Legal Records Management for Digital Contracts
Contracts are key to every business. Thankfully, digital contract management has simplified the contracting process over the years, enabling the entire contract life cycle–from creation and negotiation to management and storage–to be contained within one robust digital platform. It’s important to keep back-end records of these contracts to ensure compliance and legal enforceability, but managing records accepted by a high volume of people through a homemade system of clickwrap (click-to-accept agreement) is difficult for most legal teams.
Digital contract records usually aren’t centralized and tend to be handled by Tech teams, who already have a lot on their plates. If these records aren’t properly managed, they can become difficult to access, waste manpower and resources, and even pose problems for legal enforceability.
Poor management can also lead to financial losses, as when you accidentally miss a contract renewal date. Read on to learn more about the whole process of managing digital legal records: what data to track, how to store records securely on the cloud, and how to ensure your records can sufficiently defend you against legal action.
Digital contracting and storing records
It might come as a surprise that, like clickwrap, storing records for digital contracts usually aren’t handled b Legal. Instead, they’re often the responsibility of the tech team. There are a host of cons associated with Tech teams handling these records:
- Tech teams aren’t legal experts, so even one mistake could put the business at risk.
- A simple process, like an update to an agreement, could take weeks if Legal is dependent on the Tech team’s schedule.
- When Legal isn’t empowered to handle all legal affairs, the whole business is at risk.
Digital contract records are also rarely centralized, so it’s difficult to streamline their organization across many different departments. If records aren’t centralized on the back-end, they’re likely not centralized on the front-end either, creating confusion about which agreement is most recent and live. In addition to legal enforceability, good management of digital contract records ensures the following:
- You’ll gain time that would have otherwise been spent manually searching for contract details.
- Your contracts will remain secure and protected from accidental duplication.
- You’ll always be notified about contract renewals and certificate expirations.
If you want to make sure your contracts are legally enforceable, it’s advisable to manage the records well. For example, record specific data about agreements and store back-end digital records using cloud technology. This article discusses the importance of managing digital contract records, including:
- What secure record management looks like
- How cloud technology stores and secures your digital contract records
- What contract data your digital records should capture
- Clickwrap agreement best practices for legal enforceability
Contract repositories and digital contracting platforms
Back-end records of digital contracts are stored and managed in a contract repository. A contract repository is a centralized storage system for digital contracts, sometimes executed using a digital contracting platform. Besides ensuring the legal enforceability of the contracts, good management of these records is crucial for increasing business efficiency.
If your Tech team manages a digital platform–like a website or app–managing digital records in the repository becomes an extraneous administrative task on top of their primary workload. This means the Tech team has less time to work on your main digital offering. A digital contracting platform gives Legal all the tools they need to manage the repository, freeing up time for the Tech team.
Furthermore, changes in legislation mean that you’ll have to alter the way you store digital records to ensure compliance with new rules. Legal should be empowered to apply these updates to the repository independently, without having to check in with the Tech team every time.
Many businesses use Excel as a repository for digital contract records, but this in-house strategy has some major potential pitfalls:
- Data must be manually filtered to find the appropriate details.
- Employees must spend time and energy working on spreadsheets.
- It’s hard to keep track of multiple contracts in a single document.
These pitfalls disrupt business efficiency and possibilities for innovation because Tech employees must spend their working hours completing these manual administrative tasks instead of spending it on more crucial projects.
Outsourcing the management process to a digital contracting platform mitigates problems associated with Excel spreadsheets. Digital contracting platforms centralize digital contract records, creating ‘metadata.’ Metadata helps teams understand common patterns in contracts–for example, the most used clauses–alerts you to upcoming renewal deadlines, and facilitates instant access to contract information. Automated record management removes the risk of human error and also reduces the risk of non-compliance. There’s also no risk of easy document duplication and a lower risk of using outdated versions of contracts.
Securing records with cloud technology
Another recommended best practice is to secure back-end records on the cloud. Besides the obvious benefits of record accessibility, the ability to easily share information, and the relative ease of working with cloud technology, there are a host of other reasons in favor of this practice:
- Cloud storage avoids the risk of damage to records, which is more likely to happen if they’re stored on your hardware.
- It’s much quicker to search for records on the cloud than on hardware or in physical filing cabinets.
- Cloud storage adheres to regulatory compliance requirements and is tamper-proof, so the integrity of records is maintained should you need to go to court.
Furthermore, cloud technology offers several security measures to ensure your contracts are safe and sound, including:
- Redaction: redacting sensitive parts of the digital contract record
- Data encryption: scrambling the record data so only authorized parties can decipher it
- Access Control Lists (ACLs): limiting access to the digital contract records to authorized parties only
Digital contracting platforms offer cloud services to secure your digital contract records. Outsourcing cloud storage in this way offers greater flexibility and scalability. For example, if you want to scale your storage levels up due to increased demand during the holiday season, digital contracting platforms can do this for you with the click of a button. You can also scale your storage levels down during quieter times of the year.
