While we’ve all been looking forward to 2021 since March, most law firms and corporations are only now in full planning mode — albeit maybe not quite the planning they were expecting.
But if there is a silver lining to 2020, it’s that we now know we can achieve amazing things when we have to, thanks in large part to technology. Whether it’s remote working, shared drives, Zoom calls or just the ability to connect daily with colleagues, technology has come of age this year.
This newfound acceptance of technology — especially among previously reluctant lawyers and legal management professionals — has catapulted technology to the top of 2021 priorities when it comes to planning for growth and development.
Plus, your firm can apply technology to so many areas of work. But where to start? And which is most relevant to your firm and likely to yield the maximum benefits, both strategically and to the bottom line?
As a cornerstone of legal, contract management (CM) should be high on the list. According to a study from the independent International Association for Contract & Commercial Management (IACCM), poor CM can cost organizations up to 9% of annual revenue — and in 2021 every penny will count.
Traditional CM, while undoubtedly beneficial for your business, has been eclipsed by contract lifecycle management, particularly artificial intelligence-focused (AI) CM. Despite the hyperbole, AI CM is a reality that’s living up to the hype.
The reason so many law firms and departments are using AI CM is that it accelerates the journey along the contract management maturity model (CMMM) to a pace that simply isn’t achievable with traditional CM.
The CMMM is a benchmark that’s designed to help organizations understand where they are in their CM journey. Before you benchmark yourself on the stages below, ask yourself the following questions:
Now use the levels below to benchmark where you are on your CM journey and find out how AI CM can help.
Your contracts are undefined, and there may be poorly written informal agreements. At worse, they do not conform to industry standards or lawyers have not reviewed them.
How AI CM can help: Bringing your contracts into a single repository will facilitate your journey along the model. AI CM helps expedite the migration process into a single place ready for extracting value.
Basic processes are in a place where contracts are drafted, reviewed, managed and stored locally. Individuals manage critical contracts, and once contracts have expired, they are archived locally and accessible to key local personnel.
How AI CM can help: There’s little value from your contracts at this stage. AI can increase productivity by pulling all contracts with specific dates, clauses or terms and conditions to save manual time.
Templates, central repository and review processes are in place. At this level of maturity, using an integrated CM tool is recommended.
How AI CM can help: Companies at this stage are most likely using AI CM. To progress further, the AI can be used to extract and analyze contract data to help decision-making.
Contracts can be tracked centrally, anywhere, anytime and from any device. True risk management processes can be implemented. Alerts are built with agreed triggers, and compliance audits are made, including cross-department plans.
How AI CM can help: This means your company is already using CM AI. At this stage, advanced business analytics can help you take familiar contract terms and give them commercial value.
Not many organizations make it to this level. However, it’s one of the easiest to sustain because the groundwork is done. Once maintained, the benefits are exponential.
How AI CM can help: At this stage, you can use your contracts to extract real commercial value, predict which future contracts are high risk and use AI to conduct a full ongoing risk analysis.
Realistically, most law firms and departments are stuck at stages one or two, but prioritizing progression through the model as part of 2021 planning will have far-reaching commercial and legal benefits. It will be those organizations who invest in understanding and using the technology now that thrive, not just survive, in 2021 and beyond.
