Kicking off season two, Matt Patel, COO and Co-founder of Malbek, chats with Ed Klaris and Alex Akers of KlarisIP on how important it is to have a CLM that integrates with other business applications. When it comes to how contracts are handled, it can seem like Legal is at odds with other business teams. Alex and Ed discuss how using the right CLM and integrations smooths out friction and can bridge the gap between different parts of the business. The conversation shifts to specific departments and the pain points they face without the right integrations. Rounding out the episode, Alex and Ed discuss how having visibility into obligations and data is critical for business function and why integrating properly can be a game changer for your organization. Teamwork makes the dream work and that is no exception for CLM solutions! So, grab a glass of wine, and let's talk contracts!
Intro:
On today's episode, we talk about CLM as an integrated system with other business applications. Joining us for this conversation is Ed Klaris and Alex Akers from KlarisIP, a boutique consulting and business process outsource company. Ed is the CEO as well as the managing partner at Klaris Law, and also serves as Adjunct Professor of Law at Columbia Law school. Alex is a consulting manager at KlarisIP with an extensive background in transforming media and entertainment companies. So now it's time to relax, grab a glass of wine, and let's talk contracts.
Matt:
Hello, everyone. My pleasure to meet with Ed and Alex of KlarisIP. How are you, Ed? How are you, Alex?
Ed:
Very well. Thank you, Matt. Thanks for having us great.
Alex:
Great. Thank you, Matt, for having us.
Matt:
Excellent. Looking forward to our conversation today. So let's start with my first topic. As we talk about how contract management systems need to be well-integrated within the applications in the organization that we all work with, when it comes to contracting, we've seen that contracts don't just impact the legal department, but many others, including your typical sales and procurement, finance. But even beyond that, there are many other departments that are impacted or need to work with the terms or the data within the contracts. And let me start with you first. Can you share some of your insight and experience on working with organizations, how other groups within our company are often working with contracts and contracting systems?
Ed:
Sure, Matt. It really depends on the size of the company. Sometimes we work with small companies that really don't have even these extra departments that one might have at a larger company. Medium sized companies tend to have a finance group, even a procurement office, but maybe not a business affairs group. And then large companies that we work with have any number of departments that touch the contracting process. So I'll focus on the larger ones, the ones where many groups touch the contract and the life cycle of the contract.
Ed:
In the companies that we tend to represent, they're companies that own intellectual property, whether it's brands and logos or it's content like videos, movies, podcasts, art, photography articles. And in that space, we tend to find that large companies, there's a business affairs group that starts the process where they put together the deal terms. And then they pass off to the legal affairs group, which does the contract. Drafts it, puts it together. But that group might have to get approvals outside their department, and even after the contract is signed in the legal department, there needs to be an integration with finance and other groups who might be benefiting from some of the terms and some of the deadlines and the obligations that are in the contract. So we find that there can be a number of different integrations depending on the size of the company.
Matt:
And these terms, I'm assuming these other departments are without a system in place, right? I'm talking about less manual ways. Is it something that they pull documents and try to scan through it, or somehow manually figure out what the terms are that they need to manage? What kind of solutions have you seen in the industry?
Ed:
Most companies that we work with have not historically had a contract lifecycle management tool, like the one that you all have developed. They are usually using their local servers to store contract templates or existing contracts, and they pull up Microsoft Word and draft their contracts in the old way of not having a contract life cycle system. So, that's the general rule, and so they're really happy when they begin to find that there's actually a tool that they can make their contracts in.
Matt:
Great insight, Ed. So let me move on to the pre-contracting side, where sales or the teams that are working with the prospective buyer are working on a deal and to do the quote and proposal. Eventually, it comes to terms where they've agreed on the product and pricing, and now you need a contract. And Alex, I'll ask you this question, based on your experience working with organizations. What type of systems or processes bridge the gap between how the selling occurs to get a quote approved and then the contracting side begins where you need all the legal terms and conditions ironed out and the signature on the paper to put that deal in place? If you've seen applications work well or teams work well, the integration between sales and legal is essential to remove friction. So Alex, any thoughts on how organizations have evolved to bridge this gap?
