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Increasingly complex compliance requirements, strict industry regulation and multi-jurisdictional legislation are driving the need for corporate legal departments to extract an expanding array of key information from large numbers of contracts – Contract Abstraction.

Many corporate legal departments lack the necessary tools, resources and time to undertake such an exercise themselves, so are increasingly driven to outsource these tasks to Legal Process Outsource (LPO) providers. But how do they achieve the end result sought? LPOs typically employ low cost, off-shore resource to undertake the process manually. Allowing sensitive documents off-site is not something many are keen to consider, nor does the process actually happen any quicker.

The business need for an on-premise, technology-driven, automated solution has long been recognised; until now it has not existed.

Introducing Contract Discovery

Before contracts can be managed, the key terms and milestones, or metadata, contained within them must first be identified and understood. And even before this, there is another critical step – Contract Discovery. You cannot manage what you don’t know about.

Most organisations, when undertaking a Contract Discovery project, soon realise that they have far more contracts than they first thought. Finding these manually means a laborious, time consuming and costly exercise; first, checking each document to see if it is contractual in nature; second, abstracting key contract metadata.

Contract Discovery (cDiscovery) automates both the contract location process, searching multiple locations, and metadata abstraction. This all takes place from within the organisation; there’s no need to send electronic or paper documents offsite for processing, with the inherent security risks.

By processing automatically, on premise, this significantly improves the speed, accuracy and efficiency of Contract Abstraction. Abstracted data is made available as it is processed, without the delay necessarily associated with off-site processing. This rapid availability can be critical in time sensitive environments, such as Merger and Acquisition.

Through the use of Contract Discovery and Abstraction technology, the benefits of automation are quickly realised, and are repeatable:

• Fast, automated, predictable levels of performance
• Reduce impact and delays caused by human error
• Repeatable, small changes processed immediately
• Provides comprehensive, searchable database of contracts
• Optionally populate corporate Contract Lifecycle Management Platform
• Highly scalable to meet demand, driven by data volume and a compressed timeframe
• Increase Return on Investment (RoI) with repeated abstraction iterations

Seal Contract Discovery and Contract Abstraction provide the first solution to automate such processes. Find out more at the Seal website: www.seal-software.com

The same is very true for companies. Perhaps they could go it alone and achieve their goals over time, but do they have the appetite to wait? For many, the answer is no, and so identifying another organisation that has complementary skills, knowledge or a market presence is an extremely attractive prospect.

At Seal we recognise that there are many complementary areas to our core strengths around contract management and contract discovery, but do we have all the expertise in house? Of course not, and we’re the first to admit it.

So that’s why we partner, where together we can achieve more than if we go it alone. We recently announced two partnerships that are classic examples of how two companies can achieve more together. Nuix are experts in eDiscovery, electronic investigation and information governance technology. Bringing Nuix and Seal together enables organisations, lawyers and advisory firms to gain better business insights and take control of their contracts. The partnership delivers a complete, scalable contract discovery solution, deployable in as little as one day – the expertise is built in. Read the full announcement here.

LexisNexis are a leading global provider of content and technology solutions that enable professionals in legal, corporate, tax, government, academic and non-profit organisations to make informed decisions and achieve better business outcomes. The Lexis Contract Finder service, powered by the automated search engine of Seal Contract Discovery, makes it easy for organisations to quickly locate, categorise and manage all their contracts. LexisNexis provide additional services including scanning and digitisation of paper contracts, thus enabling legal teams to digitise and manage their entire contract universe. The Contract Finder service helps make managing contract risk more efficient for legal teams and their commercial colleagues. Read the full announcement here.

For us, the relationship we have with our customers is yet another prime example of effective partnerships – we need customers, that’s a given, and our customers need solutions to their business challenges. Together we achieve our goals through partnership.

It could take days, weeks, months or longer to build up the necessary domain expertise to address the intricacies of, for example, building a new go to market channel in an overseas geography. There are many experts with the experience, the skill, the knowledge and the contacts to help circumnavigate what could otherwise be a treacherous path.

Here at Seal Software Group, we recognise that we’re no different. Like many organisations, we’re experiencing dramatic, high growth, and in order to ensure we keep on track, we’ve recently made two announcements of our own. Måns Hultman recently joined our Advisory Board, bringing more than twenty years experience of helping steer high growth tech companies through the challenges that expansion, new markets and new channels can bring. Måns clearly believes in Seal, as he’s also become an investor. Read the full announcement here.

We also announced that Andrew Isherwood has joined the Seal Software Group board. Andrew has racked up over twenty-five years service with global IT firm HP. His experience of the global enterprise software and services market is invaluable to a firm like Seal. Read the full announcement here.

