Is Contract Management Security Your Company’s Blindspot?

Key takeaways:

• Recognize that internal security risks pose equal or greater threats than external cyberattacks, as unauthorized employee access and rogue contracting contribute to organizations losing five to nine percent of annual revenue due to poor contract management practices.

• Centralize all contracts in a single secure repository with automated role-based access controls that enforce granular permissions based on user role, department, and contract type to prevent unauthorized access while maintaining operational efficiency.

• Implement a contract lifecycle management platform that integrates both technical security features (AES-256 encryption, SOC 2 certification, penetration testing) and operational controls (configurable permissions, conditional approval routing, detailed audit logs) to eliminate the false choice between security and speed.

• Avoid treating shared drives like contract management systems, as Google Drive and SharePoint lack proper audit trails, version control, and permission management capabilities that create security vulnerabilities and expose sensitive contract information to unauthorized access.

Contract management security is the protection of sensitive business information contained within your legal agreements. Your contracts hold your company’s most valuable data—from sales figures to employee compensation to confidential partnerships, and the consequences of a breach can be staggering; for example, one recent healthcare cyberattack led to overall cyberattack impacts reaching $2.4 billion.

Most companies invest heavily in securing email systems and internal databases. However, contract security often gets overlooked, creating a dangerous vulnerability. This oversight makes contract management security a critical blindspot across organizations of all sizes.

If you work with contracts, you’ve probably wondered how you can keep your contracts secure without slowing down your business or inadvertently blocking contract access to colleagues. Here, we walk you through the evolution of contract management security and provide a checklist of the steps you can take to keep your company protected.

In the process, we’ll answer the questions that keep legal teams up at night. What’s the difference between external and internal contract security risks? What contract management features give you visibility into contract access and workflow history? How can your company turn what may be a contract security liability into a compliance asset?

What is contract management security?

Contracts are the lifeblood of all companies. They ensure that employees get paid, that services are delivered on time, and that partnerships with other companies are durable. Contract management security encompasses the systems, processes, and practices that protect sensitive contract information from unauthorized access. This means ensuring only authorized personnel can view, edit, or share contract data based on their specific job requirements.

Effective contract security addresses both external threats like data breaches and internal risks such as unauthorized access by employees or contractors. The goal is maintaining strict control over who can access your agreements while enabling necessary business operations.

External security threats include data breaches, cyberattacks, and unauthorized access by malicious actors. Technical solutions like VPN requirements, password policies, and encryption typically address these risks.

Internal security risks pose equally serious challenges, as seen in a recent breach where attackers accessed a company’s cloud environment by exploiting stolen credentials from its own data engineers. These risks include rogue contracting where agreements get executed without proper approval, unauthorized access by employees, and improper contract sharing—issues that contribute to organizations typically losing five to nine percent of annual revenue due to poor contract management, according to The 2025 Legal Operations Field Guide.

Managing internal security effectively means establishing role-based access controls and maintaining clear accountability throughout the contract lifecycle. Without defined responsibilities for each step, you cannot properly limit access or detect unauthorized contract activities.

Contracts touch every part of a company, so it’s not surprising that contract security must be a company-wide effort.

How do well-intentioned legal teams end up with unacceptable contract administration risks?

The reality is that even security-conscious legal teams often face a false choice between security and efficiency when managing contracts. This trade-off mentality leads to processes that compromise contract security in favor of operational speed.

Contract template management illustrates this challenge clearly. Teams managing templates manually typically choose between two problematic approaches, both creating significant security vulnerabilities.

1. Slowing the business down by restricting contract templates to legal only In this approach, which is the most restrictive, business users must email legal, sometimes at an email alias like legal@, to request contract generation. Business users never get access to editable contract templates, and legal sends counterparties contract PDFs for signature. This approach sacrifices speed for security, since all contract generation requires action by legal. However, it ensures security pre- and post-execution because legal manages all contract files.
2. Exposing the company to risks by allowing business users to generate contract templates on their own and bring in legal for approval or review before execution. Giving business users the ability to generate contract templates on their own may accelerate the pre-execution stages of a contract lifecycle, but only if business users generate the contract template without making any errors. In this approach, which emphasizes speed over full legal control, legal is brought in for approval and review once a contract is ready for signature. (That said, giving business users access to contract templates also enables these users to send contracts out for signature even if those contracts have not been reviewed by legal.)

These same contract administration risks apply to other stages of the contract lifecycle, too (e.g., approval, execution, archival). Companies tend to adopt overly permissive or overly restrictive contracting policies because they lack the ability to put guardrails around the contracting process. Fortunately, new technologies allow teams to move from “all-or-nothing” access policies to policies automatically governed by requester role, contract type, and other key contract attributes.

