Got 4 minutes? Tell us how this uncertain economy is affecting your hiring plans and technology spend.
5 Questions to Ask to Find the Right Contract Management System

5 Questions to Ask to Find the Right Contract Management System

5 Questions to Ask to Find the Right Contract Management SystemJessica Nguyen
Chief Legal Officer

One of the best aspects of my job during this pandemic is I get to catch-up with my legal connections over a 1:1 virtual coffee/happy hour. Many of my connections have made the move in-house or are general counsels all managing similar challenges.

We commiserate. With a beverage of choice. All times of the day. With kids and pets in the background. No one judges.

What happens in zoom, stays in zoom!

Of course, I also use this time to learn about their unique contract pain. I heard a pattern of similar pain that I experienced. This inspired me to put together a checklist of questions you should ask when you’re evaluating contract management solutions. To keep this list brief, I’m going to skip over some obvious questions (e.g., does your system integrate with our CRM, e-signature solution, and file storage system?).

Contract Management System Checklist

1. Onboarding and Organizing Existing Contracts

How does your service organize and add the metadata I need for my existing contracts?

Before your company hired you or any in-house counsel before you, they signed a lot of contracts. Probably thousands of them. Bought a company? Yeah, they have a lot of contracts too. And now those contracts are stored at different places - Salesforce, a file drive, a laptop.

You can be a hero and bring order to that chaos. One of the main reasons to invest in a contract management solution is to have a “single source of truth.” A lot of contract management systems claim to be a “single source of truth,” but that’s not true until all of your company’s existing contracts are loaded and organized in the system. I bolded “organized” here because in my experience organizing and extracting the metadata of thousands of existing documents into a contract management system was the biggest hurdle to actual use, adoption, and realizing value.

My team was often buried doing day-to-day tasks (often low-value work sadly) and had no time to manually input data. I’ve hired legal interns to get a system organized initially, but that didn't solve the ongoing data hygiene problem.

This meant my team never used the capabilities of the system we bought and we continued to look for and report on contracts the old-fashioned way - searching the email inbox and file drives and creating manual reports with spreadsheets. In short, it was not a good use of money or resources because we received no value from the system.

2. Cost

All in (onboarding, annual subscription, necessary add-ons, etc.), how much will it cost to buy your system?

Even pre-2020 B.C. (before COVID), it can be tough for legal teams to get buy-in to increase their budget or have funds to buy software. I’ve had these discussions and have heard show me the “data” to justify your ask. I’d reply, “Sure, give me the time, tools, and resources to get you that data.” It was a super awkward chicken-egg conversation (don’t worry, I secretly enjoy awkward conversations) because day-to-day tasks and fire drills couldn’t be put on the back burner to collect this operational data.

Cost is an important question to answer early on because if the system is completely out of your budget, it doesn’t make sense to move forward with discussions no matter how amazing the tech and beautiful the user interface. I’ve received quotes that were astronomical and also reasonable quotes for a contract management system where I would need significant additional funds over the original quote to hire a contractor to manually type in the contract details of each existing contract for any of the system’s valuable features to work.

3. Ease of Adoption

How long will it take to complete implementation of your system and does your system require that I train users outside of the legal department to use it?

Some contract management systems dazzle you with workflows and collaboration features that work well “if” there’s adoption by other departments or outside parties. That’s a big “if.” Best of luck with that.

In my experience, lawyers like drafting and redlining in Word (include me in that bucket; I love my Microsoft Office products) and non-legal users want to stick with their department’s go-to SaaS tool (often this is Salesforce) and Slack/email.

Getting buy-in to spend on legal tech is hard enough for legal departments. It’s arguably more challenging to get business buy-in to change processes that affect other departments and add a new system that requires adoption by the non-legal team. I was often asked, “Can we do this from Salesforce?”

Even if you get business buy-in, getting others to learn and actually adopt a new system is a major blocker and a lot of work many legal teams don’t have the capacity to do (especially remotely). This is why Lexion built features like our chat bot for Slack - we go to where your internal clients are.

4. Data Security

Have you experienced a security breach in the past 3 years?

When it comes down to it, data security is about trust. Once there’s a security breach there is a breach of trust with your customers, employees, vendors, and partners that’s incredibly hard to regain (if ever).

If you care about retaining the trust of your key business relationships, make sure the provider earns your trust by more than just checking a security box and hasn’t had a serious data breach.

5. Automation

What features do your service include to help speed up manual tasks?

The value of most contract management systems is that they speed up the time it takes to perform manual tasks, such as creating custom spreadsheets to track and report on specific contract terms. This is an area where AI technology can actually help.

Although AI is the cool tech buzzword of the moment, and a lot of over hyped promises have been made about its capabilities (I’m still waiting for a true self-driving car I can trust), the reality is that AI is a valuable tool to assist legal experts, not replace them (similar to how Gmail auto-assist doesn’t replace you, the email author).

In the contract management space, AI helps in saving time with manual data entry and scrolling through pages to find a specific clause.

AI can save up to 80% of the time it takes to properly extract and report on key issues like non-standard terms.

Several contract management vendors now claim to have AI technology, but many continue to use it simply as marketing hype. Regardless of their claims, make sure their AI is suited to your task, works as advertised, and ultimately helps you create the reporting that will help you drive the business.

The most important question to ask yourself is “what is the core problem I’m trying to solve?” (oops, that's 6 questions). If there is a system out there with many bells and whistles, it’s normally extremely expensive and a heavy lift to implement (6+ months of implementation and then the cost/time of change management to train users to adopt a new system and processes). Warning - a lot of your internal business clients have tech fatigue and you’ll face resistance.

I’m grateful to all of my legal connections who have provided their valuable time during this uncertain period to have a virtual chat with me. These conversations with in-house attorneys, contract managers, and paralegals of various company sizes and industries have taught me that there isn’t a single solution that will solve all of your contract problems. The key is finding the right solution that meets your organization’s needs and budget. Schedule a demo with Lexion to see if we're the right solution.


Subscribe for a monthly digest of Lexion's posts