Tips for Successful Collaborative Contracting
In many organizations, contracting is often done in a silo, with legal often seen as the “tower of no.” Legal wants to take the time to ensure that contracts comply with relevant legislation and are enforceable in court, while other departments, especially Sales, want to move quickly to close deals.
As such, Legal isn’t as concerned about hitting quotas and keeping everyone happy. Instead, much of their focus is on reviewing and editing contracts to minimize risk exposure. When this happens, other departments don’t have insight into the contract’s status. This means it can take days before the whole team can move forward on the contract.
This is why collaborative contracting is so crucial. It breaks down the silos and brings different departments, stakeholders, technologies, and even businesses together through a single platform or interface.
While most contract management software don’t offer contract collaboration, fortunately, Ironclad has you covered. Keep reading for some tips for successful contract collaboration.
Establish a standard operating procedure
You should start by establishing a standard operating procedure between Legal, Sales, and other teams. This will help your organization more quickly close deals without incurring additional risks.
Here’s what your standard operating procedure could look like if you used a contract lifecycle management (CLM) software to create and manage contracts:
1. Create contracts from templates
Sales will begin by creating contracts from templates. This will speed up the contract lifecycle because Sales can use pre-approved legal terms for certain deals without over-involving a busy legal team. Although Sales doesn’t have the legal know-how to minimize risk exposure, they do have the ability to plan ahead and decide when deals should be closed.
If you’re worried that Sales will go rogue with contracting, don’t fret. Templates will allow everyone to start off on the same foot. And even better, if the terms are pre-approved by Legal, Sales can easily make changes within guardrails set by Legal to ensure 100% compliance.
2. Submit counterparty redlines
After completing the contract, Sales will tag the counterparty in your CLM software’s editor and wait for their feedback. After the counterparty has given their feedback, Sales will update the workflow with their redlines. Legal will then review the contract, looking for issues that need to be addressed, aligned, or fixed. (Here are some ways to reduce your redline rate by 43%.)
3. Align with stakeholders
Once Legal has reviewed the contract, they will sit down with the counterparty and stakeholders and answer any concerns they have. They will discuss security, professional services, data handling, and more.
4. Finalize and execute
After Legal finishes their edits, Sales will meet with other departments to coordinate signatures and final approvals. Once everything’s signed and approved, Sales will email the finalized contract to counterparties and stakeholders through the CLM platform.
Use software that shows the efficiency of the contract process
You should also use software that shows your organization’s activity feed and provides metrics about the efficiency of the contract process. This will help you measure success and deliver value as cost-effectively and quickly as possible.
Your CLM software should give you several ways to assess various metrics. Ironclad, for instance, has a Process Metrics Reporting tool that you can use to generate, view, and send updated reports of the following metrics:
- How long it takes to complete the average deal
- A breakdown of contracts by department and user
- The number of contracts or workflows launched per month
- Which workflows are waiting for execution or signature
- Which workflows are experiencing problems or lagging behind
- The ratio of assigned projects to completed projects.
Establish good metrics for tracking efficiency company-wide
Besides using software that shows the efficiency of the contract process, you also need to establish good metrics for tracking efficiency across departments. This will help eliminate irrelevant procedures and boost business agility.
Here are three key contract management performance metrics you should consider tracking:
- General process metrics: These metrics are concerned with output, such as the number of workflows created per month. You can use them to keep your projects on schedule.
- Workforce management metrics: These metrics look at the people involved in contracting and include:
- The number of workflows created or approved by Legal
- The number of workflows created by departments
- Shrinkage, which is the unplanned and planned time when employees can’t work due to poor adherence, unscheduled absences, technical issues, coaching, and paid time off
- Efficiency metrics: These metrics focus on the time spent on contracting. Examples include the time spent completing a contract and the time spent negotiating a project with stakeholders. You can use these metrics to spot where you’re falling behind and reduce inefficiencies in organizational processes and structures.