In case of an internal crisis of some kind—think severe electrical faults or server crashes—your digital contract records will remain safe and accessible on the cloud. Digital contracting platforms also offer guaranteed support from tech experts on call to handle technology upgrades, fix bugs, and do all of this outside of typical business hours.
Clickwrap agreements and legal compliance
The management of digital contract records also covers clickwrap agreements (also called click-accept, click-to-sign, or click-through agreements). These are online agreements in which users click a button to check a box that says “I agree” to sign a contract.
Clickwrap agreements are popular because they’re a simple means of capturing consent without a physical signature. Clickwrap agreements are enforceable but there have been some cases in which the legality of agreements has been contested in court.
In the rare case of encountering clickwrap-related litigation, you’ll need back-end records of the following clickwrap details to ensure success:
- Screenshots of the screen at the time of signing to ensure that it was designed for conspicuous notice
- Data that connects a specific user to their acceptance of a specific agreement (i.e. IP address, name, device, e-mail address, and date)
- The specific agreement that was accepted
Poorly managed digital records might tell you which client accepted an agreement, but not which agreement, or which version of the agreement, they accepted. Ironclad is the only platform on which clickwrap agreements are executed using a contract lifecycle management (CLM) platform; most other companies have no way of storing back-end records for clickwrap agreements.
Digital records and successful litigation
When it comes to litigation involving digital records, businesses produced back-end records in 24% of cases from the year leading up to April 2020. In 65% of these cases, businesses were successful in enforcing their terms thanks to the integrity of their records.
You’re clearly more likely to be successful in litigation if you have orderly back-end records of agreements. These records alone, however, aren’t enough. The records must show details of who, specifically, accepted the agreement, which version of the agreement they accepted, and the date and time of acceptance.
The importance of specificity in back-end records is demonstrated by the case of Holley v. Bitesquad.com. Bitesquad provided records with specific details about agreement acceptance, including the “e-mail address to which the employment packet is sent and the times at which it is sent, viewed, and signed by the employee.”
In contrast, back-end records that can’t pinpoint the users who signed the agreement or provide detailed information about the signees could hurt your business in litigation. For example, in the case of re: Facebook Inc., Consumer Privacy User Profile Litigation, the court did not enforce Facebook’s terms because it couldn’t provide individual records of acceptance showing that specific users agreed to a particular version of the terms.
Ironclad's repository for record management
Unlike many other digital contracting platforms, Ironclad was created by legal experts. Ironclad even has a team of Legal Engineers who help manage trickier deployments and ensure that systems get launched properly so you can fully utilize your CLM. It’s no surprise that Eric Lentell, VP & Deputy General Counsel of FitBit, said that, “Our Business teams come to Legal for solutions because they know that we have the ability to create them with Ironclad.”
Our Dynamic Repository product is ideal for any business that wants to enhance its management of digital contract records. The repository creates ‘metadata’ for every contract, including the following details:
- Names of parties who signed the contract
- How much the contract is worth
- The specific type of contract
- The contract’s renewal and expiry dates
The Dynamic Repository works by building reports, so business users can access as much or as little of the contract metadata that they need, whenever they need it. Our Dynamic Repository also comes with a built-in contract reminder app, so you won’t ever miss a contract deadline.
Ironclad offers smart alerts, process automation, and cross-system integrations to improve your business’s efficiency. Our team has helped many companies that are household names across different industries, including DoorDash, Mastercard, and Glassdoor.
Dynamic Repository for legal records management
Managing digital contract records is no small task. From securing the records safely to ensuring they contain all the relevant details to make agreements legally enforceable. Manual in-house management of digital contract records with Excel spreadsheets takes a lot of time and manpower and leaves a lot of room for human error.
Outsourcing digital contract management and cloud storage to a digital contracting platform saves time, money, and resources. In addition, digital contracting platforms:
- Work to ensure that your digital contract records contain all the data necessary for legal enforcement
- Store digital contracts for secure but easy access by authorized personnel
- Allow for changing the size of your contract repository with the click of a button
Ironclad’s Dynamic Repository helps you deal with digital contracts smoothly and efficiently. Sign up for a demo today to see how Ironclad can help illuminate your business.
- Digital contracting and storing records
- Contract repositories and digital contracting platforms
- Securing records with cloud technology
- Clickwrap agreements and legal compliance
- Digital records and successful litigation
- Ironclad's repository for record management
- Dynamic Repository for legal records management
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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.