In many ways, there are comparisons to draw between Seal assembling the right team to help us with our continued growth plans, and what we do for our customers. Many of our customers have challenges around growth, organic or via mergers or acquisitions, and could continue to rely on manual processes that are often slow and painful in order to ensure they are fully aware of the contract landscape of their organisation. They could manually manage renewals, renegotiations, critical events and milestones around their contracts – or they could assemble the right team and bring in Seal.

“Disagreements over acceptance or delivery are the number one cause of contractual claims and disputes. So it is not surprising that the parties to a contract focus so strongly on the question of who will be liable for the consequences of failure.”

Each year the IACCM conduct a survey to establish the most frequently negotiated terms and conditions of contracts. For many years, the top three have consistently been:

• Limitation of Liability
• Indemnification
• Price/Charge/Price Changes

Now this raises a question – if so much effort is placed on these three elements of a contract, then surely these must be important to an organisation? Why else would they expend the effort to negotiate the terms into the contract to begin with? But therein lies a problem – perhaps there’s a need to change behaviours going forward, but what about the hundreds, maybe thousands or even tens of thousands of contracts that are already in place?

Does any organisation truly have control over these top terms for contracts that have perhaps been in place for many years? Contracts that have renewed many times and may have been the source of many a price hike!

Are such organisations getting a fair deal, at least in terms of the contracts that they fought so hard to negotiate in the first place? Probably not is the common answer that we see. If you don’t know what’s in the contract, or even how many contracts are still effective and binding, how can you possibly know if the terms you sweated to enshrine are working for your benefit?

Dolphin Software  specialises in locating, analysing and reporting on contractually binding documents by first ensuring, through a contract discovery process, that all contractual terms are fully understood. For example in M&A environments, the top two terms identified by the IACCM, were also among the top terms that our clients requested in our add on M&A rule pack. (cDiscovery Metadata M&A Rule Pack) Make sure you understand the entire contract landscape of your organisation.

The full report, “2011 Top Terms in Negotiation”, is published by IACCM (www.iaccm.com).

The IACCM study was undertaken in the period December 2010 – April 2011 and the results are based on input from 1,123 organisations, representing more than 8,000 negotiators. Individual contributors came from procurement, legal and sales contracting functions in more than 60 countries. Input typically represents large international corporations.

As information is the most important asset for many industries and organisations, the race to manage information, in a proactive way has never been more challenging. The biggest challenge of all emanates from the sheer volume of information inside any organisation today.

Over recent years, contract management processes within global enterprises have become increasingly important and more complex. Many drivers have contributed to this change, such as increased business-to-business transactions and the need to lower supplier risk, due to potential corporate litigation and penalties for breaching industry regulations.

A major challenge for most is poor visibility into contracts and a lack of tactical and strategic intelligence, combined with the fact that contracts today typically do not reside in a central repository. More likely these contracts reside in multiple locations, in both digital and hard copy files, in paper archives, and even in some cases, outside the organisation’s physical boundaries.

Contract visibility creates a paradox for most organisations. On the one hand this requires management and monitoring of access and protection to ensure accuracy of data. To ensure integrity, contracts need to be locked down from a security perspective. But, on the other hand, contracts must be accessible to support the business and to make sure the contracts are adhered to, with visibility both inside the organisation, and at times, also for parties outside the organisation.

It is not hard to imagine and appreciate the challenges this could create in large or midsize organisations, with thousands of contracts spread out across major divisions/departments, over geographically disparate locations. The issue of contract visibility, security and risk management is beyond the scope of management by humans, with only fragmented manual processes to support them.

Contrary to the famous saying, “What you don’t know can’t hurt you”, this approach to performance management leads to “under-the-radar” problems, hidden costs and liabilities, which can remain unobserved within an organisation for years. These time bombs can have major impacts in reducing profitability; by increasing cost through inefficiency and leaving the organisation open for unsuspected disputes or litigation.

The picture doesn’t need to be so dark, there is hope and help for all. The Aberdeen Group has in a recent customer study http://www.seal-software.com/aberdeen_group_press_release.php shown what Best-in-Class organisations do compared to the laggards. The study outlines some very pragmatic and straightforward actions that in most cases are readily achievable and provide a rapid return on investment (ROI).

Once an organisation has implemented a contract life cycle management (CLM) system, that provides both total transparency and visibility to contracts and their key metadata, together with some well defined processes for review and approval of contracts, you have created a Single Source of the Truth!

Critical planning assumptions will be based on the judgment of which contracts can bring in revenue and what cost has been contracted already.

