Contract Automation for In-House Counsel
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Subpoena-related questions, NDAs, and contracts accounted for probably 70% of my incoming mail from within the organization. I’m talking about engaging in high-volume, routine tasks that really weren’t the best use of my time.
You want to be a strategic business partner for your organization, but you spend most of your time creating, negotiating, and following up on contracts. Sound familiar?
“Subpoena-related questions, NDAs, and contracts accounted for probably 70% of my incoming mail from within the organization. I’m talking about engaging in high-volume, routine tasks that really weren’t the best use of my time,” he said.
When you’re stuck in the weeds of contract processing, it’s hard to make long-term investments like reviewing your pipeline with business partners. Chris knew he needed a change, so he built a process to respond to common requests and trained staff on a standard operating procedure for escalating.
If you want to transform your workflow so you can spend more time on high-impact tasks, contract automation can help. This guide explores what contract automation is, how in-house legal teams benefit from the process, and where to start automating your work. By the end, you’ll be ready to look at your contracting process critically to find your next process improvement steps.
What is contract automation?
Contract automation is a system to create, negotiate, sign, store, and analyze contracts following a set process without manual management.
In short, contract automation takes care of repetitive tasks so you can use your unique expertise to the fullest. You’ll need a contract lifecycle management tool (CLM) to automate your contracting process. A CLM lets you:
- Create and customize contracts from templates
- Establish self-service contracting for business users
- Add approval and signature conditionality for any contract type
- Automatically push contracts through a pre-set approval process
- Extract contract data and review clauses quickly with artificial intelligence (AI)
- Manage redlining and versions in one place
- Accept or reject changes and @mention colleagues in your contract editor
- Review contract metrics like contract volume by business unit and execution time by contract type
For example, Glassdoor used a CLM to automate more than 2,000 high-volume, low-risk contracts.
Originally, Glassdoor collected and stored paper versions of gym waivers for new employees at the office’s front desk. In addition to being a time-intensive process, Glassdoor’s old method made it difficult to find signed releases.
Since the contracts were high-volume and low-risk, they were an ideal candidate for trying contract automation for the first time. Glassdoor imported the contract template to their CLM, tagged the document’s required fields, and published a workflow that let business users initiate the automation to take contracts from request to repository.
There are no back-and-forth emails for contract versions, and in-house counsel knows that business patterns will use the correct template and collect all the necessary information every time. Plus, the automation frees up time for counsel to work on higher-impact projects.
How can contract automation help in-house counsel?
Your role as general counsel is essential for risk mitigation and business growth. That means anything you do to improve your workflow benefits you, your department, and your organization.
Become a business growth center
In-house counsel touches everything—from business deals to vendors to marketing partnerships. With that much influence, any time and cost savings in your contract processing strengthens the entire organization.
For example, Rippling used Ironclad to reduce their typical NDA contract process from days to hours. The faster you can move contracts across the finish line, the more your business partners can accomplish, and the greater returns your company sees.
Additionally, Bitmovin used contract automation to cut contracting costs by 75% and save $400,000 on outside counsel costs. Every dollar saved in your contracting process can be re-invested in growth.
Contract automation, and the data reporting that comes with it, also give you a way to share your impact in terms that stakeholders value.
However, quantifying the results of contact automation, like the time it takes to process an NDA or the number of contracts completed in a month, is a clear way to advocate for your team’s influence. You can also use process metrics to make a case for legal hiring.
Free up time for strategic work
You want to be a strategic partner and a business advisor, not just a contract manager. Each hour you save by automating your contract review process is an hour gained to look at bigger initiatives. You can use your extra time to create a department roadmap with ‘someday’ projects, form ideas to scale your team, or simply manage your growing workload.
Anushree Bagrodia, Senior Managing Counsel & Legal Transformation Lead at Mastercard, shared her thoughts on the biggest challenge for legal teams:
“First and foremost, in-house teams are becoming busier. Given the crisis and all of the changes, there is a lot more contract review, negotiation, and pivoting into new areas. In addition, I think teams are looking to save on outside counsel spend, so more work is done in-house.”
The Mastercard team uses a CLM to up lawyers’ time to do more strategic work that drives business.
Contracting and collaboration go hand in hand, and contract automation helps both. Your automated workflows will move contracts between stakeholders as each completes their role. That means nobody has to wait for the previous person to send the contract their way before contributing to approval.
If something needs a closer look, you can highlight the clause and tag team members, so they only have to consider what’s relevant to them.
Contract automation also makes you a hero with business partners since you can add conditions and parameters that let them start requests independently.