Ed:
Sure. I think it's a good question. You know, when we think about contracting, it's really at the core of many of these departments, but for sales and a sales organization, their motivation is to push documents through as quickly as possible to close that sale. And any holdup or any bottlenecks can put that potential sale at risk. So if you can integrate their CRM, customer relationship management system, elegantly and thoughtfully with the CLM process, you're cutting down a lot of the back and forth between legal, you're pre-populating contract templates.
Ed:
And the real benefit of the CLM is it's creating a common language that is unified in terms of terms, it's repeatable, and it's a very transparent process. So that if I'm a salesperson, I'm very aware at where my contract is in a predefined workflow. There's full transparency, it's reportable, it's repeatable. You can create templates that can accelerate this process. And ultimately it just gives a much greater visibility into that overall process, which results in greater efficiencies as it relates to your contract processes, and ultimately more businesses won.
Matt:
Great point, Alex. I think you hit it on the head there. The transparency and knowing where your contracts are is key. What we have seen is sales, or anyone for that matter, requesting a contract, they are not frustrated, always, that it takes one week, two weeks, one month to get it done. But they're frustrated is they don't know what's happening to their request. The lack of visibility.
Matt:
Let me put it this way. You know when you order something and you have UPS or FedEx giving you tracking? If it's going to take 10 days to get to your house within a big shipment, fine, you're okay with it. As long as you can see the progress. And you don't complain. And then there are other shipping services, which I won't name, but ones that you order, and it gives you a tracking number, you have no idea where it is. And the only update you get is when they actually deliver and it is there on your front door. That's frustrating. You don't know where things are.
Matt:
So I think that integrated systems where sales books an order and submits a request for a contract, the terms flow seamlessly, where they don't have to reenter it into some other document, and then having visibility every step of the way, whether it takes a day or a week or a month, alleviates a lot of that friction and the frustration between teams, and improves collaboration. So great point Alex. Then add any other thoughts on that. So you can just jump in.
Alex:
Thanks. Yeah. In addition to the upstream visibility and transparency that you and Alex both just so eloquently discussed, there's also, in some of these companies that we work with, studios that are making movies, for example, are looking to find out as early as possible what deals are being made.
Alex:
So a person downstream who might be distributing content wants to know whether the deal terms have been struck at the beginning of the contracting process so that they can begin know where the movie or television show is in the process of being made. And therefore, their ability to have that visibility can really help their ability to get ready for, market, and promote the movie and television show.
Matt:
Very true. Yeah, I think this concept applies to a variety of use cases and industries because the use cases are different in the different industries, especially in media, but having that visibility and transparency, and easy access to their data, versus having to ask someone and waiting for their response, it just makes a very big difference in how people collaborate.
Alex:
Agreed.
Matt:
So my next question is related. We can also look at downstream systems and procurement, for example. Or in the media world, the rights or royalties and finance, other departments that are impacted by the terms that you just negotiated in the contract. Procurement, for example. They have a lot of work on their plate because every department across the company is asking them for contracts, such as supplier agreements. Whether it's IP or consulting services, or anything that the organization is going to buy, which is a lot of things from different vendors out there. And it's often on a third-party paper. So it's not even your own document templates, but you're usually working with the vendor's document.
Matt:
So procurement struggles a lot, and they may have their own system or just using Microsoft Word and email. Just like sales, I think it's important for them to be part of this overall application and integration, especially when they work cloud tools like Ariba or Coupa, or any of the vendor management solutions out there. Alex or Ed, have you dealt with media companies or even other industries where procurement has their own unique pain points?
Ed:
I have, and I'm sure Alex has, too. Yes, you're right, Matt. Procurement has a huge number of contracts that they have to either approve, that were drafted by the legal department. Sometimes they actually are the ones that take the templates, fill them in, and send them out, or they get third-party paper. It really depends on the company. And it depends on the circumstance. The larger the company, we find, the more of their own paper they use. Often. And in the licensing business, the licensor is the one that tends to have the paper, and the licensee uses the third-party paper.
Ed:
So we find that that procurement groups definitely can benefit from the sort of template-driven, automated workflow approval process, transparency that a contract lifecycle management tool can provide, and which a Microsoft Office type of approach wouldn't really provide that kind of insight.
Matt:
Agreed.