Common contract management security risks and threats

Beyond these process challenges, you’re also dealing with some fundamental security vulnerabilities. It’s not just about hackers. Honestly, some of the biggest risks come from inside the house. When you’re thinking about securing your contracts, you’re really dealing with a few key problem areas.

• Unauthorized access: This is the big one. It’s when people who shouldn’t see a contract, do. Think of a sales rep seeing the details of a sensitive partnership agreement or an employee stumbling upon executive compensation contracts. This happens a lot when you’re just using shared drives with messy permissions.
• Data breaches: This is the external threat everyone worries about. If your contracts are stored in a system that isn’t secure, they’re a prime target for attacks, with recent data showing that in 44% of analyzed breaches, ransomware was present. A breach could expose everything from your pricing models to your customers’ private information.
• Lack of an audit trail: Something goes wrong with a contract, and you need to know who touched it and when. Who approved that weird clause? Who changed the payment terms? Without a clear, unchangeable record, you’re flying blind. It’s a huge compliance and operational risk.
• Human error: Someone sends the wrong version of a contract, forgets to get an approval, or saves the final signed copy in their personal folder instead of the official one. These aren’t malicious acts, but they create massive security gaps.

What security features should be on your company’s CLM checklist?

The security of your contracts shouldn’t live separately from your company’s contract and legal operations. Instead, it should be baked into your company’s tools and standard operating procedures, often managed through contract lifecycle management (CLM) software. By understanding how to choose the best contract management software for your needs, you can ensure contract security without sacrificing your team’s efficiency.

Effective contract management security requires both technical safeguards and operational controls. When evaluating CLM platforms, prioritize solutions that integrate security throughout your contract processes rather than treating it as an add-on feature.

Look for these essential security capabilities in your contract management system:

Technical security must-haves

1. Data encryption protects your contract information from unauthorized access even if systems are compromised. Your CLM should encrypt data both during transmission and storage. Technical requirements: Look for TLS 1.2 or higher for data in transit and AES-256 encryption for stored data. These industry-standard protocols ensure your contract information remains protected throughout the entire system.
2. Cloud-based infrastructure Cloud-hosted platforms give your company’s contract management administrators the ability to quickly make changes to security policies and monitor software usage across your company.
3. Security certifications. At a minimum, look for companies with System and Organization Controls (SOC) 1 and SOC 2 certifications. These certifications focus on how organizations manage and maintain the confidentiality and integrity of sensitive information, with some reports, like a Type II SOC, specifically assesses controls over time for a period of 3-12 months.
4. Fine-grained user permissions. Look for solutions that allow you to set user permissions by role, department, contract types, and other criteria. For example, perhaps you want contracts administrators need to be able to see all sales contracts, but not any HR contracts. Ask vendors to demonstrate how these types of cases would be handled in their systems.
5. Penetration and vulnerability testing. Audits and external tests can expose security risks that are likely to be exploited by malicious actors. Make sure that you choose a vendor that conducts penetration and vulnerability tests annually, if not quarterly.

Operational security must-haves

1. Easily configurable permissions. Software permissions determine which of your company’s users can conduct certain contract tasks (e.g., contract generation, approval, and signing). Your legal team manages many types of contracts. Some are high-volume, but carry relatively low risk, while others are low-volume, but high-risk. Look for a solution that centralizes all contract generation and expedites approval and signature for low-risk contract types.
2. Built-in conditional approval routing Your CFO may not need to approve low-value software purchases, but you may want to require her approval for contracts above a certain amount. But what if your CFO’s out of town? Will your contract software be able to reroute approval requests on an ad hoc basis? To prevent rogue contracting, look for tools that let you modify and deploy changes to contract approval conditions instantly.
3. Native System for Cross-Domain Identity Management (SCIM) integration. SCIM is an open, widely used standard for managing authentication and authorization for users across organizations. Smaller companies may be able to manage permissions for individual users and groups, but larger companies (especially those that are distributed) will require digital contracting solutions that can use the SCIM standard to automatically provision user permissions. That way, things like employee onboarding and transfer between departments can automatically be reflected in contract management permissions in a CLM.
4. Detailed contract audit logs that include contract-related communications and user actions. A key part of ensuring secure contracts is having visibility into contract behavior. If a contract is executed, for example, contract administrators should be able to quickly view a record of all communications, versions, and user actions related to that contract to ensure compliance with internal policies.
5. Built-in integrations with cloud storage and eSignature providers. Your company likely has existing solutions for cloud file storage (e.g., Box, Dropbox) and eSignature that have been configured to respect your company’s security policies. Look for a contract management system that integrates with these tools so that you can speed up the implementation process and respect existing policies around document access and retention.

