1,809 total views
1,810 total views
Ben Collins, Agiloft Platinum Partner at Collins Technology Consulting Ltd, sees many posts that only talk about CLMS as a tool for the Legal Team, but these mis the point, a CLMS should more than somewhere to negotiate and store a contract document, it should be a core asset for the entire business and not just the legal team.
The main stakeholders in many of their clients aren’t the legal team, they are more likely to be from Procurement or Sales, using Contracts and the related data to drive efficiency.
The following scenarios are real world examples of how a CLMS can be used.
A service provider may have many contracts with clients, these contracts may have specific tasks and obligations, these need to be scheduled, assigned and monitored. From the legal document perspective these may be fairly high level commitments, but in practice these activities need to be assigned to specific teams or individuals in your organisation and the details of how they get scheduled and executed are all managed alongside the contract, but not part of the contract itself. The CLMS is the logical place to manage these activities.
Your business may need to procure the services of other organisations in order for you to deliver the services you provide. From a legal point of view, these are unrelated contracts, you may mention that some services will be subcontracted out, but you won’t reference directly other contracts you have. Your CLMS should be capable of managing these relationships, if a customer cancels a contract you need to be able to instantly see if you have any related supplier contracts that are only in place to support you delivering the service. Without this information you could be letting contracts run, paying for services that you don’t need anymore.
As a service provider you will have people who manage the service delivery for a client and have other people who manage the procurement of services you need. In a large organisation this could be many people, your CLMS should also store this information, so you know who needs to be informed when contracts are executed, coming up to expiry date or going to auto-renew. Again, this level of information is unlikely to be in the contract document and is a business function, the wider business is a key stakeholder in the design of and use of any CLMS.
The sales team want to be able to send contracts out quickly and efficiently. Your CLMS should have a library of pre-approved templates covering the most common sales scenarios. Sales should be able to select the appropriate template, complete the basic information of the counterparty, what they’re selling etc. and generate the Contract document. This can then be shared with the counterparty and if there are no changes required the contract can be sent for signature and the executed agreement stored.
If the counterparty doesn’t accept the suggested contract, the Sales team need to be able to simply click a button to assign the Contract record to the Legal team where they can manage the negotiation. Once negotiated the process can go back to Sales to manage the executed, or legal could execute the agreement and Sales notified when the process is complete.
It’s the job of the legal team to ensure the language used is correct and the contract is legally correct, but they don’t own the business, they can’t decide on commercial terms, define a Statement of Work or may other details the business will have to be consulted on.
Your CLMS should allow collaboration between the Legal Team and the rest of the business, when the final draft is complete, the systems should be able to manage workflows to involved key stakeholders in formally approving the details before the contract can be executed. These workflows should be capable of deciding who needs to approve based on attributes from the Contract Data, for example if the Value is over £50k, then Finance have to approve, if it’s over £500k the CFO has to personally approve. Other exmaples would be if the contract relates to property/building you need to ensure Facilities also approved, or the wharehouse given a heads up a large order is about to be placed.
Before you take on a new client, you’ll probably want an NDA in place. This makes the CLMS the logical place to enter the client details. We have clients that create new counterparties in their CLMS, initially in a status of ‘new’, if someone elsewhere in the business requests a new contract before the counterparty has been approved, the CLMS will automatically prevent the request, the NDA is the only contract you can create. Once the basic information is entered the system can send out an email to the new counterparty requesting additional information, back account details, tax, insurance etc. The counterparty can connect and complete all the required on boarding information directly in the system. Once entered the system then initiates a workflow to ask internal stakeholders to check and approved the new client, once all approvals are complete the counterparty is set to Approved.
Many clients admit their CRM systems are a bit of a mess, duplicate clients etc. This really helps make the case that your CLMS is the ideal Master Data Source for counterparties you deal with.
Just a few examples here, there are so many things you can use the data for.
Monitoring the entire end to end process, reporting on how much time it spends with legal, the counterparty, or the business. Monitoring key indicators like these can help identify bottlenecks in your contracting processes.
Once a contract has been executed you need a system that will remind the appropriate people when it is going to expire or auto-renew. Some clients manage this via the legal team, but larger organisations send out all notifications to the business owner of the contract, after all, it would be the IT Manager who decides whether to renew that Visio subscription, not legal. The business owner will be notified, in the example of an auto-renewing contract they can take no action, and the contract will roll over, or they can contract Legal to cancel the contract, or Sales/Procurement to try to renegotiate, but the responsibility is on the business owner, not on the legal team.
The data in your system can be used to plan ahead, reporting on the value of all their obligations. The system looks at the value, the months remaining on the contract and calculates the obligations in the next year, 1-5 years and beyond 5 years. Other clients carry out contract price increases, recalculating, generated customer notification letters and easily modelling the impact of applying different percentages before committing.
Author: Ben Collins
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