What is contract management software?
Contract management software digitizes the processes required for contract lifecycle management (“CLM”). Digital contract management solutions enable legal teams and procurement teams to create and manage contracts more efficiently and securely than outdated, manual processes.
In the past, lawyers had to print each draft of a contract and review every line by hand. They expended thousands of hours and produced reams of paper packed with sensitive information that sat in piles and binders scattered throughout glass-paned skyscrapers.
The old way entailed the tedium of doing everything one word at a time as billable tenths of hours turned into dozens and hundreds of hours spent repeating the same steps. Given the lack of time they had to do anything other than painstakingly copy, paste, and type new commercial agreements into existence, legal teams struggled to come up with more efficient workflows. There could be as many different ways of drafting contracts within an organization as there were lawyers.
Many junior attorneys spent sleepless nights wondering why there wasn’t a better way.
Digital contracting offers a better way.
From increased efficiency to enhanced security, automation and user-friendly tools empower lawyers and business teams to get more done, get it done faster, and worry less about setbacks such as data breaches and missed deadlines. There’s no longer a need to chase down files stored haphazardly on myriad desks and hard drives, trying to figure out which version is the most current. A cloud-based contract management platform keeps all parties on the same page and all documents secure and up to date, no matter where the parties are located or how many changes a draft has undergone.
Why is contract management software important?
Good software can help you streamline workflows and organize files throughout the entire CLM process, from creating templates and first drafts through tracking renewal deadlines on executed contracts. Here are some of the ways in which a CLM platform can make life easier for you both pre- and post-signature.
Pre-signature: contract drafting
Automated workflows save time on contract drafting, management, and review. For example, we’ve written previously about how contract intelligence can streamline due diligence in anticipation of mergers, acquisitions, and other business deals.
Cut down on cash expenses
One benefit of a cloud-based CLM solution is saving on travel costs required to get people to superfluous in-person meetings and crowded deal rooms where they’d spend hours reviewing documents. Other cost savings include printing and labor. There’s no need to print multiple drafts of an entire 100-page contract, or to have junior associates and paralegals log dozens of hours drafting standard provisions from scratch or splicing them from other agreements. The software makes it easy to compare different versions of individual clauses and propose revisions or additions.
Streamline and align workflows so you can focus on the important things
If your business doesn’t have centralized contract processes in place, teams from different business units likely have adopted a range of proprietary — and conflicting — processes for drafting and managing their contracts. Especially with hybrid work environments rapidly becoming the norm, it’s important to standardize how your teams get work done so you can focus on substance instead of squabbling over procedures. A cloud-based CLM platform facilitates collaboration by creating a central workspace and promoting a consistent contract workflow.
Drag-and-drop tools and templates greatly simplify the process of contract creation, allowing lawyers and business managers to focus on important business and legal terms instead of the drudge work of drafting boilerplate language. User-friendly features such as saveable custom searches further reduce time spent on rote work, and also mitigate the need for extensive training.
A good contract management platform will additionally facilitate approval processes with automated notifications and a secure, central location for all document storage, review, and execution.
Beef up your security
Stacks of paper sitting on desks or shelves in an office create a security threat. People not involved with a deal might see something they shouldn’t. If your sensitive documents are safely stored online, conversely, it becomes harder for an unauthorized person to gain access to them.
Rule-based access leveraging industry standard features such as two-factor authentication helps to ensure that only the person who is supposed to see a document can actually see it. Each team across the organization should be able to tailor its use of the platform to ensure that only the proper roles, individuals, and counterparts from other teams or organizations are able to access any given document in the system.
Save time with secure e-signatures
Signing documents by hand is a pain. You have to print all of the correct pages, get them to the same physical location as the signatory, wait for that person to sign, wait for the ink to dry, scan the pages, and then send the scanned file to the other party. Missed a page? You have to repeat the process just for that one page. The designated signatory is out of the office today? Go back to the file, change the name you printed on the signature page, print it again, and so forth.
Why do that to yourself?
E-signatures are just as legally valid and binding as “wet” signatures. Integrated e-signatures offer the ease of signing with the click of a mouse or the tap of a finger, combined with the added security that comes from features such as two-factor authentication. There’s no need to print or mail a document for a signature ever again.
Post-signature: contract management
Once all parties have signed the agreement, a CLM platform can streamline the contract management process, too.
Businesses today execute thousands of contracts every year with customers and business partners. A reliable contract management tool is essential when operating at that kind of volume. Keeping track of key dates, such as deadlines for contract renewals, is too important to leave to manual tracking in a locally stored Excel spreadsheet.
Here are some of the ways in which contract management software can make your life easier after you’ve (e-)signed on the dotted line.