Thanks to your contract repository, you’ll also be able to find existing contracts and details quickly if a business partner has a question. PubMatic also uses contract automation to help other teams, like finance, automate their workflows to save time.
Create consistent and compliant contracts
Compliance is critical, but details can slip through the cracks if you manage contract versions via email. Contract automation ensures everyone uses the right template every time to reduce risk. Accepting, rejecting, and managing versions in a centralized CLM prevents missing information or context.
You can also use contract review AI to quickly but accurately identify and compare clauses to identify risks or areas that need your attention.
Build a repository that empowers future decisions
There’s an entire world of insights hiding in past agreements. Rather than letting your signed contracts collect digital dust, your CLM extracts data you can use to make future decisions. For example, do you know which contracts take the longest to complete? If you did, you could work strategically to improve your process. Are there certain contracts that consistently have more amendments than others? If so, your templates might need an update.
Your CLM repository can extract metadata that lets you analyze agreements and stay on top of rights and obligations.
4 contract types you should automate
One method for implementing a CLM for contract automation is prioritizing low-hanging fruit. High-volume contracts that typically have less redlining, like standard NDAs, fit naturally into automation. Here are the contract types you can begin automating easily.
Non-disclosure agreements (NDAs) protect your business information and are standard to send to employees, clients, and vendors. Their volume alone makes them a natural fit for contract automation, but the benefits go beyond that.
Automating NDAs means you’ll:
- Ensure everyone uses the correct NDA version. Your NDA may change over time as your organization grows and legislation evolves. An automated NDA process ensures everyone uses the most up-to-date contract.
- Have a secure place to store NDAs. Privacy and confidentiality are at the very core of NDAs, and using an automated contract process plus a secure repository creates a safe place to discuss and store NDAs.
- Get everyone’s signature. An automated workflow can’t forget to share the NDA with a stakeholder, or pre-emptively consider the agreement complete before everyone has signed.
A vendor contract sets expectations about purchase deliverables, payments, and terms. These contracts are the heart of client and vendor relationships, so managing them is critical.
Automating your vendor agreements is a good idea since you can:
- Quickly choose the correct template. Vendor agreements come in all shapes and sizes, like fixed-price or indefinite delivery agreements. With a CLM, stakeholders can automatically choose the right agreement type for the deal, reducing client or vendor redlining.
- Create an actionable database of agreements. It’s hard to render goods and services on time or hold vendors to their word when you can’t easily find contract details. Your contract automation feeds a dynamic repository you can use to ensure everyone meets terms.
- Stay on top of renewals and amendments. When you use a CLM to automate your vendor agreement process, you’ll build a database you can sort and filter to stay aware of upcoming renewals.
Sales and service agreements
Sales agreements detail the terms of exchange, like real estate or supply chain deals. Order forms, change order forms, master service agreements (MSA), statements of work (SOW), terms of service, and renewals or upsells are all sales contract types that you can automate.
Depending on your organization, you might have multiple sales agreement requests from different departments. There may be instances when you can use contract automation to confidently put contract initiation into your stakeholders’ hands through conditions and guardrails.
As in-house counsel, contract automation for sales agreements lets you:
- Bypass tedious contract cycles for low-value deals. You can create guardrails for sales agreements, like value, that let stakeholders enter standard contracts without legal review.
- Keep conversations in one place. Contract automation and CLMs let you manage internal and external collaboration in the same spot with the same context, so you get all the details.
- Automatically update sales reps. CLM software can automatically notify your sales reps when key events occur or when they need to move a contract along, so you don’t have to keep a close watch on every contract’s status.
A clickwrap agreement, also known as click-accept, click-to-sign, or clickthrough, replaces digital signatures with a button or checkbox. These easy-to-accept contracts mitigate risk without impacting customer experiences.
Clickwrap agreements work well with great contract automation because you can:
- Create an audit trail for every user. You’ll collect contract data points automatically for every user or customer without any added busy work.
- Automatically deliver the right clickwrap agreement. A CLM allows users or customers to enter information and automatically see and sign the correct clickwrap for their scenario.
- Ensure sales rep compliance. CLM integrations let you make clickwrap agreements part of your sales team’s workflow so everyone uses the correct contract for every account.
Ironclad transforms your contracting process
Ironclad is trusted by millions of users worldwide because our contract automation tools transform how in-house counsel work. With Ironclad, AppDynamics achieved 100% sales compliance, Extra Space Storage increased its mobile lease signing rate by 40%, and Dropbox reduced legal turnaround time from two weeks to minutes.
Ready to see what Ironclad could do for your organization? Schedule a demo now.