How Contract Management Software Can Help with Legal Redlining
During contract drafting and negotiation, legal redlining is the only way to ensure the process leads to a mutually beneficial agreement for all parties involved. Today, the law influences almost every aspect of life and in business and contracts are the cornerstone for sales, purchases, mergers, partnerships, and reorganizations. The legal profession has become an essential part of every legally binding interaction between individuals, entities, and governments.
With contract management software, the process of legal redlining and clarifying the specific language used in the agreement can help reduce the burden on legal resources. When preparing, negotiating, and finalizing agreements, contract management software empowers your contract management teams without consuming additional time from legal resources.
What is Legal Redlining in Contract Management Software?
Legal redlining is marking up an agreement to ensure it is accurate, complete, and reasonable in the eyes of the law and your organization.
Many organizations that have in-house counsel are finding resources stretched thin and looking for technology to assist. With every deal or agreement needing final approval from the legal team, using cloud contract management software is becoming critical for most organizations. For today’s businesses, establishing an optimized contract lifecycle management (CLM) process is the only way to save on legal costs, ensure accuracy, and mitigate the inherent risks when signing a new agreement.
Common Challenges with Legal Redlining of Contracts
If organizations rely on email communications to edit, review, and negotiate legal agreements, both internally and with third parties, then it’s bound to lead to errors. Every locally stored version of a contract opens up another opportunity for errors to creep into the document, which could lead to disputes and litigation down the line. It makes tracking version control extremely difficult and labor-intensive. In addition, manual drafting and legal redlining tasks also add time and effort to the process that raises the costs of your overall contract management. You are relying on emailing versions back and forth without even knowing if the recipient has opened the email and reviewed the attached contract. This adds time and lacks visibility into the process.
Benefits of Using Contract Management Software for Legal Redlining
As legal redlining happens mainly while you’re still in the drafting and negotiation phases of the contract, it’s likely where the most errors can occur. At this point, you need legal expertise to ensure the language used is clear, legally sound, and acceptable to all the parties involved. Different subject matter experts and contract professionals may draft the majority of the document but the final language will require legal experts, typically a Corporate or General Counsel, from both the vendor and buying teams.
Not keeping track of all changes to the document during this period can walk organizations into a legal minefield. To help teams overcome these challenges, here are some of the major benefits of using contract management software to assist teams with their draft, edit, update, and legal redlining processes.
Retains a Complete Record of the Change History
Just like the relationships built on these agreements, contractual documents mature over time. The specifics of the final signed document may be the legally binding terms, but how you got to the final version can help inform future decisions and enable you to evaluate the efficiency of your contracts and processes in retrospect.
Every review and edit to the clauses, terms, and language used is valuable information that can help you in the future, especially if a dispute arises. A complete history of every change makes it easier to find the exact moment an error occurred and helps you to eliminate similar situations in the future.
Helps Teams to Start Collaborating Early
According to the prevailing consensus, the earlier you have your legal team involved in the process the better the outcome and shorter the timeline for you to execute a contract. Although the first and most important step is research and business analysis, once you have the primary requirements finalized you’ll want legal help to draft the first version of the document, which can be accomplished without consuming a lot of legal’s time by using pre-approved language from clause and template libraries.
With collaboration tools, you can ensure everyone stays up to date with the latest developments and negotiate new agreements quickly. A centralized contract management system allows you to loop in the right resources, at the right time, with deliberate focus areas to ensure the final agreement is acceptable to all parties.
Provide Enhanced Security and Maintain Confidentiality
Controlling the disclosure of information is one of the most essential components of contract management software. If an organization uses manual contract management methods such as shared drives and spreadsheets, it adds additional risk to the process because the legal agreements are not securely stored or accessible. Even between legal teams, procurement groups, and suppliers or vendors, specific resources should have access to certain documents only.
A CLM system enables you to set granular permissions and secure all legal documents with modern encryption while granting access to your different resources from any connected device. Enhanced security will streamline compliance tasks with frameworks like SOC 2 Type II, FISMA, and HIPAA. You’ll be able to archive records, retain critical data, and secure information in storage or transit using encryption.
Deploying Contract Logix for Your Contract Management and Legal Redlining Processes
Contract management software goes one step further with your legal redlining requirements. You can use CLM systems to create clause libraries from your legal team that includes pre-approved legal language that contract managers can use to build negotiation-ready contracts. Legal teams can work on perfecting the libraries while contract managers and buyers stay on top of their daily tasks with ease.
When a deviation or exception occurs, a legal resource is only an invite away so collaboration can happen smoothly and in real-time – ensuring the timely finalization of the agreement. Contract Logix is a cloud CLM solution that provides groundbreaking contract redlining and negotiation technology called Collaboration Room. This enables enhanced and real-time negotiation, extensive change tracking, and superior collaboration features. If you need a CLM system to speed up your contracting processes, Contract Logix is a safe, secure, and accessible solution that can support any sized organization’s legal redlining requirements.
To find out how our CLM system can help your legal redlining procedures, request a demo from Contract Logix today.