Create an effective counterparty experience
Successful contract collaboration also requires creating an effective counterparty experience. You can do this by having your vendors, clients, and partners use the same system you use for contract execution to reduce time and increase transparency.
Enterprise-level CLM software like Ironclad come with state-of-the-art counterparty features that you can use to speed up communication and boost transparency. For example, Ironclad’s Activity Feed consolidates counterparty emails and conversations and supports the secure sharing of documents by placing your entire project in one centralized hub. Say goodbye to locating conversations, images, and chat histories in individual email inboxes.
What’s more, your counterparty can see everything too. All you have to do is send them an invite. By doing so, you’re letting them sign up for a free, separate Ironclad account, giving them a shared place to collaborate, send external or internal messages, loop in stakeholders as needed, and access the contract’s activity history and external audit trail. If you’re concerned about privacy, don’t be. Your counterparty will only be able to see the information you choose to share with them.
Ironclad’s Activity Feed also allows you and your counterparty to do the following:
- Upload signed agreements: This will speed up the contract execution process, as it can empower counterparties that lack e-signature services to upload web signatures or signature packets in Ironclad.
- Edit or reassign signers: Counterparties can also request to edit authorized signers or reassign signers.
Make redlining collaborative
Another way to create an effective counterparty experience is to make redlining easier for everyone involved.
For instance, you can tell stakeholders and counterparties to use Google Docs for drafting and redlining. Google Docs is a great pick because it allows parties to comment on a contract in real-time and track changes as needed. You can also just send contracts by adding stakeholders to the document, instead of saving the document, attaching it to an email, and waiting for responses.
However, Google Docs isn’t always the best choice, particularly if your stakeholders and counterparties have already decided to use Microsoft Word. Ironclad is the only CLM software that lets everyone draft, edit, manage, and execute contracts on one platform, Ironclad’s basically a DOCX-native version of Google Docs. This means anyone can use Ironclad to upload and send DOCX documents for redlining and further negotiation.
Ironclad Editor also empowers you to do the following:
- Loop in colleagues for review: Like Google Docs, Ironclad Editor lets you use internal comments and @mentions to quickly loop in colleagues for their opinions. This way, you can ensure everyone’s looking at the latest version of a contract, not a version you sent them five days ago.
- Accept and reject tracked changes: With just a few clicks, Ironclad allows you to accept and reject tracked changes made by stakeholders and counterparties. Once you’re done, you can email a DOCX copy to counterparties through Ironclad.
- Empower negotiations with Playbooks: Ironclad’s Playbooks feature allows Legal to embed negotiation guides straight into their workflow. Educate your team by quickly surfacing and applying language that protects your deal while streamlining the review process with counterparties and stakeholders.
Experience the Ironclad Difference
Without a collaborative contracting procedure, contracting is more often than not a siloed process with limited transparency. Luckily, it doesn’t have to be that way. If you do the following, you can transform the contract management process from blockers to enablers:
- Create a standard operating procedure between Legal, Sales, and other departments
- Use software that shows the efficiency of the contracting process
- Establish good metrics for tracking efficiency across departments
- Create an effective counterparty experience
- Make redlining more collaborative.
To get started, consider joining the Ironclad community. Unlike most CLM software, Ironclad has everything you need to create and implement successful contract collaboration. With our powerful Editor, Process Metrics Reporting, and other tools, you’ll be able to break down your organizational silos, track efficiency across departments, create an effective counterparty experience, and simplify the redlining and negotiating process.
- Establish a standard operating procedure
- Use software that shows the efficiency of the contract process
- Establish good metrics for tracking efficiency company-wide
- Create an effective counterparty experience
- Make redlining collaborative
- Experience the Ironclad Difference
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Ironclad is not a law firm, and this post does not constitute or contain legal advice. To evaluate the accuracy, sufficiency, or reliability of the ideas and guidance reflected here, or the applicability of these materials to your business, you should consult with a licensed attorney. Use of and access to any of the resources contained within Ironclad’s site do not create an attorney-client relationship between the user and Ironclad.