June 29 by Prashant Dubey

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 am blessed to live in one of the most amazing places on the planet – the state of Oregon, in the United States. The greenery is year round, the rain is just enough to keep the sun worshippers out (I was told by Native Oregonians to say that as a condition of my residency) and the politics are open and accepting.

About 15 years ago, I was fortunate enough to have stumbled upon a little shack on a river in the middle of national forest. It was rather ramshackle, but with a bunch of “TLC,” I was able to make it habitable. No Wi-Fi, episodic electricity, and the occasional forest critter inhabiting the rafters. No matter, it is mine and it’s a blessing.

The shack in background in mine. The one in the foreground is my kid’s rendition of my shack. Their’s is fancier.

My 19-year old son happens to agree with me. He’s home from college for the summer, slaving away at an internship and keeping himself busy with a social agenda that would rival the Kardashian’s (with an Oregon twist, no less.) This past weekend, that agenda included him driving into the mountains, up to the shack and having anywhere from 4 to 9 of his compatriots join him. (I’m not really sure of the actual number in a steady state).
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Trust but Verify

It makes me immensely happy that my children have grown up with a sensibility for nature. I didn’t even have to try – it kind of just happens in Oregon. As such, I’m ecstatic that my son and his friends went off the grid and had some good Oregon fun with campfires and s’mores. Isn’t that what all 19 year-olds do? We had covered the rules, guardrails, and protocols surrounding “cleanup and close-up” of the cabin. Despite the clarity of these rules, what my wife and I have learned over the years is that a periodic Quality Assurance check is advisable. We headed out for a nice hour-long drive up into the mountains to see how close to protocol the current state of the cabin was.

Contract Repository Integrity

Almost a decade into the maturation of the CLM marketplace, most companies have figured out that creating a high integrity repository is the foundation of contract management. Many have also realized that the process of discovering relevant contract documents, organizing them into rational parent/child hierarchies and then enriching them with relevant metadata by contract type is tedium – but well worth it.

This creates a high integrity repository, but companies have also realized that just getting to the high integrity repository is not enough – maintaining this integrity requires periodic verification that the integrity has not degraded.

How to diagnose issues in repository integrity

When we first arrived at the cabin, our goal was not to look for evidence of any nefarious activity. We were 19 once, so overindulging in hypocrisy would be silly. (That said, I’m fine with moderate hypocrisy). Instead, we had a lens for things that didn’t look quite as they should: windows left open; perhaps a smoldering campfire; dirty dishes in the sink. Did I mention that sometimes forest critters occupy the cabin when no-one is around?

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In the world of repository integrity similar quality assurance checks are valuable. Are there multiple counter-party accounts? Are there child documents missing in a family? Are notifications not being triggered when contracts are close to expiring? On a more substantive level, things such as exclusivity clauses can be verified – does exclusivity change through out the relationship with the counter-party or does it remain the same (hint: it really shouldn’t change).

These initial quality assurance checks can be designed for execution by a small team over a couple of days, following a playbook. Not too much judgment should be required – there should be an objective standard to determine if something is awry. If something is not quite right, then a deeper dive can occur.

Teachable moments – Revise the Closeout Process

The benefit of a periodic, objective quality assurance check is that if something is askance, the process for populating the repository with contract documents and metadata can be revised. Perhaps the quality assurance can result in a higher level quality control prior to new records being loaded into the repository. Note: Most companies have figured out that after a detailed legacy contract migration effort, it is logical to put in place a formal contract closeout process for new agreements that are created post legacy migration. Ideally, this would be done with the same team that did the migration as they are now the subject matter experts.

Typically, the closeout includes things such as verifying that the counter-party legal entity is the right contracting entity as well as making sure the effective date is before the expiration date. You’d be surprised how many times we notice this anomaly. Any issues found in quality assurance can be brought forward at this point to include in a closeout process or the quality control of the closeout…BEFORE documents and metadata are loaded into the repository.

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I’d like to believe I’m an above average parent. I also believe that my children can learn from me (and me from them) even when they are 19. As such, I was able to bring my quality assurance findings forward in the process, in the form of a “Cabin Exit Checklist.”

I trust this will further increase the integrity of the relationship with my son.

Be sure to check back on July 13th for the next edition of “Mastering Contract Lifecycle Management” to learn how to stay ahead of the curve and what’s trending in LegalTech.

To learn about augmenting the CLM Clause Library, 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.

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