Las Vegas, Nevada — At recent legal technology conferences, discussions have frequently centered on the challenges surrounding Contract Lifecycle Management (CLM) systems. While these systems promise efficiency and improved metrics, many organizations find themselves grappling with disappointments, including poor user adoption and lengthy contract cycle times.
A key issue faced by businesses is the lengthy duration from initiating a deal to finalizing a contract, known as contract cycle time. This includes all stages from drafting to obtaining signatures. For companies, the pressure is clear: expedite deals to maximize revenue. Unfortunately, many find that, after investing in CLM software, contracts take even longer to finalize—a frustrating scenario that has become surprisingly common.
One significant roadblock to efficiency is the lack of support for multiple users to collaborate on a contract simultaneously. Traditional CLM systems operate on a model where one user must “check out” a document to make edits, preventing other stakeholders from making necessary changes at the same time. This linear approach hinders real collaboration between departments, such as legal and finance, causing delays that can bottleneck the entire process.
Workflow management, though touted as a solution for organizing contract approvals, often fails in practice. While it facilitates sequential reviews, it can lead to a stagnation of contracts awaiting the next signer. This approach may work well for linear tasks, but contracts require more dynamic collaboration that many existing systems cannot support. Vendors should be challenged to create workflows that allow for faster processing without losing oversight, yet this remains an unrealized goal.
Furthermore, many CLM systems complicate version control by treating each minor edit as a new document version. This practice not only clutters systems with excessive versions but also increases the risk of mishaps, such as a user inadvertently replacing an updated contract with an older version. Such mistakes can jeopardize negotiations and leave companies exposed.
While artificial intelligence holds promise for enhancing CLM processes, it is not a panacea. Current AI technology lacks the sophistication needed to fully grasp a business’s unique context and practices. Without systems that ensure human oversight and contextual understanding, AI’s effectiveness in streamlining contract management will be limited.
The intricacies of contract execution require input from various stakeholders, including finance, legal, and sales teams, as well as external parties like legal counsels and subcontractors. Consequently, contracts of increasing complexity can take months—reported averages of 26 weeks for international contracts underscore the urgent need for improvements. In a fast-paced business environment, such delays are increasingly untenable.
Ultimately, the shortcomings of CLM systems extend beyond mere implementation issues or cultural resistance. Fundamental technological limitations persist, particularly regarding concurrent editing capabilities, workflow flexibility, and collaboration with external parties. Until these core challenges are addressed, companies will likely continue experiencing dissatisfaction with their CLM systems.
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