10 Stages of Contract Lifecycle Management

In the stages of contract lifecycle management (CLM) legal departments may have five, seven or more various steps in the lifecycle of contract management. In this article, we review 10 stages of contract lifecycle management and explain the importance of each for a more streamlined and systematic approach to the CLM process in the legal department.

Stages of Contract Lifecycle Management

The world of contracts is a dizzying maze of terms, clauses and legal terminology, which makes sense as a contract is intended to be legally sound. To manage the entire lifecycle of a contract, it’s important to consider contract lifecycle management software to systemize, simplify and streamline complexity so each contract phase is effectively managed. Understanding each stage of the contract lifecycle ensures that agreements are beneficial, risks are mitigated and relationships are maintained.

1. Plan: Define Business Needs

Much like the preliminary steps of planning travel, the initial phase in contract management is crystal-clear: goal setting. What outcomes are you aiming for? This isn't just about drafting a document. It's about comprehensively grasping the business necessities, and the agreement goals, pinpointing relevant stakeholders, and crafting unambiguous specifications. Starting with a solid foundation sets the stage for a smoother, more transparent contract journey. Think of it as checking the map, ensuring you have all the necessary supplies, and briefing the participants about the upcoming trip.

2. Stakeholder Management

Every contract has multiple players involved, much like the various members of a sports team. Who are they? Why are they vital? Identifying and adeptly managing stakeholders are paramount to ensuring that the interests of all parties are addressed. This doesn't mean just having their names on a list. Managing stakeholders is about continuous engagement: understanding concerns and ensuring their needs align with agreement objectives. It's equivalent to assembling your best team members, understanding their strengths, and getting them prepped for the big game.

3. Contract Administration

This stage of contract lifecycle management is akin to the core rules of a game. Here, meticulous details are everything. It's about diligently outlining the terms, conditions, and all relevant clauses, ensuring that every single aspect is agreed upon, transparent, and in the best interest of all parties. The contract is drafted with precision, ensuring there's no ambiguity. Each provision and clause help set the boundaries and rules for how the game (contract) will be played during negotiations.

4. Relationship Management

Beyond the “ink and paper,” a contract represents a commitment and a bond between parties. It's not merely transactional; it's relational. Effective relationship management means fostering open channels of communication, creating mutual understanding, and championing collaboration. Each contract, when managed effectively, can foster long-lasting and beneficial partnerships. 

5. Performance Management

It's halftime in a soccer match; teams retreat, discuss, and strategize based on their performance. Similarly, during the contract's execution, it's imperative to consistently monitor its progression. Are the deliverables as per the agreed standards? Is there any deviation? Addressing issues, ensuring compliance and continuous evaluation are critical to the deal. It's the continual checks and balances to ensure the contract's objectives are being met.

6. Payment and Incentives

Here's where tangible outcomes come to the forefront. Payments, rewards, and potential incentives reach the spotlight. Ensuring punctual payments, crafting incentive structures for exemplary performance, and transparent financial dealings are the keystones. These are the driving forces of every contract and can be considered as the energy that powers the entire contractual machine.

7.  Risk and Resilience

No venture is devoid of risks, and contracts are no exception. It's not about being risk-averse. It’s about being risk-aware. This phase zeroes in on identifying potential pitfalls, quantifying them, and then sculpting strategies to either mitigate or manage them. It's about having a contingency plan and a safety net to ensure smooth sailing even in turbulent waters.

8.  Contract Development

In a rapidly evolving business landscape, operational agility is a prized asset. Contracts, over time, might require tweaks, modifications, or even overhauls. This stage is dedicated to such evolutions, ensuring that the contract remains relevant, beneficial and aligned with current business needs. It's the art of evolving without losing the essence of the mutually agreed-upon terms.

9. Exit and Termination

Like the final act in a play, the stages of contract lifecycle management include closure. Every contract, regardless of its success, has an endpoint. Ensuring a seamless, transparent and amicable termination is essential. This is where final assessments are made, obligations are checked, and feedback is shared. It’s the bow after the final act, ensuring both parties part on good terms.

10.  Asset Management

Once the curtains are drawn, the focus shifts to the assets and resources garnered from the contract. This isn't just about physical assets; it includes knowledge, data, experiences, and more. Effective asset management ensures that these resources are not just shelved but are optimized, reused or even repurposed for future ventures. It’s about extracting value even after the main show is over.

Contract Lifecycle Management Software

LexisNexis CounselLink+ is an enterprise legal management platform with a robust contract lifecycle management application. AI-driven tools enable users to select from approved clause libraries, and LexisNexis Practical Guidance offers hundreds of contract templates. Legal teams working in the matter management dashboard can access respective contracts from the same unified platform. In-house teams no longer need to search for contracts in archives or other repositories. Moreover, contract drafting can be done directly in Word, within the matter management application of CounselLink+. All users can track versions with a more efficient contract approval timeline. 

From clear communication and improved relationships to effective risk management and optimized performance, the benefits of a contract lifestyle management solution integrated with enterprise legal management provide many benefits to corporate legal departments. If you’re interested in learning more about an integrated enterprise legal management and contract lifecycle management solution, contact CounselLink. Many features in the single, collaborative platform contribute to efficiency, streamlined workflow, cost savings, collaboration, and high productivity to better manage the stages of contract lifecycle management.

TL;DR

A contract lifecycle management application integrated with enterprise legal management software, like LexisNexis CounselLink+, features various benefits for legal teams and legal operations.

Contract lifecycle management includes 10 stages that may be more or less in various legal departments. This article reviews those 10 stages and suggests the use of contract lifecycle management software to make the process more efficient.