Knowing and understanding all of your contracts is vital to your organisation being able to plan proactively and accurately.

A monumental effort goes into creating contracts and negotiating favorable terms and conditions; without systematic controls in place much of this negotiated advantage is squandered.

Budget and planning are critical to your business and yet many companies still lose control of their contracts and pay the price. The objective of tightly controlled budgets and controls is to put the business in the driving seat;. the worst scenario is to discover an unavoidable contracted cost that has not been included in the new budget. I think we’ve all been there.

Can you answer the following questions?

• Do you have visibility of all contracted costs?
• Which customers have the right to terminate their contracts this year?
• Which supplier contracts are due for renewal; can you terminate or re-negotiate?

Poor contract visibility creates lack of tactical and strategic intelligence
Contracts today typically don’t reside in a central repository and are not accessed via formal retrieval procedures. More likely, they reside in multiple locations, in both digital and hard copy, often outside the companies’ physical boundaries.

Contract management creates a paradox for most organizations. On the one hand, contracts must be accessible to ensure data accuracy and integrity, contractual compliance and monitoring, with the flexibility for the contract owners to make revisions, addendums, measure contract performance and support internal and external audits. On the other hand,data protection, contract access monitoring and security is of paramount importance.

Large and midsize organizations have thousands of contracts spread across countries, divisions and departments. It’s not hard to imagine the scale of the challenge in pulling together the relevant contract information that proactive business planning requires.

Resolving the issues of contract visibility, security and risk management with fragmented manual processes is a recipe for failure.

Ineffective monitoring, reporting and management of compliance 
Most companies have not implemented a system to monitor contracts from a compliance and financial perspective. The lack of such a system typically results in rear-view monitoring and ‘brushfire management’ with little chance of avoiding increased operational cost and risk as consequence of non-compliance.

Inadequate analysis and follow-up of contract performance
“What you don’t know can’t hurt you,” might be a successful strategy for your personal life, but in business it’s a strategy for going out of business! This haphazard approach to performance management leads to under-the-radar problems of hidden costs and liabilities that can remain undetected within a company for years. These time bombs can have a crippling effect by reducing profitability, increasing cost through inefficiency and leaving the company exposed to unexpected disputes and litigations.

So how do we avoid these problems and address the challenges surrounding contracts?

“What you can’t measure, you can’t manage.”

This classic performance management quote is the corner stone of a proactive contract management solution. While some contracts may still be simple many that are pivotal to the day to day running of the business are multidimensional. These complex contracts have tremendous impact on the bottom line and a company’s competitive position in its industry. Proactively managing contracts requires a system with the following key functionality:

1. Discover: Automated discovery of existing contracts currently in both paper and digital form. Search for key terms and load into contract management system.
2. Store: Central secure searchable electronic repository for all contracts
3. Report: Sophisticated management reports and alerts connected to electronic calendars.

The above is a minimum requirement for you to be in control of your budget and destiny during a challenging 2012.

To learn more about our unique and market leading solution of Contract Discovery and how it can help you within a couple of days, take a look at our online demo.

In the contract management world we sometimes overlook how managers responsible for project delivery engage with contracts. After all Project Managers govern work with budgets as big as the turnover of a medium size corporation and the contracts are the fabric of what needs to be done.

In this white paper we take a visionary look at the interaction of Project Mangers and their project contract portfolios, in particular three ways where we believe Contract Lifecycle Management software can help deliver business value.

At the highest-level contract management software helps to master the complexity both of managing multiple contracts for a single business relationship as well as in building a portfolio of sub-contractors to deliver the work. The ability to shine a light on the interdependencies of these relationships is important in reducing the risk associated with interrupting the flow of the project once work has started.

Looking within the contract documents themselves we see Contract Lifecycle Management software as a means to document unstructured as well as structured obligations. This rich picture of obligations gives the project team greater leverage in its exchanges with contractors at all touch points but particularly when renegotiation of the contracts takes place.

And finally we look at the different management perspectives on the contract documents and how Contract Lifecycle Management software can help project team members to communicate more effectively with one another and with project support functions.

Dolphin Software wrote this white paper together with Ian Furlong a co-founder of Oxford Major Programmes Ltd. Oxford Major Programmes, a new company specializing in establishing ways of improving the management of the largest projects and programmes, has been established by a group of experienced industry leaders participating in the Masters in Major Programme Management at the Oxford University Said Business School.

A free copy of Ian Furlong’s white paper: Three ways contract management technology can add value to complex project management can be downloaded at:  http://www.dolphin-software.com/downloads_ian_dl.htm