A Guide to Contract Negotiation Software
Contract automation software is a growing trend in many sectors, notably in legal with large-scale investments such as the recent UnitedLex deals with GE and DXC drawing attention to the many benefits of contract automation technology. Over the coming years, partnerships between legal service providers and technology companies are set to increase as the industry seeks to streamline contract workflows.
We’ll take a closer look at one particular area of this blossoming technology: contract negotiation software. Contract negotiation software enables legal counsels, alternative legal service providers (ALSPs), procurement agents and other contract owners to automate the negotiation phase of their contract workflow.
What Is Contract Negotiation Software?
When people speak about contract negotiation software they typically refer to a specific area of contract automation technology. Let’s take a quick look at the different categories of contract automation software.
- Document Generation (sometimes called Document Assembly) – Document Generation solutions such as Contract Express enable users to draft contracts from standardized templates.
- Contract Negotiation Software – Contract negotiation software such as synergist enables contract owners to manage the contract workflow end-to-end, including the negotiation phase.
- E-Signature – e-signature solutions such as industry key player DocuSign enable users to sign documents digitally. This software aims to reduce the need for manual signing by creating a secure environment for signatures to take place digitally.
- Contract Lifecycle Management – Contract lifecycle management such as SpringCM or Icertis enables users to manage a contract of its lifecycle by allowing users to update terms or clauses.
- Document Analysis / Extraction – these types of solutions such as KIRA or LEVERTON allow users to analyse and extract key clauses from contracts using Artificial Intelligence (AI), for example when performing due diligence on M&A transactions or running periodic audits of lease agreements.
Note that there is naturally some overlap between these categories, their proponents and the features listed. These distinctions serve as a guide to better understand the automation industry and contract negotiation software’s place within it. So let’s take a closer look.
Contract Negotiation Software: A Closer Look
Firstly, let’s look at a typical automated contract workflow.
A typical contract workflow involves the following phases.
- Assembly – A contract is assembled using a standardised template based on predefined clauses and client information.
- Negotiation – Should a client have questions or disagree with a part of the contract, the terms are negotiated and additional stakeholders may be involved (dependent on the nature of a proposed change)
- Review – The contract draft is reviewed and, if required, approved by internal stakeholders and released for signature
- Signature – Both parties sign the contract and the agreement takes effect
- Management – The contract is stored in a central repository with deadlines and obligations tracked throughout the contract’s lifecycle.
Contract negotiation software differs from the other categories of contract automation software by having the ability to additionally handle the negotiation phase of a contract. Whereas other solutions have to take this phases offline, and require word doc or PDF files to be updated manually, contract automation solutions integrate this phase into their automated workflow.
How Does Contract Negotiation Software Actually Work?
Current contract negotiation solutions work around the “track changes” functionality in Microsoft Word by allowing users to quickly compare revisions that have been made by a counterparty.
Alternatively, several solutions have taken this “track changes” approach online, for example, Google Docs, where documents can be collaborated on by multiple parties in real-time. The challenges with both these approaches are they lack a way to holistically record what clauses and positions are being negotiated and agreed over time, in order to continuously improve a contracting process and shorten time to signature.
However, industry-leading contract negotiation software is able to do this. Thanks to innovative solutions like synergist, contract owners can build a playbook of standard, pre-approved terms that can be used in future negotiations. Now, if a similar pattern of pushback occurs, the playbook enables contract owners to take action without needing to involve their legal team. Over time, the playbook gets smarter as more client feedback is integrated and processed. The entire process can be monitored in a central dashboard for complete transparency.
What Are the Benefits of Contract Negotiation Software?
Contract negotiation software that is able to handle client pushback brings with it specific advantages:
Legal Cost Reduction – in an automated workflow, legal do not have to be involved in simple negotiations which reduces cost overall and streamlines the entire workflow.
More Autonomy for internal Business Teams – Contract negotiation software can actually empower procurement teams to be more autonomous by using a standardized playbook.
Increased Security Through Encryption – Automation software that cannot handle client pushback means that negotiation must take place through a repetitive exchange of word documents via email, which are unsecured and have the potential to be read by anyone. Leading contract negotiation software take negotiation to a secure deal room allowing parties to collaborate on the contract in an encrypted way.
Increased Accountability – Innovative contract negotiation solutions like synergist ensure that the entire contract workflow takes place online and creates a secure audit trail for all interactions, meaning that it is much easier to keep track of how many deals are open, which deals have been agreed and by whom, and which need further action.
Finding the Right Automation Solution
For some businesses, contract automation solutions simply may not be a good fit. When it comes to determining how effective document automation software is, it is important for businesses to do two key things:
- Determine the return on investment (ROI) from implementing contract negotiation software
- Benchmark automation software to find the best solution
With all of the hype surrounding automation technology, it is best to first start by looking at what contracts your business is currently dealing with and what has the potential to be automated. By first determining internal needs, you are much better equipped to find the right automation solution. Secondly, it is important to understand what each solution can offer and how this fits the needs you determined. Our upcoming ebook takes an in-depth look at exactly how to do this.
In the case of Radiant Law, an innovative Alternative Legal Services Provider (ALSP), it was important to deliver a highly efficient contracting service to help companies remediate their contracts in preparation for GDPR taking effect. By using synergist as their contract negotiation platform, Radiant was able to automate the contracting process for Data Processing Agreements and quickly deal with exceptions arising from the negotiation phase, all from a centralised dashboard. Read the full success story here.
The Smart Way to Automate Contracts
The amount of clear information to help businesses automate their contract workflow is scarce. Synergist provides a simple framework in our upcoming ebook “The Smart Guide to Automating Contracts”. This guide will offer a complete step-by-step tutorial on contract automation and serves as a go-to resource for any professionals considering implementing contract automation software.
Learn how synergist can help you automate your contract workflow today.