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What is Contract Life Cycle Management and How Does it Fit into Legal Technology and Law 2.0 in 2006?

Michael Kraft and Robert Enholm, in their excellent “GC Tech Wish List for 2006,” talk about contract life cycle management (CLCM) in terms of “applying technology to the contract process from letter of intent through negotiation and execution to performance, amendment and contract renewal.” They also say, “The emergence of enterprise resource planning software over the past decade has helped businesses with “workflow” processes, and GCs are exploring how to apply these principles to the activities of corporate law departments.” And CLCM is one good example.
In short, CLCM is about finding ways to look at the contracting process as a business workflow process that can be tuned in ways that benefit businesses rather than as a series of independent, unrelated legal projects.
It’s a difference that, as they say, makes all the difference.
I’ve been thinking, off and on, about CLCM over the past few years, including most recently in some discussions I had involving a large company that wanted to get some control over a very ad hoc approach they had to generating first drafts of standard documents. The business case for CLCM is pretty easy to make.
When I think about contracts (or other legal documents) as part of a process, I invariably think about the potential role of document assembly.
I’m not surprised that Kraft and Enholm move in the same direction in their article. They say, “‘document assembly software’ is coming to be seen as merely one link in the chain of the contract management process. GCs must be alert to opportunities to use this technology to expedite contract management process.”
The “one link in the chain” is the important part of this quote. Too many people I talk to see the goal of document assembly as being to generate finished documents with a “push of the button.” That’s not it at all. My goal is always to generate significant improvements in generating first drafts – versions of documents that are in “good enough” form that you can start immediately to do custom work and tailoring. People who look for the 100% solution from document assembly are inevitably disappointed and forego the benefits that 80%, 60% or even 20% solutions can bring them.
In a way, they remind me of people who see the benefit of electronic discovery only as a way of finding “the smoking gun.” Long-time users of electronic discovery rarely talk about “smoking guns.” Instead, they talk about the benefits of productivity, efficiency, organization, streamlining, telling a better story and focusing on the key issues. In other words, there are substantial benefits that flow from improved processes and procedures.
Document assembly brings with it a set of similar benefits beyond the “push button drafts” that most people concentrate on. They are similar to those you find in electronic discovery. Kraft and Enholm mention these other benefits: “GCs that effectively adopt these tools can conserve legal resources and time — and contribute to the competitiveness of the company.”
I’ve seen the benefits of document assembly coming in not just efficiency, but standardization, quality control, consistency, training, and effective use of learning from previous deals and documents. In fact, I’ve sometime described document assembly software as a tool for applied knowledge management. As you think in terms of CLCM, you will start to see the role that document assembly might play in the process.
Kraft and Enholm go on to say, “‘Contract process software’ is perhaps an apt label for the products that bridge document assembly and contract management.”
In 2005, Cisco’s NDA Central project (demo and white paper accessible from DealBuilder here (free registration required) has deservedly garnered a lot of attention. NDA Central took an undisciplined method of handling simple legal projects and used document assembly as a tool not just to create legal documents, but to manage and improve a business process with positive business results to the company and improved workflow and higher-value work for the legal department and outside counsel.
Again, Kraft and Enholm, “GCs want help from outside counsel to establish processes and protocols, help draft underlying documents and maintain the systems in our ever-changing legal environment.” Here’s the key to CLCM and the new approaches to using technology in the practice of law starting to be known as Law 2.0 – there are clear benefits to both clients and lawyers. Often, it allows the lawyer to do higher-level work, often the type that the client really wishes the lawyer had more time to do.
Kraft and Enholm provide an excellent, brief introduction to an area that could become as significant to transactional corporate lawyers as electronic discovery is to litigation lawyers. The rest of their article is well worth your while to read as well.
What do I think of the interplay of CLCM and document assembly and the potential that it has? Let’s put it this way, if I spent the whole of 2006 working only on these types of projects, 2006 would be a great year indeed. This is one topic you’ll being hearing more about from me in 2006.
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[Originally posted on DennisKennedy.Blog (http://www.denniskennedy.com/blog/)]
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