Organizations use and need legal contracts to transact business, but it is only when they are managed in an efficient way do they really make business effective. It is therefore imperative to have a system that can store and recall not only the contracts but also the critical and key elements of any contract.
Success in capturing rich complete information about your contracts is the outcome of a process. The process is composed of various steps that enable the contracts to move from paper into searchable digital information. Think of each step as an event where a specific outcome of the information meets pre-determined criteria of content, quality, and accuracy. At each step, the information is distilled further and verified to achieve a high-quality indicator of Six Sigma reliability.
Step 1: Inventory
The process starts with a consultative analysis of your organizational needs for contract management. Which department has contracts, and how many contracts and associated addendums exist throughout the organization?
Step 2: Conversion
The next step would be to scan the paper documents into computer files; usually PDFs. Each of the groups needs to do that. If all are centralized, this can be coordinated together. Gather a document that outlines the best practices for the scanning.
Step 3: Tracking Elements
A parallel step would be to identify who wants what information, and what should that look like. With so many elements, commonly called attributes, in a contract that may be needed, and so many operational and departmental needs this consultation will determine the information to be extracted. For example, with NDAs you may want to track counterparty name, expiration date, and address only. For your Supplier contracts, you may want to track the ship from location, penalty clauses, etc. Step 4: Extract the attributes from each contract
Step 4: Extract the attributes from each contract
The next stage is the attribute extraction process. This can be done in multiple ways, manually, by giving it to LPO, or by software. Today there is a new breed of using Natural Language Processing (NLP) software that looks at phrases, words, and sentences in each contract and understands meaning according to the rules set for the attribute extraction.
Step 5: Upload to a CLM
This is the end of the journey and the start of the new one. Most CLMs have a way to upload the documents and the associated metadata that is extracted and put into a spreadsheet in the system. All reporting, triggers, information tracking, etc. is now down in the Contract lifecycle management software.
Using these stepping stones, you can get a handle on your contracts and the information within them.