With growing business and personal legal obligations, paperwork such as legal contracts, agreements, lease deeds, etc., are becoming part of our lives. Enterprises have more contracts than ever – for contract work, for subcontractors, for freelance service providers, for government-issued tenders, for land and building leases, for loans, for orders, and so on.
Increased paperwork becomes challenging every day to keep track of all the contracts and other legal documents. Each contract must be accompanied by all the assorted paperwork that comes before and after it – the request for proposal, the expression of interest, the purchase order, the invoices, and many more.
If you cannot keep your legal paperwork in order and track them, you and your business may be in severe trouble. These contracts are your legal shield if someone tries to defraud you or take what is legally yours. Legal Contracts are enforceable only if you can show them when needed and in the proper order.
The core of contract management legal software is your organization and how the documents are created, accessed, moved, and stored in it. This article presents an in-depth insight into the best practices for efficient, effective, and economic contract management.
7 Best Practices for Managing and Organizing Your Legal Contracts
1. Centralized Secure Document Repository
The legal paperwork is often scattered all over the place in different files, cabinets, and shelves, with various people on the tables or in their desktops/emails. Therefore, it sometimes becomes impossible to locate the necessary document in time or at all.
First of all, you need to identify all the types of legal documents and contracts you need to maintain. These documents include incorporation, partnerships, joint ventures, investments, loans, sales or purchase agreements, service contracts, NDA, consultancy, R&D, subcontracting, distribution, agency, ICT, license, lease or rental, employment, M&A, and so on.
Next, you need to consolidate all your legal documents into a single, centralized, and secure document management repository. It is customary to have departments maintain their paperwork – creating contract silos – like the sales department handling the sales contracts, HR managing the employee contracts, etc. Contract management cannot happen if such silos exist. Without a central repository to securely store, retrieve, and manage all your legal contracts, you run the risk of losing the documents or even misplacing them.
Sometimes, people prepare multiple drafts of the contract before finalizing it. Therefore, you can make the central repository keep version control of all documents to keep a chronological sequence of all the versions and consistently access the latest one.
2. Ownership
The central contract repository must define the owner of each document and other stakeholders with distinct roles and right on each piece of the document. These roles can be editors, readers, printers, mailers, encoders, etc., but each role must be clearly defined.
Without ownership and user access control, there will always be a possibility of a breach of the document chain, and legal contracts can fall into the wrong hands, causing grave problems. The legal team shall be the overall owner of the legal software but not of the individual documents in the system.
The Legal software must maintain detailed logs of all user actions – such as logging in, logging out, IP address, timestamps, activities, documents accessed, and actions taken. This will keep notorious users at bay and, in case of a breach, will help trace the culprits or the reason for the violation.
3. Set up Reminders
Many contracts – like software licenses, domain bookings, lease deeds, insurance, etc. – require periodic review and renewal. If you miss the date, then not only will you lose the opportunity to continue the service, but you may be in for some serious legal and financial troubles.
With automated reminders – via email, message, or notifications – you can save not only the possible troubles but can timely renegotiate terms that are more favorable or even port your contract to another supplier/provider. The reminders must be customized to suit the type of contract validity – fixed duration until further notice or project-based.
4. Document Tagging
Document tags are as valuable for physical filing systems as they are in Legal digital software. Tags help you identify essential sections and pages within an extended document so that you can reach them quickly.
Tags help you standardize your document naming system and help you classify your legal paperwork like contracts so that storing, retrieving, and accessing them becomes easier for all concerned. Proper tagging also helps in correct and understandable reporting.
Having an understandable, clear, and concise tagging mechanism will help you:
- Trace, seize, store, retrieve, and organize
- Automate the granting of access to documents to team members.
- Easily and centrally control who gets to access what categories of contracts and with what rights.
- Increase efficiency and generate accurate audit reports.
5. Create Structure and Segments
To enable proper compliance with Legal software policies, a structure that states what is and is not allowed for a user with appropriate segments defined is critical.
Administrators must define multiple user roles, each with a specific set of rights. With clearly defined roles, administrators can control who can perform what kind of actions, like the right to prepare or sign a contract, modify a document or a template, delete a contract, etc.
Creating groups can also be done based on the users’ department, project, and work role or the documents. This makes custom roles easier to create, manage, alter, and delete when the need arises.
Even if a single user a document, or a permission is different from the group, do not assign that to the group as a whole. For any special rights, users, or documents, set the permissions separately.
6. Define and Follow Workflows
When managing a large cache of documents that belong all over the place and many people accessing them for varied reasons, the workflow can seem chaotic and messy. But if you look closely, each document type follows a fixed path of movement from one person’s desk to the other, usually in the official chain of command and communication.
If you can classify different workflows – with the help of experienced staff, interviews, and keen observation – then you can solve many of the problems that one comes to associate with document movement and tracking. Having defined workflows also helps you automate the process so that no document is pending with a user for more than what is needed to reject, accept, or modify it.
7. Security
All-access to the documents from the central repository must be access-controlled and properly logged. All records must be kept in an encrypted file system that works with only the authorized passwords or an OTP-based system. For more sensitive documents, the passwords can be biometric or require two-factor authentication by two organization personnel.
The Legal software must always be protected against malware using licensed software, OS, and a packet filtering firewall. The anti-malware software must always be up-to-date and running. If the contract management servers are on-premises, then they must be under constant vigil of security personnel.
Security also means a secure backup location that is remote but can come online if the primary location is inaccessible due to any reason – physical damage, power outage, or natural disaster. The backup and restoration systems must be checked every once in a while, and periodically the complete load must be transferred to the mirror site for testing purposes.
Conclusion
The deluge of paperwork becomes the bottleneck in the efficient working of any business, especially the legal profession, and no number of staff can be trained to handle the voluminous load. Excellent contract management Legal software can help you:
- Create a centralized and secure document repository accessible to workstations and authorized mobile devices.
- Define a filing and tagging protocol.
- Implement a database with cross-referencing to help retrieve contacts
- Keep a check on all users who access any legal document and ensure compliance.
A digital marketing and content curator at SoftwareSuggest, a software recommendation platform. I am passionate about Digital Marketing, and all things digital. Also interested in technology and innovation. In my spare time, enjoy playing cricket, and Badminton.
