It’s essential for all stakeholders to effectively coordinate and communicate with each other throughout the contract lifecycle to accelerate the contracting process and ensure positive outcomes. That’s why so many private fund managers are turning to collaborative contract management solutions. With the right legal technology and workflows, firms can accelerate contract processes and free up their time to focus on mission-critical tasks.
But what is collaborative contract management? Let’s dive deeper into the benefits of collaborative contract management and the features that might be most helpful to managers.
What is collaborative contract management?
Collaborative contract management is a process where all stakeholders work together to ensure the contract lifecycle runs smoothly. It encompasses:
- Contract creation
- Contract negotiation
- Contract review
- Contract approval
- Contract execution
- Contract compliance
When firms focus on collaborative contracting, internal stakeholders share an understanding of internal workflows, approved contract playbooks, market terms, and stakeholders’ contracting goals. Ideally, internal and external stakeholders can communicate with each other quickly in one location, bypassing unwieldy email threads.
To achieve this, firms need a centralized platform that provides visibility and real-time communication channels. Contract management software enables parties to standardize communication practices in one place and track contracts through the lifecycle. Ultimately, the platform helps firms eliminate inefficiencies in the contracting process that can slow fundraising, due diligence, capital investments, compliance efforts, or an audit response.
7 benefits of a centralized contract management system
1. Consolidated collaboration
Within a centralized platform, stakeholders can easily comment, redline, and accept or reject changes. These capabilities eliminate the need to email documents back and forth outside the platform, and in turn, make it easier to track feedback and contract versions.
2. Accurate tracking
A centralized contract management system enhances visibility by creating an audit trail of actions and changes related to an agreement. Time-stamped records of actions within the platform keep stakeholders informed throughout the contract negotiations, execution, and enforcement.
3. Accelerated negotiations
A survey by EY Law and the Harvard Law School Center on the Legal Profession found 69% of contracts don’t follow a playbook, and 75% of organizations don’t have pre-approved fallback terms. The lack of predefined terms for a firm’s lawyers slows negotiations. Instead of reinventing the wheel with each new agreement, firms can standardize negotiations for common contract types through playbooks within the contract management system. As a result, firms can accelerate negotiations for routine contracts and expedite turnaround times.
4. Fewer manual processes
Manual contract management processes can be time-consuming and susceptible to errors and inconsistencies. Far too many private fund managers are bogged down by hands-on processes for high-volume routine agreements, which pull their in-house teams away from their core work. Instead, firms can use a collaborative contract management system with artificial intelligence and automation. An AI-based contract management system can streamline workflows, speed up contract review and negotiations, simplify contract execution with electronic signature integration, and automate notifications and alerts.
5. Contract analytics
Firms that manually track their contracts can’t take full advantage of the information within those agreements. It takes too much time to manually review, compile, and update the data in a spreadsheet. With a platform like Insight from Ontra, firms can digitally analyze their fund documents and generate data-driven reports to obtain valuable insights from their agreements. Access to structured contract data leads to better visibility into current and past agreements and can inform the firm’s future negotiations.
6. Decreased risk
Inconsistent terms and manual contract tracking increase the risk of noncompliance, which can lead to disputes with other businesses and investors, lawsuits, regulatory exams, and reputational damage. A collaborative contract management system can help firms mitigate these risks. Within Contract Automation by Ontra, firms can designate contract playbooks, compare similar terms to standardize contract language and obligations, and understand their precedent documents by accessing structured contract data and reports.
7. Renewed focus
A collaborative contract management system enables in-house legal teams to better manage their workloads. With less time spent on manual contract processes and contract management, these teams have more time to focus on more strategic and core tasks for the firm.
Features to look for in a contract management system
Private fund managers considering implementing a collaborative contracting solution into their workflows should look for these key contract lifecycle management features.
Electronic signature integration
While electronic signatures are becoming more ubiquitous in contracts, not all contract management solutions provide eSignature integration. Without this functionality, fund managers, investors, and other parties must spend extra time manually transferring contracts to another solution for signatures.
Ontra’s Contract Automation platform offers DocuSign integration, allowing parties to conveniently send and sign contracts on any device without leaving the platform. Plus, firms can follow up with signatories via automated reminders and reassign signature responsibilities if needed.
It’s essential to have a secure and centralized, cloud-based contract repository to effectively manage contracts. Rather than allowing lawyers and business professionals to store contracts on various devices, firms benefit from keeping all legal documents in one place. In a centralized contract repository, firms can more easily view all commitments across specific or all funds and track their investor obligations.
However, not all software solutions and cloud storage options offer the same level of protection. Given the sensitive nature of fund managers’ documents, selecting a repository with strong cybersecurity measures is crucial. A collaborative contract management solution should have a security infrastructure that includes data encryption, a fault-tolerant system, malicious file detection and deletion, and regular penetration testing.
All data and documents should be easily searchable and retrievable from any device. Using a collaborative contract management system like Contract Automation or Insight, legal and business professionals can access all their contracts with advanced search functionally. In Ontra’s Insight, the SmartSearch feature allows professionals to search the actual contract language and contract summaries, providing a quicker, more direct way to access contract language.
Collaborative editing features
An effective contract management solution should facilitate seamless collaboration among multiple parties with collaborative editing features — e.g., redlining and comments. These features are particularly beneficial for firms that need to expedite the non-disclosure agreement process. The quicker they can process each private equity NDA, the sooner they can perform due diligence and make informed decisions about pursuing potential deals.
Collaborative contract management with Ontra
Overall, collaborative contract management fosters better communication among stakeholders and offers a clearer view of the contract lifecycle. Achieving this requires contract management software that allows organizations to consolidate communications, collaborate, accelerate negotiations and execution, and simplify contract tracking.
Contract Automation from Ontra is a superior way to negotiate and manage routine contracts. The AI-powered solution can speed up repetitive contract negotiations while reducing expenses and risk. Our technology combines AI with a worldwide network of legal community members to guarantee our customers get the market positions they need. Having processed over 800,000 contracts, from NDAs to engagement letters, Contract Automation is the perfect way for fund managers and investment bankers to outsource routine contract negotiations.