Why Contract Review Software is Great for the Pre-Execution Process
Nov 6th, 2023
How can you guarantee a speedier and more effective contract review process? One solution lies in utilizing contract review software. This tool automates and manages the entire pre-execution process, ensuring your contracts contain standardized and approved terms, clauses, and language. It also helps your organization better comply with all regulatory requirements, and automates key parts of the process such as approvals.
- Contract review is necessary to ensure contracts meet your internal standards, are legally viable, and compliant with all relevant regulations.
- Contract review software automates the contract review process, reducing time and costs.
- Full-featured contract review software examines terms and conditions, checks terminations and renewals, reviews contract language, audits regulatory compliance, confirms dates and deliverables, and ensures contract completeness.
- Leading contract management software solutions, including those from Contract Logix, include robust contract review components.
🤫 PS: Discover the 10 best practices for contract management HERE.
Why is Contract Review Necessary?
According to the 2021 EY Law Survey by the Harvard Law School Center on the Legal Profession, the typical large organization manages around 350 contracts each week. That’s over 18,000 contacts a year, each costing thousands to complete.
Smaller companies may handle fewer contracts, but the number of contracts signed increases geometrically with the size of the organization. As an extreme example, the Federal government signs over 11 million contracts a year.
Your organization might not have millions of contracts to manage, but each and every contract must be thoroughly reviewed before execution. This review process ensures compliance with your company’s internal standards, industry norms, and government regulations.
Contract review involves evaluating all terms and conditions in the contract, ensuring that it is legally valid and regulatorily compliant, and detailing all potential risks involved. The process also includes a thorough scrutiny for errors or discrepancies in the contract language.
This review must take place before the contract is fully executed and can be manual or software-assisted. Ideally, the process involves key players from throughout your organization, including:
- Relevant operational team members
- Team and business management
- Legal staff, including legal assistants, paralegals, and lawyers
Contract review, especially when done manually, can consume large amounts of time and resources. However, this investment is considerably less expensive than the costs of a poorly written contract or a breach-of-contract lawsuit. This approach can also introduce risk in the event the wrong person reviews and approves the contract.
SOURCE: Casey Handy-Smith Entertainment Lawyer via YouTube
What is Contract Review Software?
Contract review software is a technology-based solution that automates the review and analysis of the contents of a contract. Companies primarily employ contract review software for two reasons. First, it can review large numbers of contracts more quickly and accurately than can previous manual processes. Second, it automates the pre-execution phase of contract management.
Full-featured contract management software solutions, such as those from Contract Logix, include automated contract review functionality. Beyond automating contract review, contract management software can also:
- Optimize deadline and deliverables tracking
- Reduce paperwork
- Minimize errors
- Improve security
- Speed up and streamline the entire contract creation process
How Contract Review Software Enhances the Pre-Execution Process
To understand how a company can benefit from using contract review software, it’s necessary to understand its functionalities. Most contract review software performs six essential automated functions.
Examine Terms and Clauses
The software first identifies and examines all terms and clauses in the contract, ensuring they align with company expectations and standards.
Check Terminations and Renewals
A common mistake when drafting a contract is to leave the ending of the contract vague or ignore it completely. The contract review software sets a predetermined termination date and, if desired, outlines criteria for automatic or negotiated renewal.
Review Contact Language
All contracts from your organization should comply with standard company-approved language being understandable and legally viable. Contract review software applies standardized language and formatting to reduce confusing or misleading wording.
Audit Regulatory Compliance
With an increasing number of regulations in many industries, compliance is difficult to ensure in a manual review, leaving your company open to fines and lawsuits. Contract review software closely examines each contract to ensure compliance with all relevant regulations—even those that might escape the notice of human auditors.
Confirm Dates and Deliverables
All dates and deliverables must be clearly delineated and tracked for performance. Contract review software does this automatically and ensures that contract dates work with your internal schedules.
Ensure Contract Completeness
Acting like a proofreader, the software identifies any missing items, dates, and the like, ensuring the contract is legally sound.
Let Contract Logix Manage Your Contract Review Process
Contract Logix’s contract management software includes a robust contract review component that adds significant value to your organization’s pre-execution process. It automates both the pre- and post-execution processes, employing pre-designed contract templates, a library of pre-approved terms and clauses, and automated routing for reviews and approvals.
Whether your organization manages occasional contracts or executes hundreds monthly, Contract Logix’s automated contract review capabilities can benefit you. The software also manages your entire contract process, including post-execution deliverables and payments. In addition, all your contracts are stored in a centralized digital repository for fast and easy access and detailed reporting and analysis. It’s the best way to manage both contract review and your entire contract process.
Contact Contract Logix to learn more about how contract review software can benefit your organization.
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