Contract Storage: Tips to Store Your Contracts Effectively

Why does it always happen that only when you need something urgently, you can never find it? Every other time, it is right in front of your nose! I’m guessing Murphy’s law is always in action.

There’s only one way to beat it, though — through organization. 

“Think about how many contracts sit on someone’s laptop or in multiple databases and then think about the value of contract management. The importance of simply being able to locate all of the company’s contracts and relevant amendments in one place without significant effort cannot be minimized.”

~ Sterling Miller, CEO and Senior Counsel, Hilgers Graben PLLC 

Organizing and storing contracts in their designated categories can not only help you retrieve them at once, but also ensure version control and security of those important pieces of documents.

However, given the volume, compliance, and security considerations, storing contracts can often become complex, and in-house commercial counsels need to ensure that they are using an effective system to improve efficiency, reduce risk, and better manage their contract portfolios.

Let’s explore the importance of effective contract storage in detail.

Why Is Effective Contract Storage Important?

Effective contract storage is important for maintaining legal compliance. Businesses must comply with a wide range of legal regulations and requirements that dictate how long certain types of contracts must be kept on file. For example, some contracts may need to be kept for several years, while others may need to be kept indefinitely.

By having a secure and organized system for contract storage, businesses can ensure they’re meeting all legal obligations and avoid the potential penalties associated with non-compliance.

Additionally, effective contract storage can help businesses mitigate risks associated with contract disputes or litigation. When a contract dispute arises, having access to the relevant contract documents is crucial. Without proper storage, businesses may struggle to locate the necessary documents, leading to delayed or unsuccessful resolution of the dispute.

All in all, an effective contract storage system allows businesses to easily access and manage their contracts, maintain legal compliance, and mitigate risks associated with contract disputes or litigation. By investing in a secure and organized contract storage software, businesses can save time, reduce costs, and ensure long-term success.

4 Tips to Store Your Contracts Effectively Without a CLM Software

Storing contracts without a CLM software can lead to inefficient organization of contracts. With files on the cloud, version control can be an issue. 

"A major problem in contract management is version control - different departments using dated contract templates. When the system is opaque, the legal department might not have clear visibility into which versions operations and sales teams might use. This is why having a CLM in place is much needed.”

~ Juliette Thirsk, Chief Legal Officer, Peach Payments

#1 Create a standard naming convention

A naming convention provides a consistent and structured way to name and organize contract documents, making it easier to locate and access them when needed. 

Your contract name should:

• Be descriptive to provide a clear indication of the contents of the document
• Have a standardized format to ensure that documents are easy to locate and eliminate confusion
• Include key information such as the date, parties involved, and the contract type to quickly identify the document and provide context for the reader

Here is an example of a naming convention that incorporates these considerations.

#2 Develop a detailed index

An index is a list of contract documents with key information that allows the user to easily locate the desired contract. With a well-organized index, in-house counsels can save time and reduce errors in the contract management process.

Here are some considerations while developing a detailed index.

• Determine what information to include, such as contract name, parties involved, date of the contract, contract type, and any other relevant information
  
• Use an electronic spreadsheet with a table of contents
  
• Establish a standardized format for the index that can be consistently applied to all documents. This helps to ensure that documents are easy to locate and eliminates confusion
  
• Organize the index logically, in alphabetical order, by contract name, or by date
  
• As new contracts are added or changes are made to existing contracts, be sure to update the index to ensure that it remains current

#3 Ensure secure storage and implement access controls

Contracts contain sensitive information that needs to be protected from unauthorized access. Make sure that documents are stored in secure drives or cloud storage options.

• Store your contract documents in a secure location that has restricted access. Be sure to limit access to only those who have a legitimate need to view or handle the documents.
  
• Use password protection to restrict access to only authorized personnel. Ensure that the password is complex and kept secure. Remember that folders are not the best way to organize your contracts
  
• In case of unforeseen circumstances such as theft, fire, or flood, ensure that your contract documents are backed up in a secure location and that there is a disaster recovery plan in place to quickly restore access to the documents
  
• Consider using document encryption to prevent unauthorized access to the documents. Encryption can help ensure the confidentiality of sensitive information
  
• Establish a retention policy for contracts that outlines how long contracts should be stored and when they can be destroyed. This can help to prevent unauthorized access to expired contracts

#4 Regularly review and update storage practices

Regularly reviewing storage practices and updating them as needed ensures that the documents are easily accessible and that the storage system continues to meet the organization's needs.

