Contract management is one of the biggest drains on resources for organizations, regardless of their size.
According to the American Bar Association, “A typical Fortune 1000 company manages between 20,000 to 40,000 active contracts at any given time, and at least 10% of these are misplaced, hard to locate, or neglected.”
When you dig deeper into the challenges of contract management, the reality is even more concerning. A 2022 DocuSign survey of over 1,300 contract professionals globally found that:
- It takes an average of 45 minutes to locate a completed contract
- 46% of participants had been unable to find a contract when needed
- Finding specific details in a contract takes an average of 84 minutes
- 68% of respondents access completed contracts at least once a week
Even for mid-sized teams, this issue is significant. It can take 30 hours of work to draft, negotiate, and track a contract. For a mid-sized organization managing around 500 contracts annually, that equates to the workload of 7 full-time employees.
Fortunately, adopting a digital, centralized contract repository has been shown to significantly enhance the efficiency of contract operations and minimize the time wasted searching for contracts.
What is a Digital Contract Repository and Why is It Important?
In simple terms, a contract repository is a storage system for contracts. Today, it has evolved into a centralized, cloud-based solution for managing finalized agreements. To function efficiently, it must be searchable by key fields and terms, and be easily updatable with amendments, renewals, and regulatory changes. It’s a dynamic tool, not just a storage space.
Many legal departments are burdened with inefficient processes for generating, reviewing, managing, and storing contracts. Before signing, in-house attorneys and contract managers often deal with slow, manual workflows, using disconnected systems to negotiate, review, and approve contracts. After the contract is signed, additional issues arise related to tracking renewals, managing obligations, and mitigating risks. Much of this inefficiency stems from not knowing where contracts are stored and lacking the ability to search for key data.
Gartner notes that contract generation, negotiation, review, and approval can consume up to 50% of a legal department’s time. Furthermore, siloed departments complicate the process of managing and locating thousands of contracts across an organization. Additionally, general counsels are responsible for ensuring secure, confidential handling of contracts, often requiring need-to-know access permissions.
Traditional contract storage systems, such as Microsoft SharePoint or shared drives, are inconsistent and unreliable for managing risks and obligations. In contrast, a centralized digital contract repository offers advanced collaboration features, enhancing transparency, efficiency, and information security.
How a Digital Contract Repository Solves Common Legal and Business Challenges
A modern digital contract repository can address numerous challenges, streamlining the contract lifecycle and easing the burden on staff by:
- Speeding up contract retrieval: With a single source of truth, locating contracts no longer takes hours.
- Reducing the number of systems: Eliminates the need to switch between various systems where contracts are stored (like Word, email, SharePoint, or CRM solutions).
- Simplifying handoffs between parties: Streamlines legal reviews, negotiations, approvals, and signatures.
- Tracking contract obligations: Treats contracts as codified business relationships, with provisions that can be monitored.
- Identifying vendor relationships: Easily identify previous contractual relationships with the same vendor or competitor.
- Screening for specific clauses: Quickly locate contracts with specific terms such as nonstandard payment clauses, force majeure, or confidentiality provisions.
- Supporting remote work: Enables remote teams to access centralized contract templates, maintaining consistency and resource access.
- Providing real-time access to multiple departments: Solutions with built-in Salesforce integrations allow legal, sales, and other teams to access contracts in real-time.
- Standardizing agreements: Minimizes manual reviews and reduces variation in common documents like NDAs.
A Phased Approach to Implementing CLM
While eSignature technology has streamlined contract execution, organizations often lack a clear roadmap to implementing a Contract Lifecycle Management (CLM) solution that addresses the complexities before and after signing.
Fortunately, organizations can adopt a modular, phased approach to implementing a CLM system like DocuSign CLM, scaling as their needs evolve. For smaller businesses, DocuSign CLM Essentials is an ideal starting point to simplify contract management. As they grow, they can leverage AI-driven contract analytics and real-time tracking with DocuSign Monitor for CLM.
