Outdated manual processes can slow down deals. The problem only increases as the number of contracts, versions, and related documents grows. A good workflow helps ensure that time isn’t being wasted sifting through documents to find the right ones and that review processes aren’t being slowed by any one department or individual.
To combat these common time suckers, you need clearly defined roles, processes, and efficient workflows to ensure that contracts aren’t being held up unnecessarily. Defining business goals and risk tolerance can help ensure key contract terms are always in place. Negotiations (especially for low value and repetitive deals) shouldn’t be eating up too much time for the legal team—it’s simply not a good use of limited and valuable resources (yes, legal is outnumbered in most organizations—except law firms). Most importantly, you’ll need the right technology to help you automate otherwise tedious and sometimes redundant processes.
So, how do you improve your approach to contract management? Here is an overview of what a contract workflow is and tips to help you create more efficient contract workflows.
What is contract workflow?
A contract workflow comprises everything from the creation through execution of a contract. It starts with a draft of a basic agreement and goes through negotiations, contract reviews, redlining, and approvals before ending with an executed legal document signed by all parties—and monitored for as long as it’s active.
Here is a brief look at the stages of a contract lifecycle:
- A business department submits a contract review request to an in-house legal team.
- One party shares a template agreement (normally the party with leverage or most relevant terms).
- Internal stakeholders provide feedback and redlines.
- The external party provides feedback and redlines.
- When all parties agree on terms, they sign and execute the contract.
- Parties store contracts until they’re needed for renewals or questions.
Contract workflows sound pretty straightforward. There are, however, hiccups and roadblocks that can make them lengthy and complex—and anything but linear. Managing the process manually rather than with the help of technology can make it even harder to streamline. The parties involved may see a lot of back and forth when trying to get the most favorable terms or to avoid contract risk. Collaborating on and sharing documents can be clunky. Sub-optimal workflows will hold up any business.
Save time by automating your contract workflow process
There are lots of tricks and tools available to help you improve contract workflows. Some are manual processes, but many of them involve consulting the latest technology and automation tools that are offered by contract lifecycle management (CLM) software. Here are six basic steps you can take to optimize your processes:
1. Define roles within your legal team
To understand how best to leverage the expertise of every member of your team and make sure tasks are being assigned to those who are best able to handle them, you’ll first need to outline the tasks involved in the contract workflow process. Next, identify which team members have the skills and time to take on each task. Determine the answers to the following questions to get started. With every question, also ask yourself whether you need a legal professional involved:
- Who will create the contract document?
- Where do you find and how do you create contract templates?
- What contract types are needed by each department?
- Which departments or individuals handle the review process and approvals before sending to external parties?
- Who is in charge of negotiations and each aspect of deal negotiations (some terms will be business and others will be about legal risks)?
- Who will coordinate signatures?
- Who will sign the final contract?
- Where will the final, signed contract reside for tracking?
- Who manages the signed contract obligations, including any renewal discussions or terminations?
Clearly outline each person’s role in the process so you know how the document will be routed when the time comes. The clearer each person’s responsibilities, the better.
2. Use contract templates, playbooks, and a clause library
It’s likely that most of your first party agreements are fairly standardized—or at least they start that way. Instead of creating a brand new document tailored to each transaction, draft a template with terms tailored to your business that you can use as a starting point and edit as needed. Bonus points if those terms are fair and reasonable to minimize the other party from editing them (which can save your legal team a whole lot of time). We’re also seeing growth in crowd-sourced, open source contract templates, such as Bonterms, GlobalNDA, and oneNDA.
Playbooks for your preferred positioning, along with a clause library, are also helpful because it’s often the same clauses that see pushback and receive edits. With a CLM like Lexion, you can easily create and store templates and your preferred clauses in your clause library so they’re always accessible and the most current versions are used.
Lexion even has AI features that allow legal teams to have AI take a first pass at reviewing and editing contracts based on your playbook and clause library. This AI feature has reduced about 83% of time it takes to review NDAs for our legal team. Learn more about AI Contract Assist here.
3. Develop a standardized contract approval process
The approval process is one of the most important—and often most tedious—processes in the contract workflow. It’s important to come up with a list of everyone who has to review and approve the contract or certain changes. Then, put a process in place for routing documents to each person before they’re sent for signature.
A standardized approval workflow will speed along the process so that contracts don’t get stuck, help make clear who you’re waiting on to move forward, and maintain an audit trail for approval tracking. You won't reap those benefits when collecting approvals via chat or ad hoc emails. With Lexion, you can easily automate your contract approval processes based on key contract details, helping to ensure that no critical stakeholder is overlooked, and no time is wasted routing to the required parties.
4. Use electronic signatures
If seeking someone’s John Hancock has become a major roadblock on the daily and tends to delay your deals, rest assured that today’s CLM software makes it easy for all parties to sign electronically with just a few clicks. You simply enter in the names and emails of signatories and they receive a link to sign the document right in their inbox.
If your executive team has to sign hundreds of contracts each month, it’s much easier for them to be able to sign them all with one click. Some platforms, like Lexion, seamlessly integrate with the e-signature tool of your choice, such as DocuSign, Dropbox Sign, or Adobe Acrobat Sign. Electronic signature helps you speed up contract workflows significantly.
This seamless integration of the activity and workflow before a contract is signed is key to the post-signature workflow, too, because it eliminates the manual step of saving a signed contract to a repository and gives you context and the history of the conversations and approvals that led to the signed contract.
5. Use a contract lifecycle management tool
The full integration of all contract workflow tasks is another benefit of workflow management software. You can create and edit documents in the platform, send contracts for review, redline, track statuses, and coordinate signatures, all from one place.
A good contract lifecycle management system also provides an intake (a.k.a. legal front door) mechanism to allow you to track and report on key metrics and KPIs like how long it takes for a contract to get signed from start to finish. Lexion’s customizable intake system also helps you identify which stages (e.g., internal legal review vs. counterparty review) are holding things up so you can smooth out the kinks in your workflows.
But the work doesn’t stop when the deal is signed! To ensure you stay on top of obligations and key dates, an AI-powered contract management solution can also alert you and any relevant stakeholders. This functionality helps you comply with obligations and facilitate the contract renewal process, which in turn leads to better client retention and big savings on unwanted vendor renewals and other automatic actions.
6. Better yet, choose a simple, no-code solution
A CLM should improve the efficiency of your contracting workflows and reduce your risk and cost. It’s most effective when the CLM is so simple to implement and maintain that you can do much of the work yourself—even if you’re not tech savvy. A no-code CLM, like Lexion, can help your team avoid the time, resources, and cost needed to consult IT or third-party vendors. Make changes to optimize your workflows yourself anytime you’d like.
According to Lexion’s 2023 State of Legal Tech, 43% of respondents shared that CLM implementation took 6 months or longer. Yikes. Lexion is so confident in the ease of implementation of Lexion, we guarantee it within 60 days or your money back. Learn more about the implementation guarantee here.
Speed up contracting workflows with Lexion
An all-in-one platform like Lexion makes it possible to scale and eliminate many manual steps.
With Lexion, you get everything you need to streamline and accelerate your contracting from end-to-end, including intuitive, email-based intake to make fielding requests simple, no-code automation for stakeholder management, approvals, and document generation, a GenAI-powered contract copilot to accelerate review and redlining, integration with the business systems your company knows and loves, and much, much more.
Want to learn more? Book your demo today or attend an upcoming event.