• Set up a schedule for regular reviews of your storage practices. The frequency of these reviews will depend on the volume and complexity of your contract documents and the size of your organization
  
• When reviewing storage practices, evaluate their effectiveness in meeting the organization's needs. This may include assessing accessibility, security, ease of use, and compliance with regulatory requirements
  
• Based on the results of your review, update your policies and procedures for contract storage as needed. Ensure that all personnel are aware of any changes made to storage practices and are trained on new procedures as necessary
  
• Monitor contract storage practices regularly to ensure that they are being followed and to identify any areas that need improvement. This may include reviewing access logs, monitoring physical storage areas, or conducting regular audits
  
• Regularly evaluate and implement new technologies and tools that can help improve contract storage practices, such as electronic document management systems, cloud-based storage, and encryption software

Despite these storage and security best practices, storing contracts without a CLM software can be time-consuming, inefficient, and error-prone. In-house counsels need to consider investing in a CLM software that can streamline contract storage and management processes. 

SpotDraft is a contract lifecycle management software that helps you gain advanced visibility of your contracts and business partners. 

Your legal teams can overcome effort-intensive manual processes through our automated contract storage solutions. It helps mitigate risks and improves the ROI. At the same time, sales teams can expedite the process of getting contracts signed and kickstarting the deal. 

Also read: Rethinking Contract Repository Management in the Age of AI 

5 Tips to Store Your Contracts Effectively on a CLM Software

Organizing contracts on CLM is much easier and secure. However, there are still some best practices you must follow to quickly locate and retrieve them.

#1 Organize by contract type

Create folders for each contract type, such as employment contracts, lease agreements, and vendor agreements. This makes it easier to find the right document quickly and efficiently.

• Start by identifying the most common types of contracts used by your organization. This may include employment contracts, non-disclosure agreements, sales contracts, and purchase agreements
  
• Once you have identified the common contract types, create categories in your CLM system to store these contracts. For example, you could create a category for employment contracts, another for non-disclosure agreements, and so on
  
• When you add a new contract to your CLM system, assign the appropriate contract type to it. This will ensure that the contract is stored in the correct category and is easily searchable
  
• Develop a naming convention for your contracts that includes the contract type. This will make it easier to search for contracts by type and help to avoid confusion when multiple contract types share similar names
  
• Regularly review and update your contract type categories to ensure that they remain relevant and reflect changes in your organization's contract usage

#2 Include relevant metadata

Metadata is additional information about a document, such as the date it was signed, the parties involved, and the expiration date. This makes it easier to search for and retrieve specific contracts when needed.

Our in-house legal experts suggest the following relevant metadata details to look for. And our CLM software, SpotDraft, automatically extracts them from your contracts, making it much easier for you to manage and locate them when you desire.

• Start by identifying the key metadata elements that are relevant to your organization's contract management needs. This may include the contract type, date, expiration date, contract value, parties involved, and other important details
  
• Once you have identified the key metadata elements, develop a metadata schema that specifies the required fields for each type of contract. For example, an employment contract may require fields for employee name, start date, salary, and job title, while a non-disclosure agreement may require fields for parties involved, duration, and purpose
  

• It is important to ensure that metadata is consistent across all contracts. You can achieve this by developing consistent naming conventions and data entry standards, and by training personnel on the importance of accurate and consistent data entry
  
• Use the metadata to create powerful search and reporting capabilities in your CLM system. This will enable you to quickly and easily locate and retrieve contracts based on specific metadata elements, such as contract type or expiration date
  
• Regularly review and update the metadata for your contracts to ensure that it remains accurate and relevant. This may involve adding new metadata fields or revising existing fields based on changes in your organization's contract management needs.

#3 Create a backup plan

Always have a backup of your contract storage system in case of data loss or system failure. Consider creating a physical backup on a hard drive or external storage device.

