Why Legacy Contracts Can No Longer Cut It
Legacy contracts can cause problems for your business (and headaches for you) if they aren’t modernized. They are difficult to search to discover what’s inside of them. They lack structural metadata and offer you no insights, which can leave your legal team blindsided.
You will also face problems with poor storage, inaccessibility, and the likelihood of lost contracts. These problems can result in inefficiencies at best, legal liability at worst.
Instead, you can migrate and centralize your contracts into a contract lifecycle management (CLM) system. Contract management can upgrade a legacy contract to give you access to a document and all of its metadata. You can easily transfer your old contracts to CLM software to streamline your business and let your teams focus on more revenue-generating activities.
What is a legacy contract?
Legacy contracts are legally binding documents that have matured or are still active, but are still being stored in an outdated system or unsophisticated software. They are challenging to search for, often getting lost in the myriad ways they exist in your current systems.
Legacy contract storage often includes, but is not limited to:
- Excel spreadsheets
- Paper filing cabinets
- Internal or external networks
- Personal storage devices or computers
- File-sharing software
- Cloud storage
Legacy contracts are stored in many different formats, such as PDF, MS Word, and more. This makes them challenging to manage and edit in a collaborative way.
As your business continues to grow, legacy contract problems scale along with it. Antiquated storage systems for legacy contracts can’t keep pace with an increasingly digital marketplace, and hold you back when trying to fundraise.
Legacy contracts are difficult to search
Unlike modern technology, antiquated systems do not give you access to valuable data built into these contracts and agreements. Instead, you must perform a manual and basic text search for what you need. This is a prolonged and cumbersome process that wastes valuable time and employee effort.
Not only is it difficult to locate individual agreements, it’s also nearly impossible to know what’s inside of them. Contracts are full of valuable data that’s right at your fingertips when properly organized and stored. With legacy contracts, you must instead analyze an agreement manually, even for simple items, such as a particular date or a party name.
In today’s data-driven world, the characteristics of a legacy system will only hold you back. Business demands that in-house legal teams respond quickly and fully understand contractual obligations. They need access to contract metadata that is searchable and easy to use.
Using a contract data repository
Powerful CLM uses a contract repository that stores all contracts in one place. It is easy to capture and secure agreements so that you can answer questions instantly. You can leverage searchable data to automate your company, reduce risk, and discover new business opportunities.
Contracts end up all over the place using legacy systems. This means there is no way to secure the agreement to find what you are looking for efficiently. CLM software can help you import legacy or even third-party paper to build a complete and accurate source of truth for all of your contracts.
Legacy contracts lack structural metadata
Legacy contracts suffer from a significant lack of structural metadata. Contract metadata is simply the data about the contract and is like a quick summary of the agreement.
Metadata also helps legal teams sort and track information contained in these legal agreements. Without it, each contract will require manual review by an attorney to ascertain even simple details.
Structural metadata makes it easy for legal teams and the CLM software to organize, aggregate, and link contracts. With the right metadata, a company can be well-organized and easily access contracts without hours of contract administration.
There are many benefits of structural metadata that are lost when using legacy contracts, including:
- Streamlined communication between departments and different teams
- Consistency, relevant updates, and effective contract monitoring
- Clear and simple summaries of complex information that are accessible to everyone
- Ability to make quick and strategic decisions based on past agreements
Metadata lets you know about upcoming deadlines, comply with new regulations, and even help prepare for renegotiations. A CLM system can even remind you of critical events like fulfillment and renewal dates. With legacy contracts, you cannot take advantage of these and other CLM benefits.
Legacy agreements lack insight into contract terms
Legacy agreements do not give you easy access to the contract terms. This can leave your legal team blindsided when something happens. Your team needs access to this critical information, whether that be a business dispute, change in regulations, or other business detail to which the contract applies.
Legacy contracts do not grant access easily. Manual review is required, and there is no hope of getting proactive reminders or assistance from a legacy system.
Instead, legal teams can utilize modern CLM tools that remind them of important dates and can quickly identify key contract terms, such as:
- Party names and contact information
- Key fulfillment dates or other contractual deadlines
- Duration of agreement
- Contract effective date
- Jurisdiction or choice of law provisions
- Renewal dates and conditions
- Breach of contract conditions or liquidated damages clauses
These are only a few of the contract terms legal teams need quick and easy access to. Without it, your company is open to significant litigation risk and the loss of valuable business relationships.
Migrating legacy contracts to a modern CLM platform
Instead of living with the limitations of legacy contracts, you can migrate them to a modern CLM system instead. Companies need strategies for migrating legacy contracts, and an experienced CLM company knows how to help with this process.
Contract migration refers to moving existing contracts into a new CLM system. Whether you are moving to CLM for the first time or are coming from a less advanced software, the migration process can seem daunting at first. There is a lot to know and do to accomplish this monumental task. However, the right CLM solution helps make it easier to accurately move, organize, and modernize your company’s contracting process.
Legacy contract migration is a necessary part of modernizing your business and keeping up with the pace of modern competition. You should not spend your resources on time-consuming and ineffective manual storage and contract analysis. Modern companies leverage technology and talent to drive business and focus on revenue generation rather than inefficient contract administration.
Organizing legacy contracts into contract management software
Your business has spent a lot of effort creating templates, past agreements, and other valuable intellectual property you don’t want to lose, especially since you have an excellent option for moving into the modern era. This requires organizing your current inventory.
First, you should take stock of what you have. You’ll analyze what needs to be digitized and come with you into the new system. Organizing before migration saves valuable time and effort migrating your contract inventory.
Moving legacy contracts into modern storage
The contract repository not only makes it easy to search documents, but it also means you will have accurate records at all times. Never again will your contracts be stored haphazardly. You can leave physical paper inventory behind by digitizing agreements and storing them in a centralized location.
This gives you complete access to contract process data and metadata. When contracts are stored in an intelligent and centralized location, you can automate your business and how you handle contracts. This is especially helpful for high-volume, low-value contracts requiring little to no negotiation; however, it’s useful for every type of contract your business undertakes.
Tagging elements and fields
When migrating your legacy contracts, you can tag key elements and fields in your agreements. This is done with the help of your CLM platform and possibly third-party vendors who assist with the migration process. This includes tagging elements like contract type, key dates, fulfillment obligations, contract version, etc.
Tagging elements helps the CLM system sort and store your legacy contracts effectively. By the time this process is complete, you can say goodbye to your legacy system and its stored contracts.
Eliminate legacy contract problems with advanced CLM software
There are countless problems with legacy contracts, including limiting your business’s ability to compete against more efficient companies. Using a CLM, your team can spend more time focusing on generating revenue, making new deals, and innovating.
Legacy systems leave you stuck doing a manual review of agreements and facing the risk of substantial litigation because of breaches of contract. Leave the problems of legacy contracts behind by moving to a CLM system and migrating your existing agreements to modernize and bring your A game to the marketplace.
Your company needs and deserves access to modern tools that help you do your job effectively.