How to implement contract management security best practices

Alright, so you know the risks. What do you actually do about it? It’s not as overwhelming as it sounds. Here’s how you can start getting things in order.

1. Centralize everything in one place. This is the most important first step. Get all of your contracts out of email inboxes, shared drives, and people’s desktops. You need a single, secure repository. This is the foundation for everything else.
2. Define and automate user permissions. Not everyone needs to see everything. Your sales team needs access to sales agreements, but not HR contracts. A good system lets you set these permissions by role, department, or or even specific contract attributes. The key is to set it up once and let the system enforce the rules.
3. Digitize your contracts and documents. If you still have paper contracts in filing cabinets, it’s time to scan them. Once they’re digital, you can store them in your central repository and make them searchable. This isn’t just for security; it’s for efficiency.
4. Create an audit trail for every action. You need a system that automatically logs every view, edit, approval, and signature. This isn’t about micromanaging; it’s about having a clear record for compliance and troubleshooting when something goes wrong.
5. Train your team. You can have the best system in the world, but if your team doesn’t know how to use it or why it’s important, they’ll find workarounds. Explain the ‘why’ behind the new process—it’s not to make their lives harder, it’s to protect the company.

Common contract management security mistakes to avoid

It’s easy to make a few common mistakes during implementation. Here are the big ones to watch out for.

• Treating a shared drive like a CLM Using Google Drive or SharePoint as your contract repository is a common starting point, but it’s a huge security mistake. Permissions get messy, there’s no real audit trail, and it’s nearly impossible to manage versions effectively. It’s a recipe for unauthorized access and lost documents.
• Setting overly broad permissions. It’s easier to just give everyone access to everything, right? Wrong. This is one of the fastest ways to create a security nightmare. Take the time to think through who really needs to see what, and be as granular as possible.
• Forgetting about employee offboarding. When someone leaves the company, you need a process to immediately revoke their access to all contracts. If you’re managing permissions manually across different systems, it’s easy for this to slip through the cracks, leaving a major security hole.
• Ignoring counterparty paper Your security process has to account for contracts that come from your vendors and partners, as nearly a third of data breaches have been linked to counterparty involvement. If your team is just downloading these from email and signing them without running them through your secure process, you’re creating a massive blind spot.

Protecting your contracts while helping the business move faster

Here’s the thing: contract security isn’t about building a fortress that no one can get into. If you do that, you just become a bottleneck, and the business will find ways to work around you. The real goal is to build smart, secure guardrails that let the business move fast without taking on unnecessary risk.

When you have a centralized system with automated permissions and clear audit trails, you’re not just protecting the company’s most sensitive information. You’re building a foundation of trust. Your sales team can generate their own NDAs knowing they’re using the right template. Your finance team can pull reports on obligations without having to ask you for every single contract. You move from being a gatekeeper to a strategic partner who helps the business operate securely and close deals faster.

Contract management security is essential in the modern business world. The right CLM platform protects your sensitive information while enabling efficient contract processes across your organization.

This strategic shift yields tangible results, with organizations using Ironclad seeing an average 55% improvement across value metrics, according to The 2025 Contracting Benchmark Report. By implementing a modern CLM, you can build a foundation of trust where security and speed go hand-in-hand.

Frequently asked questions about contract management security

What’s the difference between internal and external security threats?

External threats are what most people think of—hackers trying to breach your systems to steal data. Internal threats come from inside your organization. This could be malicious, like a disgruntled employee leaking information, but more often it’s unintentional. Think of someone accidentally emailing a sensitive contract to the wrong person or using a weak password. Good security addresses both.

How can I get other teams to follow our security protocols?

This is all about making the secure way the easy way. If your process is complicated and slow, people will find workarounds. Use a CLM that integrates with the tools they already use, like Salesforce for your sales team. If they can create and approve a contract without leaving their own system, they’re much more likely to follow the process. It’s also about explaining the ‘why’—when they understand the risks, they’re more likely to be on board.

Is a cloud-based CLM really secure?

It’s a fair question. The reality is that leading cloud-based CLM providers invest far more in security than most individual companies ever could. They have dedicated security teams, undergo regular external audits like SOC 2, and use advanced encryption. Storing contracts in a top-tier, secure cloud platform is almost always safer than keeping them on an internal server or in a shared drive.

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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.