Some Practical Advice on Implementing Clause and Template Libraries

By Karen Howe, Director of Training at Contract Logix

A few months ago, I wrote a blog about the advantages Clause and Template libraries provide when used with contract management software. The rewards included speeding up the creation of contracts by enabling non-legal staff to generate them quickly and easily and lessening the risks of using non-approved or obsolete language in agreements. So, what’s the best way to get started implementing clause and template libraries? Before I dive into that topic, first, some clarity.

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Clause Library and Template Library – What’s the Difference?

When talking with users about Contract Logix’s contract management software, I sometimes find them confused about the difference between the Clause Library and the Template Library, so let me offer this analogy.

Clauses are like “Legos”, the building blocks (of text) that make up your contract documents.  The red ones might state payment terms, the yellow ones describe services, and the blue ones define the handling of confidential information.  Each piece contains specific language and may also include tags that can pull in data from other areas of the system, like the name and address of the counterparty’s organization. Like Lego pieces, clauses can be assembled in numerous ways to construct different types of contracts.

Templates are like the assembly instructions that come in the box of Legos and without which you’d just have a pile of little plastic pieces. They provide the structure and define the order in which the clauses are assembled for various contract types, like non-disclosure agreements (NDAs) or master services agreements (MSAs). The template can also include rules for under what circumstances a particular clause should be included in the contract.

Putting it into Practice – Could Bigger be Better?

So, what strategies can you use when considering the best way to begin implementing clause and template libraries? For this, I’d like to refer back to a recent blog series by a colleague on the topic of How to Avoid the Second Job Syndrome in Contract Data Entry.  Some key takeaways from that series were the importance of keeping it simple when starting out and two options for achieving that: “Go for the Quick Win” and “Go for the Biggest Impact.”

When talking about implementing Clause and Template Libraries, the “Quick Win” approach might mean taking the contract templates you currently use and creating a single, separate clause for each in the Clause Library, rather than breaking each document up into smaller, composite clauses. The end result would be one clause per template.

Now you might be thinking – “Wait a minute! I thought you needed a bunch of clauses to make up a template!” Not so. A clause can be any length you want, from a single sentence to a multi-page document, and a template can contain any number of clauses – one or a hundred, it doesn’t matter.

Going back to my Legos analogy, there’s a reason that the blocks made for preschoolers are bigger and fewer than the ones designed for older children and the blocks get progressively smaller and the instructions more complex as the users mature. It’s easier to handle and doesn’t take as long to build! So “bigger” [clauses] might be “better” when you’re starting out. Of course, you won’t be able to take advantage of fancy features like rules that make decisions on which clauses to include based on field values, but you’ll realize value faster because you can get it up and running quickly.

Fewer but More Impactful Templates?

What about the “Biggest Impact” approach? That method suggests you concentrate on the contract type with the largest impact on your company (whether it be financial or some other metric) and worry about the others later. This also is a viable strategy for building and implementing Clause and Template Libraries. It would be quite daunting to build out a library of every clause used in every contract you need to generate, and the time-to-value could extend out months from now.  However, if you focus on a key contract type (one template) and build out just the clauses needed to produce that one, you’ll be generating contracts and realizing value from the contract management system in a shorter timeframe. The rest of your contract templates can be rolled out as time permits. Plus, you’ll likely be able to take advantage of clauses already in the Library.

Takeaway

Even if you know you should be taking advantage of Clause and Template libraries within your contract management software, getting started can seem overwhelming. If you follow the simpler-is-better approach, by either limiting the number of clauses or the number of templates you have to create and manage right out of the gate, you’ll be generating contracts sooner and proving the value of that software to your organization.