval workflow, such that when a new agreement is drafted by a sales rep, a request is sent to legal to sign off on the contract.

Because this all takes place within your CLM platform—rather than the sales rep sending over the contract via email—the pending document remains secure.

“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

Commercial Contract Management in Hypergrowth Startups

Contract execution and eSignature 

A solid tool for managing contract security should include functionality that assists during the execution phase.

Look for features like the following:

  • Native eSignatures
  • Document encryption
  • Automatic storage and archiving 
  • Renewal reminders 
Also read: Contract Execution Process: The Ultimate Guide

Automated contract creation

Automation also has a hand to play in the initial contract drafting phase.

By using pre-approved templates as a starting point for contract creation, legal teams can minimize the risk of incorrectly worded clauses and can, in some cases, prevent the need for agreements to be shared internally at all, lowering the number of hands on any given document.

Also read: Tools & Tips to Automate the Contract Creation Process

Native integrations 

Lastly, look for a contract management platform that integrates easily with the other tools you’re already using.

For example, an integration with your sales CRM will help streamline the contracting process by allowing you to pull customer data directly into the agreement. 

While this is important from an efficiency perspective, it also provides an additional layer of security by ensuring key customer details are 100% correct in the subsequent contract.

Also read: 6 Must-Have CLM Integrations for Streamlined Workflow and Higher ROI

7 contract management security features to prioritize 

Ready to invest in a contract lifecycle management platform?

Make sure that whatever CLM you choose has all of these seven features to ensure contract security.

Contract security features your CLM should have

  1. Make it impossible for illegitimate users to access sensitive data by fully encrypting contract data at rest and in transit.
  2. Consider CLMs that are SOC1 and SOC2 certified. Doing so ensures that your customer's data is handled with care and is protected. Click here to learn more about SpotDraft's SOC2 Type 1 Audit completion.
  3. Cloud-hosted CLM platforms enable you to stay compliant with the latest security standards. So, pick the most appropriate ones and monitor org-wide contract management software usage.
  4. Set and grant permissions to contract administrators or business users based on their role, department, contract value, and contract type. Role-based access enhances contract security. For instance, only employee contracts might need to be seen by your HR department.
  5. Quarterly penetration and vulnerability tests expose security risks that remain largely unnoticed. Make sure your CLM partner or vendor takes audits seriously.
  6. A detailed audit trail records all contract-related communications, versions, and user interactions. This feature helps contract administrators and business users maintain compliance and meet internal policies.
  7. Ensure that your CLM vendor integrates with other cloud storage and eSignature tools you are already using.

Boost contract management security with SpotDraft

Contract management security in today’s world means much more than just a centralized repository for storing contracts—though this is an important first step!

Businesses need to approach contract security according to the nature of their agreements. 

Often, your contract type dictates the level of security needed—it may not be necessary to protect a simple T&C (Terms and Conditions) agreement the same way you would protect a shareholder agreement. The latter contains sensitive financial information that you need to keep private.

Thus, security is a vital aspect of assessing and evaluating CLM solutions. Malicious hacks and data breaches are increasing dramatically. As contracts are the basis of your business, implementing these practices will increase contract security. You'll not only feel more at ease, but you'll also stay away from the potential brand, financial, and legal risks. 

To that end, let us introduce you to SpotDraft.

SpotDraft's end-to-end contract management platform offers a secure place for organizations to store and access contract libraries and related data. It is one of the leading tools to organize, store, and grant access to contract documentation to multiple parties securely.

As part of one of our SaaS client's contract management risk strategy, they ensured stakeholders only had access to the data and contracts they needed to do their jobs. 

With SpotDraft, they were able to keep and leverage detailed audit logs and control access to the system according to roles, departments, and much more. Also, they automatically recorded changes to contracts before, during, and after they had been signed.

Additionally, they created granular roles and permissions on contracts and ensured that certain contracts were only visible to specific teams. It made contract creation and editing error-free and helped mitigate risk. Having an audit log of all work done in a contract helped them understand how their team could be more efficient. Now, it’s easier than ever to keep track of a contract's stages, and they are always up-to-date.

Sound like what you need?

Take a look at SpotDraft's commitment to providing a secure contract management solution. Request a demo today.

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