Simplify storage, organization, and access
When you’re just getting started with contract automation, good contract management software will rapidly import your existing contracts from all of the places where you presently keep them — from cloud-based storage solutions to Salesforce to your email inbox. Once all of your documents are in a secure, central location, you’ll never lose track of individual files again.
Organizing your documents can be as easy as clicking a button. After you run a search, a well-designed CLM platform will allow you to simply tag a group of documents or move them into a folder together. Good software will also give you the option to save the search itself. If you need to look for the same set of data points on a recurring basis, you can come back to the saved search whenever you need to and run it again with just one click. A leading contract management solution will also provide other convenient features, such as automatically linking parent and child documents together so that you can always see related documents in their proper context without having to run additional searches.
Even if you choose not to store all of your contracts in one place, that’s not a problem. A good CLM platform can access your documents wherever you prefer to store them and automatically update the stored files with any edits you make within the CLM’s user interface. It should also provide a single location where you can access all of the important data contained in those contracts, wherever you store them.
The centralized storage location that facilitates collaboration also enables the creation of a reliable audit trail. You don’t need to waste time chasing down documents or drafts when everything is conveniently accessible in one place.
Review vendor performance
Working in a central location where you can review all of your contracts, you can go beyond just reviewing basic information from one contract at a time. You can start to glean more valuable insights — such as how your vendors are performing relative to what they’ve promised. Have they delivered what they said they would? If you use multiple vendors for similar products or services, how do they compare to each other?
You can work with your colleagues in procurement, accounting, and any other relevant teams in order to judge whether your vendors have lived up to your expectations. A CLM platform will allow you to easily share any document with anyone on any team, and you can rest assured that the recipient will see only what they’re supposed to see.
Your contracts contain a wealth of information about how your business operates — and what sorts of risks it faces. Those could range from the business risk of continuing to work with an unreliable vendor, to the legal risk of not knowing what’s in all of your indemnity clauses. Having an easily searchable central repository for all of your contracts can help you identify an array of obligations and risks that your business deals entail.
Map out synergies between teams
Another benefit of putting all of the business’s contracts in one location is the ability to gain a bird’s-eye view of your business deals. Maybe different teams are using different vendors to meet similar needs. Perhaps you could save money by combining purchases across departments. With all of your different teams’ contracts in one place, you can more readily identify and act on any overlap between their deals and operations.
What can artificial intelligence (“AI”) do with contracts?
AI is what takes contract management software from simple storage to contract automation.
AI can pull contract data in real time to provide leadership with valuable insights on the state of the business. Instead of waiting weeks for teams to manually parse data and prepare reports, managers can get all of the information they need without delay.
Contract management software on its own can help you get organized, but it won’t do much else. You’ll still have to do the heavy lifting when it comes to drafting templates and new agreements, mining your contracts for information, and tracking deadlines, compliance, and performance.
A contract management platform powered by AI, however, can introduce a new level of productivity and value for your business. From exponentially faster document review times to automated data tracking and reporting, AI enables business teams to do more, do it more efficiently, and do it more consistently.
That’s because AI can operate at a scale at which humans, no matter how smart or how experienced, simply can’t. By taking the most repetitive work and getting it done within seconds instead of hours, AI frees lawyers to do what they went to law school to do — practice law. Procurement managers and general counsel need time to focus on strategy, not on the most menial aspects of document management.
Contract management plus artificial intelligence. That’s contract intelligence.
Contract intelligence transforms legal and procurement professionals from harried clerks, manually typing and searching troves of documents and always trying to catch up, into agile teams that can close deals and provide valuable insights for leadership at the speed of business.
So how does it accomplish that?
How does AI work?
The speed and accuracy of AI come from its natural language processing ability, which derives from another concept known as machine learning. That might sound like something alien. It’s not. AI learns exactly how humans do — but in an infinitesimal fraction of the time. There are two parts to machine learning: deep learning and active learning.
Think of how humans learn language. A baby hears people talk and starts to make connections between words and objects. As the child grows, she starts to connect words to each other and to abstract concepts, thereby developing a greater understanding of language in context. Eventually, without any guided instruction, she’s fluent in the language. That’s deep learning.
Active learning, on the other hand, is when the learner receives guidance on a subject. If the child goes to school to learn a second language, her teacher will provide her with a framework through which to understand it. She’ll learn about grammatical structures and receive vocabulary lists to memorize. The difference is that active learning teaches the learner what to look for and how to think about it. Deep learning leaves it up to the learner to draw their own conclusions.
Machine learning in contract management means that the AI has been pre-trained on millions of real contracts and different versions of common clauses. Thanks to that massive exposure, contract intelligence software can comb through hundreds of thousands of contracts as soon as you log in for the first time, already able to recognize a range of standard fields and provisions. Right out of the box, contract intelligence software can provide business leaders with important insights about what’s in their contracts.
