Contract Management Defined
Contract management (also contract lifecycle management or CLM) is the process of managing the entire contract lifecycle from the creation of a contract, contract negotiation, signing, storage, and retrieval. In any business, effective contract management maximizes a team’s performance while reducing its operational, financial, and legal risks.
There is no doubt that contracting is core to business activities. Over 70-80% of business operations are governed by contracts, and external costs on legal services amount up to 46 cents for every $1 spending. Legal operations certainly demand substantial operational costs.
However, the manual approach to contract handling has resulted in multiple business challenges. For instance, 46% of contact management professionals find that manual tasks make collaborating on contracts a difficulty. Additionally, 47% of sales teams mention that analyzing nonstandard agreements for opportunities and risks is the most difficult part of the post-execution process.
In confronting these operational challenges from manual contract handling, 68% of legal departments say “digitizing manual processes” is a top priority. This is why in 2018, 37% of companies spent more than $750 thousand on legal technology. In specific, mid-size companies with in-house engineering resources had an average spend of $1 million on legal technology to ease their contracting operations.