• Decide how often you want to back up your contracts. The frequency of backups will depend on the volume of contracts, level of criticality of the contracts, and cost of potential loss
  
• Decide where you want to store the backups. Ideally, you should store backups in a different physical location to minimize the risk of data loss due to natural disasters or other unforeseen events
  
• Use automated backup tools to simplify the backup process and reduce the risk of human error. Most CLM systems have built-in backup features that can be scheduled to run automatically
  
• Regularly test the backups to ensure that they can be restored in the event of data loss. This will help you to identify any issues or errors with the backup process before a crisis occurs
  
• Establish protocols for who is responsible for performing backups, how often backups should be tested, and how backups should be stored and secured
  
• Use encryption and access controls to protect the backups from unauthorized access. This will help to ensure the confidentiality and integrity of the contract data.
  
• In addition to regular backups, have a disaster recovery plan in place to guide your response in the event of data loss. This plan should include procedures for restoring backups, recovering lost data, and resuming normal business operations.

#4 Set up access controls and passwords

Protect your contracts with appropriate security measures such as passwords, encryption, and access controls. Limit access to only authorized personnel and keep a log of who has accessed the documents.

• Determine the access levels that are appropriate for your organization. This will depend on the size of your organization, the number of contracts you manage, and the level of risk associated with the data
  
• Define user roles and assign specific permissions to each role. For example, you may have a contract administrator role that has access to all contracts and a contract reviewer role that has limited access
  
• Set up authentication to ensure that users are who they claim to be. This can include usernames and passwords or multi-factor authentication
  
• Use encryption to protect the data during transmission and storage. This will help to ensure the confidentiality and integrity of the contract data
  
• Use audit trails to track user activity and identify any unauthorized access attempts. This will help you to quickly identify any potential security breaches
  
• Provide training to users on access controls and best practices for protecting contract data. This will help to ensure that users are aware of the risks and understand how to use the CLM system securely
• Regularly review the access controls to ensure that they are still appropriate for your organization. This may include adding or removing user roles, adjusting permissions, or updating authentication methods

#5 Review and update regularly

Regularly review your contract storage system to ensure that it is up-to-date and accurate. Remove any outdated or unnecessary documents to keep your system streamlined and organized.

• Establish a schedule for reviewing your contract storage practices. This could be monthly, quarterly, or annually, depending on the size of your organization and the number of contracts you manage
  
• Evaluate your current contract storage practices and determine if they are still meeting your needs. Look for areas where you can improve, such as organizing contracts by contract type, adding relevant metadata, or setting up access controls
  
• Keep up-to-date with new features and updates in your CLM system. Many CLM systems offer regular updates and new features to improve functionality, security, and usability
  
• If you identify any issues or concerns during your review, address them immediately. This could include updating access controls, adding new metadata fields, or setting up a backup plan
  
• If you add new features or updates to your CLM system, be sure to train your users on how to use them. This will help to ensure that they are aware of the new features and can use them effectively
  
• Continuously look for ways to improve your contract storage practices. This could include implementing new features, such as electronic signatures, or reorganizing your contract database to improve searchability and accessibility.

Also read: Why are folders not the best way to organize your contracts?

How Does SpotDraft Make Contract Storage Secure and Easy?

SpotDraft’s smart contract repository system is here to help you ease your contract management worries. Here are six compelling reasons why SpotDraft is the best intelligent contract management software to organize your contracts.

#1 One-click import

You can import all your contracts with a single click. The smart inventory has unlimited storage capacity, and you will never run out of space ever. Select one or even hundreds of agreements at once for importing into the system. There is also a drag-and-drop function to simplify the data import process.

#2 Smart highlight

The software pulls relevant details from the agreement and highlights them in a simple view. You no longer have to spend long hours finding the information you need.

#3 Easy search

You can look for anything and everything related to your contracts in the repository. It is possible through contract details, custom labels, tags, and much more. Even if you have a thousand contract agreements, locating that elusive one is possible without wasting time.

#4 Reminders and updates

System notifications and updates help you track renewal dates. You will never miss out on vital events that could directly impact your revenues. The system also delivers weekly and monthly reports to your inbox.

#6 Unmatched control

Contract managers are in control all the time with permission-based access to contracts. It is possible to grant access to people based on their roles and contract types.

Get a free SpotDraft demo to see how contract management software can help your business.