Better yet, the AI keeps learning as it goes. The more information you put into the system, the more it’ll learn about your business — and the more helpful the insights it can provide. With active learning, you can train the contract intelligence software to look for anything you need. Thanks to the power of deep learning, AI can also show you things you didn’t even know you needed to look for.
How can AI help your business?
So AI is super smart. But how does that change how your business operates from day to day?
AI’s speed at learning and searching translates into greater efficiency on the part of your employees. A room full of documents would take a team of human reviewers hundreds of hours to search thoroughly. AI will do it in just minutes. That efficiency translates into time and cost savings for your business. You can reduce your spend on time-consuming (and often inconsistent) document review by outside counsel even as you minimize the time it takes to get the information you need.
The benefits don’t stop at document review or data tracking. Thanks to the power of natural language processing, AI today can write as well as a skilled human writer. With less time spent searching and typing, your lawyers and operations teams will be free to spend more time focusing on analysis and strategic decisions.
Here’s a look at some of the ways in which AI can transform how your business creates and manages contracts.
A small team with only a few contracts to draft might not have a problem with drafting and reviewing them manually. However, it’s simply not practical to continue to do that as a business scales up and the contracts start to number in the hundreds or thousands — and at some point, it’s no longer feasible. With the power of contract intelligence, though, a lean team can quickly and securely draft, organize, and review contracts at virtually any scale.
Contract intelligence powered by natural language processing slashes the time it takes to review existing agreements and draft new documents. Instead of just reviewing a small sample that you hope is representative of your portfolio, you can review the entire portfolio. Automated template creation and streamlined contract drafting and approval workflows can get your deals closed sooner without stretching your budget.
Improve your accuracy
AI isn’t just faster than humans — it’s also much more accurate. Our studies show that Evisort can read a 30-page document in only 15 seconds with 95% accuracy. In an outside study, meanwhile, human lawyers failed to correctly identify up to 75% of relevant documents. Can your business take that sort of risk when it comes to reliability?
Stay on top of every deadline
Thanks to the speed and accuracy of natural language processing algorithms, a platform powered by AI can quickly identify all of the expiring and auto-renewing contracts throughout your portfolio. Automated dashboards and alerts help lawyers, procurement managers, and business executives to meet deadlines with confidence. You’ll be able to prioritize contracts based on their renewal dates and sleep well at night knowing that you’re not stuck with a bad business partner just because you missed the cutoff to terminate a contract.
Enhance your business intelligence capabilities
Deadlines aren’t the only information that AI can help you find. Machine learning can help you track any data point you can think of — and even those you can’t. Natural language processing can boost your business intelligence by supplying insights your team previously didn’t have time to think about thinking about.
That AI boost to your business intelligence can be a boon to your compliance initiatives. Let’s say you need to identify which of your contracts contain the standard language that you need, which have temporarily acceptable, non-standard clauses, and which contain “ticking time bomb” language that needs immediate attention.
Contract intelligence can help you quickly identify and update those problem clauses. Thanks to the power of AI, you’re not limited to rigid searches based on exact language matches. Natural language processing capabilities allow you to search based on the actual meaning of the language in your agreements.
Once you’ve identified the problematic clauses you need to update, you don’t need to access each document individually, one at a time, in order to input manual updates. An AI-based platform can replace those clauses in bulk with your preferred language. How much time do you want to waste manually pasting in updates while the clock is ticking?
Focus on strategy
Speed. Power. Rock-solid dependability.
Your legal and procurement teams can start saving hundreds of hours annually on the unnecessarily cumbersome workflows that bog them down and keep them from closing deals more quickly. Armed with a greater understanding of what makes your business tick, you can realize gains that you wouldn’t have thought possible. A comprehensive, cloud-based, AI-backed contract intelligence platform can be the difference between surviving and thriving in a constantly evolving global marketplace.
Evisort is contract intelligence. It’s the only platform on the market that offers an end-to-end contract management solution built around an AI-powered core architecture.
Our proprietary AI can process a gargantuan 122,400 pages in only one day, telling you everything you might want to know about what’s in them. We pre-train our AI on millions of contract samples. The result? In addition to identifying 60+ standard fields and provisions with 95% accuracy, straight out of the box, Evisort can create new, equally reliable algorithms with just 10 examples from your portfolio. As if that weren’t enough, Evisort’s Optical Character Recognition (“OCR”), which detects fields such as text, logos, signatures, and tables in both scanned and digital contracts, is 97% accurate*, easily surpassing competitors’ 80% OCR accuracy.
Combine that startling accuracy with other smart features such as built-in approval workflows, document synchronization with external storage, integrated e-signatures, and automated parent-child matching and prevention of duplicates, and you have a best-in-class contract management platform.
Ready to learn more about how Evisort is helping businesses like yours to digitize and supercharge their contract management practices? Check out some of our customer success stories and schedule a demo today!
*based on internal testing and customer testimonials