Contracts are the lifeblood of commerce – every company uses them to conduct business; whether it’s people and talent teams sending employment offer letters to new hires, sales teams sending order forms, or stakeholders signing supplier agreements before purchasing a new product or service. It can be hard to recognise revenue without them.
But as the business scales, contracts can also become a headache – depending on the system in place to agree and manage them.
What’s wrong with how people manage contracts?
The contract workflow can be painful for various teams in the business. It’s often set up in the early stages by the leadership team, using the tech stack already in place. Microsoft Word is the default currency for contracts, built on a process of manually inputting information; editing the document, saving as a PDF and sending back and forth across email, and printing, signing and scanning, is still as commonplace as it is painful.
In a digitized world, with other functions in the business automating their processes, this way of working doesn’t cut it – and here’s why:
1. It’s time-consuming
None of the manual systems mentioned above are built for speed. If the company is in its early stages, it might be relying on its operations or finance lead to handle contracts – and chasing different versions through Word isn’t a great use of their time. If the business is mature enough to have hired an in-house lawyer, they’re often snowed under with a range of wok – from daily legal requests and risk management to high-value contract negotiation and long term strategy planning. A manual contract process to handle low-value agreements just distracts from the high-value work a lawyer could be doing, and often creates frustration between teams as contracts slow down critical business decisions.
2. Multiple systems
Through its lifecycle the contract moves from system to system, often changing formats along the way: it starts in Word, and is sent back and forth over emails, with new versions being created as changes are made. Eventually, it’s converted to PDF and passed through an eSignature tool, ready for signing – or worse, printed for a wet signature. With so many systems to contend with, the business may struggle with version control, and that’s a problem as it continues to scale and process more contracts down the line. Skipping between systems means data loss, missing attachments and lots of wasted time.
3. Documents are difficult to track
Post-signature, contracts either live as files on a shared drive, on stakeholders’ personal desktops, or even as printed copies in the back of a filing cabinet. This lack of one system of record makes it increasingly difficult for legal to track key information, like contract renewals, for example. It also leads to more work than necessary in due diligence projects, such as those before a funding round or acquisition.
4. Limited oversight
A manual contract workflow also leads to a lack of standardization – sales teams might freestyle legal terms in order to get deals over the line, and send out agreements with no oversight or approval from legal. This makes the business seem unprofessional at best, and increases risk in the company at worst due to unacceptable contract terms making their way into signed documents.
How can contract automation help?
The legal tech space is booming with solutions that can help in-house legal teams work more efficiently and empower the business. Contract automation is one example – and many scaleups are turning to contract automation platforms to agree and manage their legal documents.
Automation can help legal teams resolve all the issues found in a typical contract workflow. Here’s why businesses’ legal teams should look at automation as a solution:
It’s a huge waste of time for legal counsel to need to manually populate a simple non-disclosure agreement themselves. To solve this, some platforms have features that autopopulate information, so legal can spend less time manually inputting details, and more time on the work that really matters. Q&A workflows allow other teams to take on this responsibility instead – by answering a few simple questions, teams can populate the contract themselves and reduce the risk of human error.
2. Unified workspace
Being able to create, negotiate, agree, and manage a contract without leaving the browser has multiple benefits, from time saved chasing after contracts to being able to manage version control. Some platforms also have features that allow teams to collaborate internally, and negotiate externally with the counterparty – without having to leave the browser. This makes it easier to keep track of contract redlines, streamlining the negotiation process for both parties.
3. Trackable contracts
Contracts in an automated workflow are tagged with metadata, which makes them searchable, accessible, and easy to track. Legal no longer has to spend hours trying to dig out signed documents – instead, contracts pre and post-signature live in the same workspace, and can be accessed with a few clicks. Features like renewal reminders can help lawyers stay ahead of key deadlines, so accidental renewals are a worry of the past.
Templating features in a contract automation platform allows other teams to self-serve from a single document, with set, pre-approved terms from the legal team. This means no more freestyling contract terms, but also ensures legal has authority and control over the process, without needing to get involved at every stage. Being able to self-serve on contracts can also streamline the process, which is essential when it comes to important deals, for example – sales can take ownership of the creation and negotiation of the contract, only bringing legal into the deal when it’s necessary.
A streamlined, scalable workflow
As the business continues to scale, it’s inevitable that contract volumes will increase. An automated workflow ensures that teams are ahead of the curve when it comes to handling that workload, and that key talent in the business can focus their time and resources towards the high-value work they were hired to do in the first place.
Richard Mabey is the CEO and co-founder of Juro