Contract Management Process Improvement

Commercial contracts are the lifeblood of corporate relationships and transactions. Yet, in many organizations, contract management remains an overlooked function, often riddled with inefficiencies that, when compounded, can hamstring a company's operational effectiveness. Improving the processes around contract management can not only save valuable resources but also enhance organizational agility. As companies look for solutions, many are now considering the power of outsourcing. This article delves into the transformative steps essential for effective contract management and how outsourcing plays a pivotal role in this journey.

The Need for Contract Management Process Improvement

Continuous improvement matters because small inefficiencies compound. In contract management, those inefficiencies show up as slow reviews and approvals, inconsistent contract terms, and missed renewal dates. Corporate legal teams are expected to manage contracts while also ensuring compliance, so a manual process creates avoidable risk.

A contract management workflow is the sequence of steps a contract follows from contract requests and drafting to reviews and approvals, contract approvals, execution, storage in a contract repository, and contract renewal tracking.

Contract management process improvement means clarifying roles and responsibilities at each stage, standardizing approved contracting through templates and playbooks, and using contract lifecycle management, CLM, and automated workflows to track contracts, reduce delays, and reduce risks with automated reminders.

Key Steps to Improve Your Contract Management Workflow

When it comes to contract management, addressing inefficiencies and optimizing processes isn't just about implementing random changes; it necessitates a strategic approach. Below, we identify the critical steps that companies should consider to refine their contract management processes.

1. Assessment of Current Systems and Procedures

Inventory where contracts live today (shared drives, inboxes, CLM, vendor portals) and whether there’s a single contract repository.
Measure cycle time by stage (drafting, negotiation, approvals, execution).
Identify which steps are still manual processes and most prone to errors or rework.

2. Identifying Bottlenecks and Areas of Improvement

Pinpoint delays caused by unclear ownership (sales vs procurement vs legal teams).
Look for repeated renegotiation of the same contract terms and missing templates.
Quantify downstream risk: missed obligations, renewal dates, or compliance requirements.

3. Establishing a Negotiating Playbook

Define fallback positions for common clauses (indemnity, liability caps, confidentiality).
Publish approved contract templates for the highest-volume agreements.
Set escalation triggers (what must go to counsel vs what can be approved operationally).

4. Implementing Training and Development

Train requestors on intake requirements so contract requests start complete.
Train reviewers on version control rules and where final signed contracts must be stored.
Refresh guidance quarterly as clauses, regulations, or preferred terms change.

5. Regular Monitoring and Feedback Loops

Use KPIs tied to the workflow: cycle time, exception rate, renewal miss rate, and rework frequency.
Audit a sample of executed agreements to confirm the process ensures compliance.
Review whether CLM tooling or automation (routing, reminders) is reducing delays.

Key Stages of the Contract Lifecycle

Most workflow problems happen at predictable points in the stages of the contract. Mapping the lifecycle makes it easier to spot where time is lost and where risk increases. A typical contract lifecycle includes:

Contract requests and intake: who submits requests, what information is required, and how requests are prioritized.
Drafting: using approved contract templates and clause libraries to speed drafted contracts and reduce rework.
Review and negotiation: tracking redlines, maintaining a single source of truth for versions, and standardizing contract terms.
Approvals and execution: defined approval paths, signature routing, and audit trails.
Storage and obligation management: saving final documents to a searchable contract repository so teams can track contracts, deadlines, and obligations.
Renewal or termination: proactive automated reminders and contract renewal tracking to reduce missed dates and risks.

Common Workflow Bottlenecks and Fixes

Unclear intake: Standardize contract requests so the legal team gets the right information upfront and can prioritize work consistently.
Manual process for reviews and approvals: Define who approves what and when, then use automated workflows to route contract approvals and reduce delays.
Version confusion: Require one place for drafted contracts and redlines so teams can track contracts and confirm the latest contract terms.
Missed renewal dates: Put renewal dates into a contract repository and use automated reminders so contract renewal tracking is consistent and reduces risks.

The Advantages of Outsourcing in Contract Management

Contracts can be complex and handling them effectively requires both time and expertise. For many businesses, managing these in-house might lead to stretched resources and inconsistent results. That's where outsourcing can be a practical solution. Legal talent outsourcing can give in-house teams flexible support for contract requests, drafting, and reviews and approvals without adding permanent headcount.

Think of it this way: there are teams out there that work exclusively on contracts. They've seen it all, and they know the ins and outs. By hiring them, a business can leverage this experience, ensuring contracts are managed efficiently and professionally pursuant to a playbook. This doesn't just save money by freeing up in-house teams, but also guarantees a level of quality that's consistent.

If your team is also managing large volumes of contract documents, document review services can help standardize review, reduce turnaround time, and support consistent decisions.

Outsourcing, including commercial contracts outsourcing through Lexitas, also provides businesses with access to the latest tools and systems that can simplify and enhance contract management. Instead of investing heavily in new technologies and training in-house teams to use them, companies can tap into this ready-made expertise.

Moreover, external partners provide valuable feedback to improve processes. Through detailed reports and analytics, businesses can get a clear picture of where they stand and where improvements can be made. It's not just about getting a task done; it's about understanding how to do it better. In short, outsourcing in contract management isn't about handing off responsibilities. It's a strategic move that can help businesses operate more efficiently and make informed decisions about their contracts.

Build a More Scalable Contract Process

If your contract volume is growing, workflow improvements stick when the process is documented, measured, and consistently followed. Talk with Lexitas about scaling contract workflows with outsourcing support.

Related Resources

Why Companies Need a Commercial Contracts “Playbook”

To be effective, an outsourced contract review process with an ALSP begins with an understanding of a client’s preferences for how work is performed.

Digital Manifesto: Let’s Move Beyond Old-School Contracting Processes

According to a survey conducted by Paradoxes Inc. on behalf of DocuSign, nearly 68% of legal departments say that “digitizing manual processes” is a top priority.

Mastering Multi-State Operations: Keeping Commercial Contracts Compliant

The constant evolution of legislative, regulatory, and legal frameworks in different states requires vigilance to ensure commercial contracts remain both relevant and compliant.