This article is written by Heena Joshi, pursuing a Certificate Course in Introduction to Legal Drafting: Contracts, Petitions, Opinions & Articles from LawSikho.
Table of Contents
Introduction
Do you know that the average company loses over 9% of its revenue annually just because of two contract-related issues? As it seems in the text of a topic very simple but yet complex, we all know what a contract is, a set of rules where both parties agree to, all the clauses for a certain amount of consideration. From the very beginning, it taught us that without consideration contract is void and all contracts are agreements but all agreements are not contract. Rules are generally aware to everyone but sometimes big sets of bare Acts, file, and pre drafted norms and government regulations, does not teach us how to manage the contract in a smart and intelligent way, we can also say it like how to go through each step of contract from drafting till stamp duty in smart and less time-consuming ways. This is what smartness means to me, actually doing a task at its best with less time-consuming. Here I will discuss few steps that we can implement in our professional life while drafting a simple contract to any complex agreement. Following steps will impact for betterment in our day to day life as well as professional status, so let’s begin.
Role of simple language to manage contract
A contract should be simple, it should not be difficult to read or drafted with some difficult synonyms and antonyms. “Simple things create less confusion”. Why would anyone make a contract or draft agreement if it’s difficult to understand? Take this example on you, you have to put yourself in the shoes of your client, but not to make things difficult for your client who is not even a law dropout or graduate, there is no logic in it, is it? Recently the Supreme Court in November 2020, a plea by Advocate Subhash Vijayran, asked the government to respond to the plea to use “plain English” for drafting laws, government orders, and notification to make them digestible for the public. It means the supreme court also favors that things should not be complicated but easily understandable to the public at large because the law is not only for the educated people it is implemented on each and every individual.
What is Contract intelligence?
Contract intelligence is a new approach that provides companies an ability to dynamically analyze contract in the context of the system and processes that drive the business forward, one way to do it is to go through each and every document again and again and note down new points that come up with every check, but this is very time consuming. I have one way like I do during the process of due diligence that is to “look at the important document first, such as bank statements, board resolutions, loans, auditor report, etc and write down in short notes on a small paper so that you don’t forget, it really works to keep a small diary to note down small details that are relevant and help to remember big incidents of the company.
Role of Artificial intelligence
Usage of advanced tools to intelligently structure any kind of contract Technology is there to help every individual so it is also there for professionals too, artificial intelligence speeds up the contract setup process by modeling your contract relationship and leveraging a library of hundreds of thousands of clauses sourced from millions of existing contracts. Artificial intelligence helps businesses make better decisions by recognizing patterns and identifying hidden relationships in contract data; it also provides transparent reporting for key stakeholders.
How can we manage contracts? What are the better ways to do it?
Icetis contract intelligence and medius contract management are that type of platforms that helps at the stage of the life of a business agreement it makes easy to manage every facet of contract from managing a single contract to bulk actions for amendment and regulatory changes. This platform makes it easy to analyse and review contracts at any stage of the contract lifecycle, this tool also recognizes contract language and recognizes attributes and then builds algorithms to automatically choose the right approach based on the content of the contract. Icetis could be the option for the big industries to manage their contracts smartly but let’s now discuss what are the practical options for small scale industries or a start-up professional who starts from the small level.
Pre-conclusion
We need to manage contracts for 100% result in our work, there is no such concept of 90% or 80% because chances of failure will always walk with us and once you clear in your mind the 100% criteria then there will be less chance of failure. We all know that technology and artificial intelligence is at on a top demand for every profession and business because they make things easier and simpler and faster, but still, we cannot take it as one and only solution for proper management of contract there are some human/natural intelligence ways as well without which may be artificial intelligence is also not complete. Let’s discuss what we can do, at our level for better contract management.
Keep your contract accurate and information rich
Keep a proper track of all historic information in order to maintain a complete audit trail, instead of having different information in different formats. Maintain important documents and properly note down important dates when your organization signs a contract, and always maintain renewal reminders, update on time to time review and renew.
Let your Employee access
Centralizing all your contracts means that and, Let your employees get access to any documents whenever they need them so they can help you as a team. However, it is also important to set up controlled access to certain documents. Employees play an initial role from maintaining data, recording important dates to the drafting and filing of a contract. They play an important role in effectively managing contracts and agreements and relationships between entities by properly planning all the contract management strategies resulting in reducing, eliminating, or mitigating financial, legal, and procurement risk.
Having all data digitized in a single place
Yes, the method cannot be underestimated and is simply best practice in today’s data-fuelled business economy. But the reality for many law firms is that files are still held in archives, boxes, and cabinets
Visibility of all contracts
Visibility of contracts can identify opportunities for cost saving. You can start to evaluate contracts by their key dates, milestones, deliverables, and specific contract terms. With this insight, you will be in a stronger position to renegotiate those contracts, consolidate the number of the vendor in your portfolio, and not waste time and resources on the contracts that are of little value or are redundant, reducing cost, and revenue leakage
Manage your risk
Managing risk via triggers that alert you or your contracts team to crucial renegotiation points, changes in contract values, compliance rules, and obligations that incur fees, can all help drive down lost revenue and add directly to the bottom line. But contract management has on from simple trigger alerts. Now smart contract management takes a deeper look at risk management by using artificial intelligence, for example you can create a contract hierarchy based on risk potential and value that means you have better insight into which contracts pose the greatest threat to your organization, and manage them accordingly. You can get insight into what percentage of your contract is compliant or non-compliant.
Conclusion
Whether there is a role of artificial intelligence or team work of employees, proper update of information, norms, rules and regulation is must. Every drafted contract should be managed in such an easy way so that any employee can play a role to update it. I realise teamwork played an initial role while managing a contract smarty. Update and visibility of all important events of the contract played a very crucial role in contract management and smart work to manage contracts effectively. Keep a proper track of all historic information in order to maintain a complete audit trail, instead of having different information in different formats. Maintain important documents and properly note down important dates when your organization signs a contract, and always maintain renewal reminders, update on time to time review and renew.
References
- https://www.cobblestonesoftware.com/blog/contract-intelligence-smarter-contract-management
- https://www.infosysbpm.com/spendbytes-issue10/documents/towards-smarter-contract-management.pdf
- https://www.google.com/search?q=spreme+court+on+plain+english&rlz=1C1CHBF_enIN873IN873&oq=spreme+court+on+plain+english&aqs=chrome..69i57.10226j0j15&sourceid=chrome&ie=UTF-8
- https://www.cobblestonesoftware.com/blog/contract-intelligence-smarter-contract-management
- https://www.infosysbpm.com/spendbytes-issue10/documents/towards-smarter-contract-management.pdf
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