When to implement Contract Lifecycle Management vs Workflow Automation

April 23, 2024

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Choosing Between (CLM) and Workflow Automation

Contract Lifecycle Management (CLM) has taken centre stage in many legal technology and operations conversations today. But, should all legal departments implement CLM? Perhaps, eventually. But far too many legal departments are implementing CLM simply because “everyone else is doing it” or because it is the only legal technology they are aware of, perhaps outside of e-Billing and e-Discovery. Maybe it is the familiarity in the word ‘contract’ in ‘contract lifecycle management’. As a result, we end up with failed CLM implementation projects, an overspend on time and money to solve a problem, or making an investment that doesn’t generate the maximum amount of value today.

Often, legal departments seek a CLM, when what they really need is a legal workflow automation software instead. How do you know? Here are some indications that you should onboard a workflow automation tool instead of a CLM:

  • You want to launch self-service contracting, but it is for simple, high volume contracts (e.g., NDAs, service agreements)
  • You want to launch self-service for non-contracting workflows such as conflicts of interest, vendor onboarding, incident reporting, employment-related Q&A etc.
  • You have an existing document repository, but it doesn’t provide self-service or workflows well
  • You want to improve your contracting process but you are starting from nothing or close to nothing (i.e. have not yet defined and documented extensively your contracting rules and playbooks)
  • You want to improve your contracting process but you do not have a lot of resources and time for implementation.
  • You need to set up a generic legal front door that is inclusive, but not exclusively just for contracting work.

Matching Legal Technology to Your Objectives

Another way to determine whether you need CLM or workflow automation is by looking at the outcomes or metrics that you are attempting to improve. CLM is a better fit if you are more interested in contract intelligence whilst workflow automation is a better fit if you are more interested in process improvement.

You likely need a CLM if you are looking to improve You likely need Workflow automation if you are looking to improve
Efficiency in contract negotiations by leveraging suggested alternative clauses Efficiency on low-complexity work through more self-service
Negotiated outcomes by leveraging data on previously accepted positions Workload allocation to balance work across the team and ensure the right work goes to the right person
Tracking obligations in a contract and the financial implications Visibility across legal requests for legal leadership as well as business clients
Contract insights on signed contracts such as deviation from standard language Interfunctional interactions and communication between legal and other departments, including external counsel
Searchability of contracts, though this may also be addressed by much simpler repositories Cycle time from intake to resolution and milestones in between, segmented by different workflow participants

Harmonizing Workflow Automation and CLM: A Synergistic Approach

And yes, you can have both. Workflow automation and CLM are not alternatives, but complimentary. It is often the case that legal departments start with a workflow automation platform to better organize their request intake and gain efficiencies through low-hanging self-service contracting. Once their contracting program matures and there is a need for robust contracting rules and a strong advantage of leveraging contract data, organizations will evolve to adding on a CLM. At this point, their workflow automation tool will continue to handle the simple, low and non-negotiated contracts and integrate with their CLM for more complex, highly-negotiated contracting work and to store all contracts regardless of complexity, in the CLM repository.

But what if my CLM does workflow automation? Whilst there are some use-cases that overlap between the two categories depending on the specific provider, there is a clear advantage in allowing each type of technology to play to its own strengths. In the same way that workflow automation tools can be configured to provide ‘CLM functionality’ such as document repository and obligations management, CLM may be able to provide some ‘workflow automation functionality’. But it doesn’t mean that you should use it in that way. Below are some drawbacks of using CLM for workflow automation use-cases:

  • Long and expensive implementation – CLMs require a very high amount of time and effort in readiness work which is monolithic in nature. Implementation of workflow automation tools are modularized and bite-sized, allowing value to be realized rapidly and incrementally with significantly less readiness work, which eventually makes up the base for more complex CLM implementations as you get there.
  • Poorer end-user experience – CLM systems are not optimized for workflow automation which results in more noise on the user interface, requiring more end-user training and risk of confusion. On the contrary, workflow automation tools present end-users with a very specific and defined journey that is guided by design and does not require external users to create an account and learn a new system.
  • Less flexibility in customization – workflow automation in CLMs are heavily confined to the system design of the CLM whereas workflow automation tools allow you to flexibility define the user journey and experience.
  • Potentially more expensive license fee – CLMs often charge per user which means that any user required to interact with the workflows will require a license. This is in contrast with workflow automation tools which typically have unlimited users and price based on number of workflows.
  • Unable to address non-contracting workflows – whilst CLMs may be able to provide some self-service contracting, they will not allow you to scale into non-contracting work and intake, leading to an inefficient stall in your tech stack architecture.

In summary, don’t blindly dive into sourcing and implementing a CLM. Instead, consider what problems you are attempting to solve, the contracting maturity of your legal department, and the resources you have available for implementation. You may very well be ready for a CLM. But for many of you, it’s probably a workflow automation tool that you should look at first.

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