In-house legal professionals have been burned time and again trying to implement contract lifecycle management (CLM) software, so if you’re thinking about taking the project on, put the technology on the back burden until after you get your “plumbing and foundation” right, Simon McCarthy, vice president of enterprise transformation at ContractPodAi, says.
“Define your overarching contracting strategy,” McCarthy told Legal Dive. “What’s your risk appetite? Do you want to empower the business to self-serve contracts, and if so, to what degree? What are your functional processes? Are all your templates harmonized? Have you built out your clause libraries and playbooks? Where are all the contracts you’ll need to migrate? What is your service delivery model going to be?”
CLM is thought of as a legal deployment, but really it’s an enterprise-wide platform similar to an enterprise resource management (ERM) and customer relationship management (CRM) platform. And it’s best deployed only after procurement, IT and sales, among other function areas, are on board, he said.
For it to work properly and add value, representatives from all of those function areas must work together to lay the groundwork for its deployment and outside specialists, like a Big Four consulting team, should be brought in to work on implementation from day one.
“Over the last three to four years, the blind have been leading the blind” on implementation, McCarthy said. “A bunch of salespeople are selling something they don’t understand. Delivery people are delivering something without having any idea what they’re doing. There’s a stigma around how many people have been burned on their CLM journey.”
McCarthy recommends bringing in outside implementation specialists first to help you get your policies, systems and processes in place in a technology-agnostic way and only after that’s done should you start looking at the best technology solution for you.
“Design [your processes] in a way so it doesn’t matter which CLM you choose,” he said.
Outside specialists are needed because they’ll bring experience from having worked on successful deployments and they can access manpower that you likely lack to do the work that’s required.
“A vendor is not going to be able to provide hundreds of bodies to support this,” he said. “A Big Four consultancy or similar will be able to put bodies in the territories. They’ll have change management teams. They’ll be able to work on the operating model design.”
A global manufacturing company that ContractPodAi worked with recently on their deployment is a model for doing it right, McCarthy said.
The company brought in outside specialists to help with implementation. It agreed to phase in deployment, extracting value quickly in some areas while leaving other areas to a second phase. And it did the preliminary work that’s required before the technology was brought in.
“From the very first interaction they wanted this to be a collaborative experience,” he said. “From the first interaction they put their cards on the table and said, ‘We’re not the experts in this; please co-work with us.’"
The first thing McCarthy’s team did was show them what the outcome could look like and then sketch out how the deployment could be phased in.
“They didn’t choose to prioritize migrating all the contracts first and foremost,” he said. “It seems logical to say the first thing you have to do is get everything out of the filing cabinet, or off the shelf, and put it all in the new system. But if that’s 250,000 contracts, you’re not unlocking value quickly. You’ll go to your CEO and say, ‘I’m still migrating. I’m still migrating. I’m still migrating.’ When are you unlocking value? So, they focused their attention on getting new contracting processes up and running and then they ran the migration in phases by contract-type approach.”
This kind of collaborative effort between the software buyer, vendor and outside implementation specialists is the formula for increasing your chances of success, eclipsing whatever bells and whistles a vendor includes in its CLM.
“In six to 12 months, every vendor will have the same features, the same generative AI capability,” he said. “There will be parity at the AI level. So, how do you differentiate? You do it through your expertise and by establishing trust.”
For general counsel and their in-house team, it’s best to see CLM not as a legal project but an enterprise-wide project that, depending on how it’s structured, will be used far more outside of legal than within.
If sales is given flexibility to negotiate contracts and go to a fallback position, or do redlining themselves, for instance, legal might end up using the system the least amount of all function areas.
But even if procurement, sales or IT takes the lead on acquiring it, legal remains the custodian of the software. That means legal must take the lead in getting the enterprise in order before deployment.
“Start small,” McCarthy said. “Phase this thing in incrementally.”
For smaller organizations and those that haven’t matured their contracting processes, McCarthy recommends implementing a limited type of contract analytics tool rather than an end-to-end CLM.
Not only can you extract immediate value from that—by using it for evaluating M&A deals, for example—but it buys you time while you get your preparatory work done.
“Don’t try to deliver too much change into the business in one go,” he said. “The change in adoption challenge combined with trying to do too much in one sitting is typically what stifles implementation.”