Commercial contract management doesn’t have the same face as it did five years ago or even a year ago.
Contracts used to be simpler, allowing you to handle and track contracts manually. However, contract management is no longer that straightforward. You have more regulations, moving parts, and potential partners to create commercial contracts.
Your traditional contract lifecycle management (CLM) techniques may not be enough anymore. So we gathered the top trends and challenges you’ll see moving through 2024 and ways to make the most of new technology to stay on top of the latest commercial CLM trends.
- Manual and traditional contract management processes can no longer keep up with increased legal and commercial contracts.
- Automation and natural language processing aid in contract drafting and review.
- Managing contracts extends beyond signing the contract and requires software for tracking compliance afterward.
- Establish KPIs and use automation to track your entire contract lifecycle.
Where Commercial Contract Management Stood in 2023
Last year left commercial contract management at a crossroads between traditional methods and embracing new technology. AI, machine learning, and automation brought new opportunities and challenges.
Often, these changes occurred faster than legal departments could understand and adopt the technology. There was also resistance to change as AI was still relatively new, causing legal leaders to pause before risking their contract workflows with new technology.
However, legal departments also began seeing that change was necessary as increased contract loads, costly delays, and human error caused apparent issues in the contract management process. Legal departments could also see the benefits of new technology.
Some of the common challenges new trends and technology address include:
- Contract leakage: Extended contract processes and weak document review can lead to contract loss of value.
- Increase regulatory compliance: Regulations increase as more data moves online, protecting personal and sensitive information from exploitation and privacy violations.
- Increased globalization: Greater global opportunities for commercial expansion also lead to more legal regulations and a greater need for technology to aid in collaboration.
- Higher contract volumes: Your contract volume is increasing faster than your ability to support the contracts, which can lead to oversights or poorly managed contracts.
It’s time to step into the future and embrace the change that will help you stay on top of your legal contract needs.
5 Trends Leading Commercial Contract Management in 2024
Several key trends are shaping the landscape of commercial contract management in 2024. Embracing these trends is crucial for organizations aiming to stay ahead of the curve.
1. AI-Generated Contracts
Contract automation tools use the knowledge from past contracts to understand language and structure. It uses this knowledge to write new contracts using similar structure and verbiage.
A Gartner study predicts that by 2026, AI will create a quarter of first-draft contracts without human intervention.
AI contract generation allows you to handle larger contract numbers. You’ll spend less time on the menial drafting phase and more time ironing out those fine details, getting that commercial contract signed faster.
2. Automated Contract Review
What used to be a time-consuming task is now simpler, thanks to artificial intelligence. Automatic contract review cuts your hours significantly while reducing common errors accompanying contract review.
AI combined with natural language processing can search through contracts, pull out key ideas, and identify potential issues. It not only understands the legal language you’re familiar with, but it can also interpret ideas and phrases from other jurisdictions and countries you may otherwise not be familiar with.
Having AI at your side will be especially helpful as globalization becomes more prevalent. Commercial businesses can expand further due to technology and digital roads paving the way to worldwide commercial destinations and customers.
Keeping track of all the latest compliance rules, jargon, and processes is nearly impossible without some help. AI helps hold the knowledge of worldwide legal procedures in its system. Automated contract review can also keep you compliant with the changing legal rules and regulations, especially surrounding personal data and digital information.
3. Increased Technology Reliance
According to Gartner’s 2023 legal compliance survey, the most significant change in the legal budget is increased legal technology investments.
Contract review and generation only scratches the surface of technology’s potential. AI fuels workflow automation across all areas of your legal department and helps you create, review, and monitor commercial contracts with greater efficiency.
4. Continued Contract Monitoring
The contract’s lifecycle doesn’t end when the other business signs the commercial contract. It continues for the life of the contract.
For example, if you sign a five-year contract with a supplier, that contract’s lifecycle lasts all five years.
Who monitors that contract for all five years?
You probably don’t have the staff to watch those contracts night and day. In fact, 55–70% of businesses don’t have effective contract management systems, especially to handle the increased workflow of contracts. But you do have technology that can do just that.
Continued contract monitoring is not a new trend but is made easier by automation. To perform continued contract monitoring, you’ll need established contract key performance indicators (KPIs) to measure the contract’s results. These will help you adjust future commercial contracts for the greatest financial profits and legal security.
Your legal automation can also alert you if anyone in the contract isn’t upholding any part of the contract.
5. Automated Contract Workflows
A legal workflow is like a roadmap for your technology. If you perform a pattern of processes, you can create a workflow to aid in contract lifecycle management.
The workflow directs when the next step starts in the commercial contract’s lifecycle and who should perform the next task.
Automating contract workflows moves contracts to the next process without human intervention or sends them to those who do need to act, like business partners who need to sign the contract.
Workflows are necessary to decrease the time it takes to process contracts, saving you money.
Add the Latest Technology to Your Legal Stack in 2024
Adopting new technology to change with this year’s trends will be what sets you apart from other commercial businesses. Legal technology will decrease your contract review times while increasing your accuracy. You’ll be able to stay on top of the contracts more efficiently, ensuring all parties remain compliant.
Exigent is your partner for legal technology adoption. We offer the services and support you need to review and generate new contracts, build commercial contract workflows, and monitor the contract throughout its entire lifecycle.
Contact us to learn more about our commercial contract services.
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About the Author:
Exigent delivers scale, expertise, and insights that generate bigger returns for CLM – Contract Lifecycle Management, Legal Spend Management, e-Billing, Due Diligence, Document Review, eDiscovery and Litigation Support, Commercial Services, Regulatory & Compliance, Outsourced Legal Administration, and Legal Tech Design.