One of the biggest mistakes businesses can make when managing contracts is failing to capture contract data. Too often, businesses only view contracts as a formality, and they fail to recognize the true value that sits within a contract’s data.
This explains why contracts get buried post-signature. Legal and business teams file signed contracts away, hoping that the new relationship runs smoothly and they’ll never have to reach for it again.
But in doing so, businesses are failing to capitalize on a significant opportunity: capturing contract data, and all the valuable insights it contains. But what actually is contract data, where can you find it, and why should you bother tracking it at all?
Juro’s all-in-one contract automation platform offers a data-rich repository for your legal documents, making it simple and fast to search through contracts post-signature. To understand what contract data could do for your business, hit the button below to get in touch. Otherwise, read on to find out more.
Contract data is a term used to describe the information contained within a contract. It covers everything from clauses, signatures, pages and specific details within a contract, like dates, contract owners, contract types and contract values.
Contracts are merely seen as a legal requirement in most organizations, and the details within them are often only relied on before the courts if something goes wrong. But this data can prove transformative if captured and examined properly, making it quicker and easier for legal and business teams to get future contracts across the line.
What are the benefits of capturing contract data?
Despite being widely neglected, the case for capturing contract data is a strong one. Finding an efficient and meaningful way to capture data from contracts can have an immediate impact on your bottom line. Here’s how.
1. Contract analytics can help you improve your contract processes
With negotiation data preserved and captured, you can get real-time insights on your contract workflow’s efficiency. Which templates typically lead to the longest contract lifecycle? Which clauses usually block signing? Which business colleagues make the most edits? How do contract approval rates change over time?
Analytics will enable you to answer these questions, not only to improve your processes, but to be accountable to your colleagues in other teams too.
2. Searching becomes quicker and easier with efficient data capture methods
Search might seem like an unsexy feature, but a powerful search mechanism can have a huge impact when it comes to response times and efficiency. And as a scaling business, having this time back can be game-changing.
If your contract data is properly structured, users can search for documents by team members, dates, company names, clause titles in seconds.
But without structured data, your ability to search contracts for certain contract metrics will be extremely limited. Often, it will begin and end with the file name and the modified/created dates.
For anything beyond this, you’ll need to be prepared to dedicate hours trawling through individual contracts - an administrative task that will take lawyers away from higher-value work. Alternatively, you'll need to outsource the work, which can come at a considerable cost.
3. Contract data enables more informed decisions
Another benefit of capturing contract data is that it can be utilized to make more informed strategic decisions. In fact, contract data can be essential when making informed decisions on the following things:
Whether to renew or upsell on existing business agreements
How to proceed with contract negotiations
How to allocate the workload within legal and business teams
Whether certain business relationships are worth the risk involved
Which contract administration tasks to prioritize
Challenges of capturing contract data
The default currency for contracts, with almost 100% market penetration, is a product that was never designed for legal documentation: Microsoft Word.
People create contracts in Word, often by copying and pasting parts from old documents, and then make tracked changes, bouncing around between different versions via email. At some point, everyone’s happy and the document becomes a PDF.
This PDF jumps into various email chains until it’s printed, signed and scanned, or perhaps signed electronically with a tool like DocuSign, or a DocuSign alternative. It’s then saved on a shared or personal drive, where it sits pretty much forever.
There are lots of problems with this process: it’s hard to collaborate, it’s inefficient, it takes a long time and version control is difficult. But a key problem, that only increases as time goes on, is data loss.
In the process described above, almost none of the data on contract collaboration is retained:
If suggestions are made over email about edits, that data doesn’t make it to Word
If edits are tracked as changes in Word, that data doesn’t make it to PDF
Time-to-signing data and new version data doesn’t make it to the shared drive
Generating all this collaboration data, only to discard it throughout the process, is a huge waste of lawyer time and expertise. The main reason why so much data is lost throughout this traditional workflow is that the data generated in static Word and PDF files is unstructured.
Key fields like dates and signatories aren’t tagged with metadata, so when the document passes to a new system, that system can’t differentiate between important and less important information.
This makes it almost impossible to have a genuine audit trail of a legal document’s journey from inception to agreement. Who made which edits, when, why, and how - all of this is either never captured or lost along the way. Without data to identify problem clauses and contract negotiation bottlenecks, they are almost certain to reappear next time.
But what should businesses do to overcome these challenges? Let’s see.
How should businesses capture contract data?
1. Identify the metrics that matter most
There are hundreds of contract metrics you can track, and trying to chase all of them will be an endless pursuit. It’s far more efficient to only focus on the contract metrics that move the needle.
Ask yourself: which numbers have a direct impact on revenue? Which numbers tell us how efficient our current processes are? Which metrics are useful beyond the business’ legal function? Which metrics are critical from a compliance perspective? Are there any legal KPIs might enhance your team’s performance?
Once you know the answers to these questions, find out whether you can extract this data from your contracts, and how. To help you identify which contract metrics matter most to your business, get out our guide to the key contract metrics.
2. Create a centralized contract repository
The second best way to ensure your business is capturing contract data sufficiently is to ensure the way you store contracts (and their data) is secure, consistent and accessible.
This is where a centralized contract repository comes into play. One of the biggest contract management mistakes we see in businesses is poor contract storage. That means contracts stored across multiple drives, with multiple versions and in multiple formats. How can you extract your contract data when you don’t even know where to find your contracts to begin with?
Fortunately, most contract management systems offer a secure contract repository, allowing you to store your contracts in one place and creating a single source of truth. For example, Juro’s contract automation software provides a smart storage solution for contracts whereby users can locate the document they need instantly using a powerful search function.
3. Build contracts as data to begin with
Another way to make capturing contract data seamless is to create contracts as data to start with. This sounds complex, but it doesn’t have to be.
Once you start viewing the contents of your contract as data you’ll be able to tag certain data fields for certain data types. You’ll also be able to create contract templates that ensure this critical contract data is always included within a legal agreement.
By implementing a contract tool like Juro, this process can become seamless. Legal and commercial teams can create contracts as structured data using automated templates developed by legal. These contracts progress through the contract lifecycle without leaving the platform, and they can then be stored securely in a contract repository, where all of the tagged metadata (aka contract data) can be queried in seconds.
4. Create processes for contract data to be analysed
Once you’ve implemented a robust system like Juro to automatically tag and capture your contract data for you, you need to decide what you’re actually going to do with it.
Who will be responsible for reviewing which metrics? Do you have a contract manager that will monitor the contract data? How will the contract data be shared to inform other business functions? Who will have access to the contract data and when?
These are important decisions and ones which need to be communicated effectively throughout your organization, usually using a contract playbook or something similar.
Are machine-readable contracts the solution?
Ultimately, the most efficient way to capture contract data is to make your contracts machine readable from the offset.
They can ‘read’ old contracts and offer some level of automated tagging, bringing structure to the collaboration data that’s been mismanaged. However, data that was lost is not recoverable; and more than this, if your problem is that collaboration data is unstructured, then creating more unstructured data and buying a solution to structure it for you is an odd way to solve it.
The most obvious way to capture and retain collaboration data at all stages of the lifecycle is to stop creating unstructured data, and instead use a machine-readable editor to create your contracts. When the document receives approvals, is amended internally, or viewed and negotiated externally, the metadata that captures all these changes, stakeholders and events is created and stored.
If the platform in question also offers signing and contract management, then there’s no need to move the contract to Word, PDF or email. However, if the contract was created from structured data, then users have that option, because the document is rich enough in insight to carry useful data from system to system.
If this sounds like a solution your business would benefit from and you’d like to start using a machine readable contract editor to create contracts, hit the button below to find out more.
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