finance

Contract Management for Corporate Counsel

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Corporate Counsel

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Many departments within a company can benefit from contract management software, but corporate legal is a natural.

Every company needs a corporate counsel to vet contracts at some point. All too often, however, during a contracts lifecycle, key information about a contract tends to get dispersed – and lost to legal’s view.

For instance, what if a client’s contract calls for X number of products to be delivered within a certain time period. However, during the agreed upon period, your company cannot take delivery of that contracted number of products due to warehouse problems. So, numbers are altered and an agreement reached. But this “agreement” happened between a product administrator, warehouse, and the contracted vendor, leaving legal out of the loop. At the end of the contract period, the billing department may be looking for a “make good” and ask the legal department to write a letter regarding a possible breach of contract.

This can be a touchy situation, leading to confusion and maybe even a bruised business relationship – maybe even lost business with a key partner.

With a centralized repository of contract records, information on deliverables, met obligations and key deadlines can be entered in notes or linked to relevant documents or document excerpts. Consider the time and trouble that saves when internal departments ask for legal to either weigh in or take action on a contract. Without all that information in one accessible place, tracking down something as simple as a mid-contract amendment can be tiresome and labor-intensive.

With a single contract database corporate counsel departments can ensure:

  • a holistic view and approach to managing a corporation’s legal obligations through the contract lifecycle
  • consistency of contract execution
  • reduction of duplicated services and efforts
  • limited errors and unapproved changes to contracts

Mitigating organizational risk and maintaining compliance with federal, state and local law can also be more effectively managed with contract management software. Read some of our previous posts on how proper contract administration and use of document retention policies can reduce the business risk of your organization while helping you meet the demands of laws such as the Sarbanes-Oxley Act of 2002.

Reputable legal associations suggest contract management software as a reliable resource for in-house legal departments as well. Check out what the American Bar Association (ABA) and Association of Corporate Counsel (ACC) say about contract management software.

What’s in It for Me? Department Benefits From Contract Management Software

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To create the necessary buy-in among your business’s leaders and functional partners, you need to shatter the assumption that contracts—and the benefits of implementing software to manage them—only affect an administrative role or department.

So let’s walk through how just a few key departments of an organization directly or indirectly benefit from contract management software.

  • Finance
    With contracts centralized in one place, finance personnel can maintain visibility in all contracts, even those originated by other departments. Increased control can yield dramatic cost savings, especially when combined with features such as alerts and reminders, by reducing unnecessary duplication of services, overpaying, missed deadlines and deliverables, unwanted auto-renewals, and more.
  • Human Resources
    Employment contracts can be easily managed through their entire lifecycle, as well as identifying renegotiation opportunities and reducing risk of non-compliance or litigation. HR departments usually need to store a lot sensitive and disparate information on employees; using a contract management system as a database, important records can be linked to or stored with associated records. This can greatly reduce the organizational mess generated from all the records (paper and otherwise) that HR departments amass.
  • Purchasing
    A purchasing department must maintain exact control over purchasing contracts to maximize its effectiveness. Contract management software is the ideal tool to ensure necessary transparency to mitigate risk and increase productivity during renegotiation periods. Purchasing departments can look up contracts to ensure invoices comply with agreed upon rates and charges. Also, notation fields can be used to store a history of such reviews – which makes it more likely to catch anomalies in subsequent reviews.
  • Information Technology
    One of the biggest headaches for IT departments can be minding the constant maintenance needed for homegrown solutions used for tracking internal company data. Even some “off-the-shelf” applications may get used as databases, though they weren’t designed for that. The result is a lot of work being done by IT departments that take away from more vital work. A solution like Contract Assistant is easy to install and can be managed by any user with consumer-level knowledge of software. A strong history of excellent support (see Contact Assistant customer comments here) also means users will rarely, if ever, have to rely on internal IT for help.

These are just a few examples of how different departments can benefit from contact management software. No matter who benefits, the point is that centralized contract management is a best practice for a broad range of users and departments.