CLM software promises, disappointments, and paths to success
Contract Lifecycle Management (CLM) software can be an immensely powerful tool, working like magic when fully optimized. But ensuring it functions at that level requires time, resources and optimization. When shopping for a CLM, legal departments receive promises of simplicity and seamless functionality – do any of these assurances sound familiar?
“All you have to do is upload your agreements and you’ll have a clean database with intelligent fields so you can have the data at your fingertips.”
“Our API connects to Salesforce. All the sales team needs to do to generate a new agreement is use a Salesforce plugin. They answer a few questions and then the CLM does the rest. It’s basically magic. Here’s your contract.”
“It’s a digitized filing cabinet for you, so you can extract all the data points you want. That can be party names, dates, whatever fields you want.”
Eventually those promises can be realized, but upon purchasing CLM software, problems often persist well past initial implementation. Among the hurdles faced is the initial input of hundreds (or thousands) of old agreements. Because legacy contracts aren’t all built the same, the data turns into a morass as fields are populated with incorrect information, formatting is inconsistent, etc.
As CLMs are not built to find gaps in data, they do not allow users to quickly identify where the AI extractions may be incorrect, they do not allow users to quickly get through mass amounts of data, creating a resource-heavy “hunt and peck” exercise where users must manually sort through the imported data. Worse still, many CLM purchasers don’t realize this scenario could be a problem until they try to find something specific; it can become hard to trust the full data set is reliable without double-checking.
There are a handful of post-purchase pain points that experts can help CLM users overcome to unlock the magic of these tools.
Data Hygiene
Data hygiene plays a critical role in maximizing the usability of any CLM. Simply put, it’s the moral equivalent of “garbage in, garbage out.” Experts can ensure the correct data is extracted and stored in the correct locations and a consistent format, including:
- Party names: A user wants to know all their agreements with Acme Corp.; did the CLM pull out the correct name (Acme not acne)? Or all pertinent variations of it (Acme Inc., Acme incorporated, etc.)?
- Dates: A user is looking for a contract executed on August 8th, 2023; was the date formatted as 7/8/2023 (American) or 8/7/2023 (British) or some other variation?
- Auto-renew details: A user needs to know about canceling a contract; are all the critical details (execution date, term, notice period, able to be terminated for convenience) retrievable?
- Custom/intelligent fields: These add-ons to CLMs come with an extra cost; did the CLM extract the key data points from the pertinent clauses?
Roll-ups/governing summaries
Roll-ups or governing summaries are the data that truly govern the entirety of any relationship between the parties engaged in a contract. Any contract amendments made over the course of the relationship can be tracked at the top of the agreement without having to go through the manual process of creating those updates.
For example, a CLM user looking up Acme wants to know the limitation of liability that governs the relationship with Acme. The signed Acme Master Services Agreement (MSA) is 20 years old, but there have been seven amendments and 15 different work orders over the life of the contract. The original MSA no longer contains the current information or language that governs that clause; maybe one of the amendments was a change to the limitation of liability language. The AI that CLMs rely on for data review and extraction is not developed to the point where it can tell what language supersedes other languages without manual confirmation from users. Our contracts experts identify and put these documents in the correct order to create a reliable and accurate summary.
Buyers of CLM platforms should be aware of these realities before and after investing in the solution and plan for these complexities. Consider consulting with a trusted partner to simplify the post-signature setup process and unlock the magic that CLMs are capable of.
Contact UnitedLex today to see how we can help.
