April 26, 2024

 Rob MacAdam

CLM contracts trends software CLM software elm law department consulting CLOC artificial intelligence contracts lifecycle management

This second instalment in our ‘Road to CLOC’ series examines the impact of the operational complexities of contracts lifecycle management (CLM) systems. Any law department considering implementing full-suite CLM solutions should understand early on the practical considerations and pitfalls involved – and why the realities of such solutions are driving many law departments to embrace a simpler, “return to basics” approach to CLM.

In their quest for efficiency and streamlined operations, law departments must navigate various claims about the promise of full-suite, end-to-end contracts lifecycle management (CLM) systems. Supposedly, these solutions are a silver bullet for all contract management challenges – cost-effective and comprehensive, with functionality to cover every phase of the contract lifecycle. However, as many legal teams have painfully discovered, the reality rarely matches those expectations. The costs prove significant, implementation drags on, and system complexity proves to be a daunting barrier to adoption and ROI. Disillusionment is rife, and more and more law departments want a simpler approach in which ‘less’ is not only sufficient but actually preferable.

The Allure and the Let-Down

All-encompassing CLM systems have an undeniable appeal: automation and simplified processes across the entire contract lifecycle, from drafting and negotiation to approval, execution, and renewal. But the devil is in the details – particularly in implementing such systems. Complexity is unavoidable when deploying a full-suite CLM. For example, tailoring the system to an organisation’s needs requires extensive customisation that drives up costs and extends timelines. Furthermore, comprehensive functionality often means a bloated system that users find cumbersome and unintuitive. Instead of streamlining processes, the system becomes another hurdle for legal teams to navigate.

The Case for Simplicity

The alternative – a simplified CLM system – is gaining attention. The limitations of simpler CLM solutions are outweighed by their ability to deliver sufficient ROI quickly. As long as a CLM provides a basic contract repository, robust search capabilities, and ready access to key provisions and obligations, numerous benefits are within easy reach for several reasons:

• Quick Implementation:Unlike its more complex counterparts, a simple contract repository can be set up and operational in a fraction of the time, allowing teams to realise benefits sooner.
• Ease of Use:A user-friendly repository that focuses on core functionalities—like storing, categorising, and retrieving contracts—is more likely to be embraced by legal teams. The lower learning curve ensures team members can effectively use the system from day one.
• Cost-Effectiveness:By forgoing unnecessary bells and whistles, law departments can significantly reduce the costs (for the system itself, customisation, integration, training, etc.) associated with their contract management solution.
• Flexibility: A simple repository provides a solid foundation upon which additional functionality can be gradually added as the organisation’s needs evolve. This scalable approach allows law departments to grow their contract management capabilities organically without being locked into a complex system that may not adapt well to changing requirements.

Building on a Solid Foundation

The journey toward effective contract management does not require racing to embrace the most complex and expensive solution. By focusing on the essentials, law departments can avoid the pitfalls of overcomplicated systems and build a contract management process that works for them without foreclosing future capabilities. Indeed, one virtue of adopting a simple CLM solution is that it forces a law department to think through priorities – always a good exercise when choosing from alternative courses of action.

For many law departments, a simple contract repository provides the order, access, and functionality needed to manage contracts efficiently while offering flexibility to expand and adapt contract management processes as an organisation’s needs evolve. As users become more comfortable with the basics of contract management, they can explore adding more advanced features, such as contract automation, automated playbooks, and integrations with other legal tech tools, in a controlled and deliberate manner.

Ultimately, law departments will ‘vote with their pocketbook’ regarding a CLM strategy. Although my colleagues and I have an opinion (as explained above) on how to proceed, we’re eager to hear your thoughts. Have particular contracts management tools and systems been pivotal for your team? What hurdles have you faced? What victories have you achieved? How do you see yourself expanding your CLM system? And if you’re considering a simpler solution, we’re ready to share our insights and suggestions.