Alex:
And if I can jump in here really quick, I think the value of having an integrated ERP system with your CLM can help accelerate a lot of the setup time for suppliers. And then, from there, you can really take advantage of that enterprise data. Once a contract becomes more or less a smart asset, and you create data points that are associated with the embedded information within that contract, you're able to do a lot of cool things. From a governance approach, but also from a reporting and a dashboarding approach. It really is a good way to centralize a lot of that information and really make it accessible faster versus having to go and dig up a supplier contract on a shared folder where it might not connect to another system. Really, the benefit of CLM is that it connects these systems together, to each other, and you're able to pull that information quickly.
Matt:
Correct. Exactly. And it's the heart of all of the enterprise applications. You've got to connect it to other applications. ERP, CRM, supplier management, CPQ solutions, some organizations in a formal tool to do their configuration pricing and quoting. So lots of applications that talk to one another. Historically, when it came to legal and contracts, that's where there was a gap and all of these systems stopped, and it ended up being Microsoft Word and email. And there was no integration as far as data was concerned. And that's what CLM applications are trying to bridge this gap across applications. Great, great points, both of you.
Matt:
And the last one I'll raise here in our recording today is around obligations or renewals and commitments that each company tries to track. Whether it's manually, many companies have Excel sheets. I've seen some amazing formatted Excel sheets, but a well formatted Excel sheet doesn't mean it's a great approach because it's a manual way. If you have thousands or hundreds of thousands of active agreements, how do you know that a renewal came up and if you're on the buyer side, you can't cancel it on time, if you don't need that service anymore? Or if you're selling, then did you look at the price cap and price increase provisions and make sure that you updated the pricing for their renewal term?
Matt:
There's lots of obligations and commitments that you must pack on those signed contracts. So whether it's the media industry or other industries that you work with at KlarisIP, can you share some use cases of organizations have struggled without a proper system to manage these commitments? I'll start with you Ed, and then we'll go to Alex.
Ed:
Sure, Matt. This is also a really important point. Interestingly, I find that the small companies that have fewer contracts are as flummoxed by this problem as large companies. You don't have to have tens of thousands of contracts to miss renewals, to miss payment dates, to not know when your contract terminated.
Ed:
It's remarkable, even at a company that might have 400 contracts in total, they're also a company that has very few people watching each contract and how it's functioning. So I find that they miss these deadlines as much as anybody, and they are overwhelmed. So to have a system, a contract life cycle management tool, that can not only house and help draft agreements but can also give you some ticklers around when a contract needs to be renewed, whether the pricing is changing when your due dates are, is a huge benefit to really any size company.
Matt:
Agreed. Absolutely. And I think you have a valid point there. The obligation management or renewal tracking is a pain point for large as well as even smaller companies. Even if it's 50 agreements, you need to manage those. And Alex, any thoughts on that before we close here today?
Alex:
I was actually just chuckling hearing the Excel. I'm a big Excel guy, but I know not everyone is, and I think one of the values of CLM is it helps strengthen your compliance by taking that data-centric approach. So if you can take things like payment terms, or even expiration or renewal dates, and create a dashboard view against them that sends you a reminder and pulls you out of the spreadsheet and puts you more into your day-to-day, then it's just part of business as usual.
Alex:
You're not having to go dig for anything. It's on your home screen, right there, and it gives you a sense of what's coming up 30 days, 60 days, 90 days out from a contract expiring. And from there, it gives you your marching orders. You can establish processes to engage those third parties to kick off the renewal conversation, you can make sure you're in compliance with any of your corporate standards and getting your payments out on time. So being able to take that data-centric approach and put together a thoughtful relational database that aligns all of this stuff really helps these CLM systems shine and teams shine with them.
Matt:
Completely agree, Alex. Thank you both for your amazing insight. And for our listening audience, if you want to share any contact details or where to find you or your services at KlarisIP, website, LinkedIn, happy to share that.
Ed:
Thanks, Matt. It's a pleasure being here today, and thanks for having us.
Matt:
Thank you both.
Ed:
You can reach us at KlarisIP.com, we're on LinkedIn, we have a fulsome website. Our services include all sorts of legal operations, including contract management and rights management, finance management, business process management, and we also work in the content supply chain space. So check us out, give us a shout. We'd love to hear from you.
Matt:
Excellent. Thank you both, and have a great day.
Ed:
Thank you, Matt.
Alex:
Thank you, Matt.