The year 2020 is upon us. How, in this illustrious digital age, are we managing our contracts? Those critical agreements that store the relationships and assets that are our clients’ greatest source of value?
Turns out, the same as we have for decades. Even now, the most common tools for drafting and negotiating contracts remain MS Word and email.
Microsoft Word was created 27 years ago. I’m reminded of the astute advice of a high school instructor training me to use MS Word who said, “Many people use Word as if it’s just a slightly improved typewriter. They skip learning about capabilities they think they’ll never need. And in the process, they never discover new ways to make their work easier.”
Similarly, Contract Management Software (CMS) doesn’t just help you do the same contracting work you’ve always done with Word and email, only faster and more efficiently. CMS platforms make new opportunities possible. They are revolutionary decision support tools underpinned by three core technologies that bring in-house teams and law firms new and improved ways to work. That is, if we dare to explore the full range of their capabilities and functionalities.
Let’s start by looking into the three core technologies supporting CMS and its powers to transform how corporations and law firms manage contracts in the digital era.
1. The Cloud: Collaborative Contract Management
Cloud-based software is the essential link that makes collaborative endeavors not just possible but also convenient and effective. Cloud-based CMS provides the long-needed single, secure location to store, execute and manage contracts and–crucially–all related communications and attachments. Controlled access streamlines collaboration among internal departments (sales, finance, legal, etc.) and external parties, including outside counsel.
On-the-go, anytime access provides visibility into all contracts in progress and throughout their entire life cycle, often with real-time visuals of key metrics. Fast, easy access to business intelligence is critical as company controllers now look to general counsel to not just protect business interests but also to provide strategic growth advice. As outside counsel, you can also access to the same metrics, allowing you to provide truly targeted advice by expanding your insight into your clients’ businesses.
Most importantly, the cloud is currently the best way to build modern software that can evolve with the times, incorporate technologies as they mature, and scale with your organization.
Law firms that are open to the possibilities the cloud offers are better situated to work efficiently with technologically advanced companies who need agile legal partners.
2. Artificial Intelligence: Automating Contract Review
Machine learning and natural language processing help convert predictable manual tasks to time-saving automated workflows. A major chunk of work is done for you, and your time is freed up for more important work.
AI is also a data tracking tool, pulling key variables from contracts and enabling you to continually measure contracting data at scale. The insights gathered help you provide more informed advice on new approaches such as creating innovative deal structures. They also show where to apply time-saving tactics such as automating global clauses. Knowledge truly is power.
AI tools continue to learn more about the intent behind contract language. As they advance, they’ll become increasingly accurate in identifying the legal meaning of clauses. When opposing counsel sends a draft for review, CMS technology will point out not just where changes were made, but also the potential legal ramifications involved. Imagine the possibilities of working with tools that essentially automate the hard-won wisdom of your firm’s most experienced attorneys.
3. Blockchain Brings New Actionable Contracting Opportunities
Blockchain is an immutable, distributed ledger that changes how we verify information and execute contracts. As predefined events occur, smart contracts (a prominent blockchain application) automatically self-execute applicable clauses. A network of computers share the decision-making in a virtually tamper-proof process. It eliminates the need to consult third parties to validate the authenticity of information and documents.
Smart contracts automatically enforce obligations, offering a level of assurance and value never before possible. Parties are confident the automated clauses of a contract will be executed exactly as agreed to, on time, without interference from human bias, neglect, error, fraud, or cyber intrusions.
That assuredness strengthens the intrinsic value of contracts, which are increasingly digital assets. With trust as a given, blockchain opens a highly reliable avenue to optimize a contract’s value.
Blockchain also increasingly and more directly links a contract’s language to its performance. This allows you to identify ways your efforts succeed beyond just protecting the company from risk. For example, you can pinpoint the most consistently advantageous terms and clauses. These can then be applied to future contracts to drive even more revenue.
Opportunities With Revolutionary CMS
Yes, MS Word is an excellent program. But in exploring cloud-based CMS platforms, you’ll undoubtedly discover new opportunities for simplifying your work and improving client service. The cloud is a modern way to build business software applications that enhance transparency, collaboration and security. AI frees attorneys to focus on more strategic work. Blockchain applications such as smart contracts increasingly allow us to make contracting more actionable.
Now, it’s up to all of us together to continue exploring their combined power and discover even more advantages CMS platforms offer. All we need to do is explore the full range of their capabilities and functionalities and be open to incorporating disruptive technologies into our legal practice.
This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.
Olga V. Mack is the CEO of Parley Pro, a next-generation contract management company that has pioneered online negotiation technology. She focuses on improving and shaping the future of law, having led from the front lines for decades as an award-winning general counsel, operations professional, startup adviser, public speaker, adjunct professor, and entrepreneur.