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, how many contracts and associated addendums exist through the organization.
Step 2: Conversion
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 which 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
Next stage is the attribute extraction process. This can be done in multiple ways, manually, by giving it to LPO or by software. Today’s time there is a new breed of using Natural Language Processing (NLP) software which 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 a start of the new one. Most CLS’s have a way to upload the documents and the associated meta-data that is extracted and put into a spreadsheet into the system. All reporting, triggers, information tracking etc. is now down in the CLS.
Using these stepping stones, you can get a handle around your contracts and information within them.