10 Key Elements for CLM #3 – The Claus(e) Library
Now that we’ve covered the importance of a searchable repository of contracts and tools to seamlessly author them, it’s time to talk about the critical importance of the clause library. Creating a contract from scratch is the perfect way to introduce risk into a deal. The introduction of unfavorable language – often done totally accidentally – can have far-reaching consequences. Going back to past contracts to copy and paste isn’t necessarily a safe solution either. Without a solid understanding of how the existing contract’s terms actually performed, you may be doomed to repeat negative outcomes from the past.
Rather than starting every contract from scratch, the Malbek Contrax™ clause library provides a selection of pre-approved language and terms that can be automatically included in contracts. With the power of AI, the template and clause library drive automatic inclusion into the draft agreement of appropriate language based on key business or legal terms. Authorized users have visibility into how preferred language differs compared to alternate clauses and can swap pre-approved alternative language where desirable without requiring manual updates or additional approvals that would cause delays. This insight is very powerful for gauging whether you are creating contracts close to your preferred terms or straying far away from them.
A clause library also reduces template proliferation and consolidates redundant templates where only small clause variations exist. The clause library greatly simplifies and expedites the contract creation and approval process, while mitigating compliance risk from rogue contract terms. Over time, unfavorable language or terms can be removed from the clause library, safeguarding profitability, reducing compliance exposure, and making successful contracting an easily repeated process. Analytics on existing contracts show the usage of preferred versus alternate clauses and how often the clause language has been edited during contract negotiations.
Do you have a clause library, and if you do, does it give you insight into the long-term implications of preferred versus alternative language? If that capability has caught your notice, reach out to us. We would be delighted to demo the solution for you. And don’t forget to download the complete eBook, The 10 Key Elements You Must Have in Your Contract Management Solution.