If you’re a business owner then you know how important contracts are. Businesses enter into contracts regularly. With so many negotiations happening at the same time it is quite hard for the legal team to keep a track of all these details. Also during negotiations or drafting of contracts, both the parties involved may have suggestions, so before finalising the contract there may be many inclusions, exclusions that they want to make to the contract. So with all these rounds and rounds of negotiations, it is hard to keep track of all the additions and deletions in the contacts. If you want to stay on top of the legal contracts, manage and track them well, then you need a strategy in a place. Yup, you heard it right.
Since there are many revised versions of a particular contract, so they need a particular data strategy in place to track the legal contracts. In this article, you will learn about some of the best practices that will help you in your legal contract tracking.
Let’s dive right into the topic then.
One of the important things about legal contracts is that the legal team has to spend a lot of time and effort in reviewing the documents. And every time if there is a change they have to review the document again and again. However, if they have a pre-approved language they can make progress faster. So it is advisable for businesses to standardise and pre-approve as much of contract language as possible. There are many businesses whose legal contracts have a standard set of terms and conditions, legal terms, etc.
Because this way they can review their contracts quickly without spending too much time on the contract. Not only that as the review time is reduced to the half they can concentrate on the important parts of the contract that are unique/specific to this contract. So if you standardise and use the pre-approved language in your contracts, it saves a lot of time for your legal time and also will lead to an efficient work process. Standardise the legal language for effective contract management.
At the beginning of the negotiations, there will only be one draft lying on your table, but before you know there will be so many new versions of the original drafts lying around your desk. So with all these contracts, it is quite hard to manage the drafts. As you already know, there will be more than one contract draft. It is best to come up with an idea at the beginning only. To avoid confusions it is advised to hold one person responsible for managing the official version of the contract. With only one person involved, there will be less confusion and fewer chances of omitting any important details out of the contract. The person responsible will make sure that all the discussed changes are made to the contract.
It is your call on what will become part of the new version. You must know whether you want to make a new version of the contract for any minor change in the original contract. If you keep creating new versions of a contract for every minor change you make to the original document before you know it, you will be dealing with the 50th version of the original contract. The best way to track your contract is by making one person the point of contact. Both your team and other parties involved will not be confused about whom to contact.
Automate the communication
With time the way people handle contracts has also changed. Automation of contract communication will save you time, effort and money. If you’re also following an outdated contract communication such as shipping or emailing the contracts then it is high time that you change your ways. Having a central, cloud-based repository is perfect for contract management. The parties involved can have access to contract files at multiple points of the contract. Both the parties involved in the contract can access the same version of the contract at the same time.
Also, they can collaboratively discuss the details of the contract. It will save you a lot of time and effort, as you can discuss the contract and make necessary changes. Not only that you can also set automated reminders for the other party to review the document. You don’t have to worry about leaving anybody out in a hurry while you’re emailing about the contract. There are many contract management softwares available in the market that will help you in managing and tracking your legal contracts effectively.
System for saving and naming documents
Another important practice you should follow to track and manage different versions of your contracts is developing a system for saving and naming the documents. Developing a specific system will help you in managing the various versions of the documents that you have. But one thing you must make sure is that all the employees within your organisation should also save the documents in the same manner.
Adding an alphabet and a number before each version of the document will help you in finding the different versions of the document and also there will be no confusion when it comes to the final copy of the contract. For example, you can name and save the first draft as A1 and then the second version can be named and saved as A2, so on.
Even this can be confusing in most cases. So if you want a system that will leave no room for the confusion then a cloud-based contract management system is best for you. It is central storage. And all the people involved can access one single document simultaneously. This will give you fewer worries as you don’t have to pay attention to emailing the document around and wondering who has the original document.
No matter which method you use to update the official document through the negotiation process do not forget to run a comparison with the draft you receive from the other party. You can make an electronic comparison of the draft that is sent to you by the other party. When you compare the document you sent and the document you received, you can easily spot the changes that have been made. You can either use word comparison features or any other third party tools, but make sure you compare the documents. You need to know the changes that took place in the document then only you can track and manage them.
Handling contracts is not an easy job. There are many things that you need to take care off. From negotiations to executions, there are hundreds of things that you must pay attention too. In this article, you must have understood the best practices that will help you in tracking your legal contracts. Automating the process is highly beneficial for you, it will save cost, time and effort. It also fastens the work process and helps the team in finishing the work effectively. With a contract management software, you don’t have to worry about missing the document review. Also, you can set reminders for other parties too. No matter which practise you follow, be it giving responsibility to one person or opting for automation. Hope that you can track and manage your legal contracts effectively.