GENERAL COUNSEL AND THE NEED FOR CLM
THE CHANGING PROFILE OF A GENERAL COUNSEL.
General Counsel in the current time has vast complex responsibilities. They make sure that the firm gets into the least amount of unnecessary risks. They have a profile that makes it important to act increasingly as an advisor to the CEO for legal and business terms. A lawyer is expected to have a deep knowledge of laws, regulations, and negotiating skills. As professionals, attorneys are trained and valued for their technical skills and expertise.
While all this adds to the portfolio, in house lawyers still have a part of their job, which is transactional in nature and most overwhelmingly in volume. One aspect of this is the contract drafting and maintaining, which generally is very monotonous and bulky. Many times it is the same template for many contracts, and that can lead to the job being seemingly tedious.
Contracts define the relationship between the parties and apportion the risk as well. However, during drafting, there is a basic risk of human error. There can be mistakes like miswording or omission resulting in serious calamities for the business.
Any firm of mid or large size, it will be nearly impossible for the counsel to be in the know of the hundreds of contracts that are made in the firm. What happens when one has to refer to past contracts immediately, they will have to go and search through all the PDFs saved under that particular contract title to find the one needed.
WHAT IS CLM?
CLM or Contracts Lifecycle Management is a software that helps in contract managing the company at every stage, including performance and renewal or expiry. It leads to significant cost saving and efficiency; understanding and automating also limits the exposure of the company of risking their business by reducing missed obligations.
CLM has some key steps to it, which makes it an interesting software, which focuses on almost every aspect of a contract. Even though every step is as important as the other one, some have gotten more publicity. For example, for the longest time, managing contracts have been made available, but recently post-execution steps have come to the rise with artificial intelligence and machine learning.
CLM has various steps, and a closer look at them helps with a deeper understanding of how they are good for the general counsel in the current economy.
Template Authoring: Simplifying a company’s library of template results in great risk managing. A smart template authoring will allow the general counsel to add clauses to the document, put custom texts and metadata. The process ensures approval before the contract comes into existence.
Contract Creation: Contract content is assembled automatically using any criteria associated with the contract, such as region, products, services, or price terms. Rules-based authoring capabilities greatly improve the scalability and agility of contracting operations while also enforcing appropriate process controls.
The business owners also have a sense of empowerment when there is an option of self-service mode; it also gives the organizer time to achieve revenue and significantly reduces the legal operative expenses.
Review of Contract: An automated contract review can result in better negotiating terms and enforcing commercial terms. The software is enabled so that it captures the commercial terms of products and services, prices, discounts, rebates, and incentives in a structured form and integrates the same into enforceable terms.
Contract Approval: A good CLM software by design accumulates the workflow and coordinates the approval process, with parallel approves going alongside the contract approval. This is subject to negotiating updates and also ensures governing. A user can also manually intervene with the approval with the help of ad hoc steps.
Contract Execution: Josh McCown executed a deal worth 10 million dollars from a parking lot and his phone. Executing contracts is highly digitized in the modern-day world. Software as secure as CLM help execute the signature process based on user-defined workflows, all the while updating the contract after the execution.
Performance: CLM software of the current time, which gains insight into performance on all areas like finance, legal, and sales. The software consists of an analytical module resulting in the comprehension of data such as renewal, expiry, and procurement, etc. This step helps to track the contract, even third party inclusion, if needed or more complex commitments. Risk can also be managed post-execution.
Expiry: The software provides notifying users, including the expiration and renewal alert and notification of contract. Most such software provide the user with a dashboard showing the latest updates on their contracts.
BENEFITS OF CLM
We have understood what a General Counsel does and the software and its various functioning. The question, however, still remains about the efficiency of the software and how it might help the upcoming generation of in house lawyers and general counsel. Here are some key benefits of the software.
Risk Management: Missed renewals and expiry dates, small details a company cannot skip through. CLM this issue. With dedicated software that can keep you informed of these key milestones while providing ready access to key provisions.
Report Compliance: For effective contract managing, compliance is key. Meeting contract obligations is pertinent to a company. The threat of contract terminating can be reduced by the proper recording of documents related to the legal requirements.
Centralized Repository: The central repository is one of the biggest advantages of CLM. It can house all the contracts documenting in the system—a level of transparency that is allowed with the software.
Compliance from suppliers: Getting suppliers to meet deadlines can seem very difficult and time-consuming; however, a good contract enforces negotiating terms helpful to the business and thus results in cost efficiency.
Contract cycle improvement: A typical contract cycle begins when the company recognizes the need for a good or service, and cycle ends at delivery. Generally, the team of lawyers would want to improve the process and reduce cost or improve profit; this could potentially take a lot of time out of their day. However, CLM software may recognize many moving parts that can present opportunities for profit-making.
Customer – Supplier Relationship: Contracts are one of the more important documents driving your supplier and customer relationships. To that end, you want to communicate that your business is valuable, reliable, and credible. CLM can help fulfill obligations and go above supplier and customer expectations.
DRAWBACKS OF CLM
The more I read about the software, I have realized while the software is great for a company with respect to cost efficiency and time management. However, it won’t be a full analysis of the drawbacks that are not taken into account.
A high degree of customizing is needed for each module or template integrating into the software. This is counterproductive to the claim that the software is time-efficient. The software needs data to feed off of which a lawyer from the team has to sit and fill in. In most cases, the software is only updated once a year.
How does CLM benefit general counsel or in-house counsel?
· SPEEDY OUTCOMES
General counsels have to deal with multiple contracts at the same time and are under pressure to speed up the completion of such contracts. CLM can help in automating processes like contract creation and approval through standardized rules, which reduces the time taken for each process.
CLM helps to manage data in bulk, keep tabs on the status of hundreds of contracts, and helps in easy retrieval of specific data in record time. CLM discards the cost incurred if this were to be done manually using a large workforce and long work hours.
· LESS GRUNT WORK
Counsels get more time to provide valuable legal advice and strategies when repetitive tasks of a contract are assigned to a computer. Tasks like creation, approval, and even review of a contract can be automated through user-defined rules. Even the execution of a contract can be digitised with the use of electronic – signature platforms.
· EFFECTIVE COMPLETION OF CONTRACTS
A CLM software may create tasks, assign them to parties, and track the completion of such tasks; this reduces the burden on the general counsel to monitor the completion of contracts. The software can also be configured to provide alerts on the completion of tasks.
· REDUCES RISKS
Since the manual effort of counsels is minimized, the risks of making mistakes and missing timelines are significantly reduced.
For a mid or big tier firm with complex agreements and contracts, an approach that comprehensive in nature paves the way to more control and risk mitigating and, as a result, increases the value attained contracts. However, it is important to select the solutions on the basis of the goals the company has. As there is no one-fits-all solution, organizations with competitive goals should further explore the advantages of contract managing tools and technologies, and find the right fit that matches their unique requirements.
About the author: A final year student at Symbiosis Law School, Pune, Pragya Bansiwal identifies as an intersectional feminist and is an ardent advocate of queer and minority rights. She falls back on her camera often, to capture moments both mundane and memorable.