Top Contract Management KPIs to master CLM

“Mastering Contract Lifecycle Management” is a 15 part, bi-weekly series writen by Prashant Dubey, CEO of The Sumati Group, dedicated to expanding your mastery of Contract Lifecycle Management (CLM). The series is divided into 5 parts and encompasses the entire lifecycle of purchasing a CLM solution, including: the research phase, launching your CLM project, implementing the key building blocks, strategies for driving user adoption, and continuing down the road to success. Enjoy!

I approached with hesitation. Would she notice me? Would I be scolded or welcomed warmly? Ms. Kolakowski (Ms. K.) had her glasses on the bridge of her nose, looking through the bottom half of the bi-focals at the latest set of periodicals delivered in the morning. She was deep in concentration.

“Mr. Dubey…???”
“Y-Yes,” I stuttered.
“It’s nice to see you this afternoon.”
“Yes ma’am, it’s nice to see you too.”
“Ma’am? Please don’t call me that. That’s what people call my mother.”

I walked into the stacks with a smile. I was certain that banter and the parting comment meant that Ms. K. thought I was the cat’s pajamas. I was certain we were destined to live a long happy life together.

 

Multiple decades since, it’s very clear to me that none of the elements of my 13-year old boy, ultra-vivid imagination were even remotely true. I do, however, believe my affection for clause libraries today stems from the (assumed) suggestive glances of Ms. K.

 

Clause Libraries – Not Libraries at All

Libraries are places (physical or digital) where materials are stored for the purposed of being referenced or borrowed. Another key element of a library is that there is no value judgment (most of the time) on which of the contents are being referenced or borrowed, and by whom. Yes, there are some age related limitations, but if I wanted to check out all the archives of “Cosmo” magazine and consume them at Stumptown coffee, I am more than welcome to do so.

Clause libraries – not so much. A collection of clauses in a contract lifecycle management (CLM) system are (or should be) organized and presented to users in some order, WITH value judgment. There is either a risk rating on a particular clause, or limitations on who can use it in a contract and with or without whose permission. It’s like Ms. K., only with overt rules.

To Look Forward, One Must Look Back Into History

When I headed to the stacks, I usually ended up in the history section. Not because I was enthralled with the books, but rather because the foot traffic there was minimal and there was a little desk I could sit at in the back to get some quiet and study. Further, the library in the afternoon was also used for detention – so the history section was the furthest one from the detention table. I had a reputation to uphold, however untrue (studious Indian boy, always followed the rules) so I needed to make sure my regular visits to the library after school were not misconstrued.

History, in the domain of clause libraries, is the foundation for how to build a rational library. It is going to sound trite, but really, it is quite simple. Review the starting point template of an agreement. Start with your own paper (let’s say an MSA). Look at 12-15 ending MSAs and identify the provisions most often negotiated. (Hint: if the ending language is different than the starting point, there was likely some iteration.)

 

The ending point represents your company’s acceptability threshold for alternate language. Further, the deviation of the language from the template can be a good indicator of the level of risk contained in each ending provision. Therein lies your list of alternate clauses by provision, that can be organized into a library.

Lather, rinse, repeat. Contract type by contract type.

 

In our experience reviewing almost 6 million contract documents over 7 years, we have found that, on balance, in most agreements (not on 3rd party paper), there are no more than 4-7 provisions negotiated time after time, after time. So, focus on these in a clause library, manage the rest on a one-off basis.

Ms. K. would likely be proud that I’ve moved on.

Want to learn more about how to create a Clause Library? info@sumatigroup.com

Be sure to check back on June 29th for the next edition of “Mastering Contract Lifecycle Management” to learn why periodic QA of contract metadata is important.

To learn ways to speed up the contracting process, visit the previous post – HERE.

The “Mastering Contract Lifecycle Management” series is written by Prashant Dubey, bestselling author of The Generalist Counsel and CEO of The Sumati Group, which is the Apttus premier contract migration and CLM Managed Services partner.

Download the Forrester Wave Contract Management Report for Free (a $2495 value) to see a full analysis on the top CLM vendors.