Legal Operations Explained: Contract Lifecycle Management

Contract Lifecycle Management, often referenced as CLM, is a key function for successful legal operations programs. As a legal operations program matures buying software to assist with this function is important but this can be handled manually if the company size and the volume of agreements is fairly low. 

So what is CLM? Contract life cycle management refers to the process of managing the creation, execution, monitoring, and termination of contracts between two or more parties. It involves overseeing the entire life cycle of a contract, from the initial negotiation phase to the final termination or renewal.

The contract life cycle management process typically involves the following stages:

  1. Contract initiation: This stage involves the creation of a new contract or the review and update of an existing one. It includes identifying the parties involved, defining the terms and conditions, and setting objectives and goals.
  2. Contract execution: Once the contract is created, it must be executed by all parties involved. This includes signing the contract, adhering to the terms and conditions, and meeting all contractual obligations.
  3. Contract monitoring: During this stage, the contract is monitored to ensure that all parties are meeting their obligations. This includes tracking key performance indicators, monitoring compliance, and resolving any issues that may arise.
  4. Contract renewal or termination: At the end of the contract term, the parties may choose to renew the contract or terminate it. If the contract is terminated, this stage involves ensuring that all obligations are fulfilled and that all parties are released from their contractual obligations.

Effective contract life cycle management is essential for ensuring that contracts are properly executed and that all parties involved are meeting their obligations. By implementing a structured approach to contract management, organizations can improve their contract performance, reduce risk, and minimize the likelihood of disputes or legal issues.

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