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Streamline Contract Development in Five Steps You’ve witnessed this play out at your company before. You may have even done it yourself. A contract is needed, so you ask legal to draft it. Legal, being buried with a million tasks, looks for the latest contract used with a counterparty similarly aligned to the current situation. Once identified, a quick search and replace process takes place to remove the legacy information and the current deal’s details are added to make it look like new. There’s just one problem. Using executed contracts as a base template for new agreements can create a variety of compliance risks and impact negotiation leverage. A centralized template library and contract playbook can make your company’s contract lifecycle management more effective, more efficient, and ultimately more profitable. But overhauling a process that’s been the standard for years can seem like a daunting task. It doesn’t have to be. In fact, you can reduce legal risk and increase efficiency and compliance in just five easy steps.

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WHITE PAPER Step 1: Discovery and Organization Locate the Contracts

What is a Contract Library?

The biggest stumbling block that companies come across when they try to improve contract development and management is trying to locate the existing contracts and templates. They can be spread across electronic repositories like employee hard drives, network file shares, emails, or stored as hard copies in desk drawers or file rooms. Locating and identifying all of the active agreements and contract templates may require you to take an approach similar to electronic discovery. And doing so in a proactive manner could help you avoid locating them in an actual eDiscovery moment as a result of litigation. Organize Contracts by Groups

A contract library is an online repository where standardized and approved templates and clauses can be found and used in contracts authored by your staff or in certain circumstances for contracts authored by a third-party. If the language in a contract needs to be changed (a common practice), having a central repository allows you to make single changes that then are replicated across all appropriate contracts, saving valuable time and resources.

Prior to developing contract templates, it helps to group your agreements by some meaningful designation, i.e. sales contracts, license agreements, NDAs, etc. You need to look for the common components within the contract and identify those that match. Contracts may go by different names within the same organization. To effectively consolidate, you need to uncover and understand contract sets and what they represent. Identify the Common Components Once contract groups have been established, identify the common contract components within those groups. Start by analyzing the contract language. Some contracts will have identical terms, others will contain similar language. Examples include entitled clauses such as termination or standard language that is used repetitively across all contracts, such as boiler plate language that excludes all liability for activities you may or may not be involved with during the contracting period.

Step 2: Build Your Contract Template Library Once you’ve identified common components, look at the variations in these components, which can range from a single different word to entirely different sections. You’ll need to: 

Define the rules guiding these differences such as circumstances in which one variance should be used over another

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Determine which contracts are the preferred versions and which are alternate versions

Once you’ve consolidated your templates and identified the common and variable components, you’re ready to build a library with a central clause repository and a central template repository.

“When contracts are spread across multiple locations, it is nearly impossible to figure out where a particular clause is being used.” 

This exercise isn’t solely about creating a process to generate contracts more quickly; there are some additional benefits to building a clause and template library, including the following specific examples:

Mergers and Acquisitions: Run simple reports to address M&A needs, such as showing all contracts containing a change of ownership clause

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Financial Regulations: For large financial organizations, Dodd-Frank requires certain financial institutions to submit annual reports (called living wills) that include the requirement of identifying certain vendors and ensuring their contracts contain specific language relating to continued operations in the event of financial distress. A central repository for clauses keeps this process from being an annual compliance fire drill.

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International Contracts: Enable local contract managers to make localized contract adjustments and easily track clause changes across multiple languages in disparate geographies

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Map to Third-Party Paper: Align third-party paper with your own contract language to create more advantageous negotiation positions

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Stealth Behavior Modification: A new secret for the lawyers, this allows you to embed rules around the use of contract language, giving the sales team some autonomy in developing successful deals (and the appearance of control and flexibility) without actually having to run every decision by legal first.

Step 3: Implementing Standard Timelines and Metrics for Review Once you’ve identified common clause types -- such as assignments or confidentiality -- create a matrix organized by use. This will show how often and where certain clauses are being used so you can quickly and correctly assemble new contracts with the correct clause types.

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When you have variations, you need to know the rules that drive those variations. This is one of the biggest values from automated contract management systems such as Apttus. Being able to identify trends from the metrics and apply them with rules will allow your company to automate its Legal Playbook. Establishing Standard Timelines With standard timelines, you can build a regular schedule to review standard clauses. As market conditions, economies, products, and prices change you can ensure your standard language isn’t stale, your company is remaining compliant, and

“Automate the process based on conditional rules and stored metadata, saving both time and ensuring 100% accuracy.”

prevent any revenue leakage. In addition, standard timelines will provide metrics that will help in future negotiations to really understand if you are using the best language for your starting point or if are negotiating away from an alternate clause in many of your contracts.

Step 4: Automating Your Legal Playbook What is a Legal Playbook? How will automating help? A lot of companies have a legal playbook, which is an enormous notebook with rules and policies for contract managers to consult as they assemble contracts. Many senior contract managers will have this playbook memorized, pulling out individual clauses based on specific parameters. Instead of having contract managers pick out clauses manually, which is both time consuming and error prone, you can automate the process based on conditional rules and stored metadata, saving both time and ensuring 100% accuracy.

Step 5: Automate Template Libraries with Apttus Contract Management Apttus Contract Management takes all of the work above and sets it in continual, repeatable motion through automation. With Apttus Contract Management, built on Salesforce1, the most secure and flexible cloud platform, legal and contracting teams can: 

Build and Manage an Electronic Contract Library and Playbook: Create a single, controlled repository for contract templates, clauses, and playbooks. Attach metadata to clauses when you upload them to the repository to easily retrieve them later on. Metadata also provides guidance on

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WHITE PAPER which clauses to use for a particular contract type or particular setting when someone is assembling a new contract. 

Configure and Modify Contracts Right in the Familiar Microsoft Word Interface: Tight integration with Word allows legal and contract administrators to retain full control without IT support, while working in an interface they’re already familiar with. Data fields in your Word tool bar also allow you to quickly search and paste approved clauses straight from your electronic legal playbook.

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Salesforce1: Leverage the platform’s advanced metrics and reporting capabilities to create robust, real-time drag-and-drop reports and analytics that will give you complete visibility into the entire contract lifecycle.

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Salesforce Chatter: This built-in social platform allows you to run approvals in parallel rather than person to person, increasing collaboration and visibility without sacrificing time and efficiency. Once a document is uploaded to Apttus, everyone who needs to can see and approve in real-time.

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Conditional Assembly: This allows you to drive exhibits and clauses by selecting key terms in a contract. Set priority and alternate clause pulled from your library. The conditional clauses will appear in the template and based on the language used, the appropriate clause will be inserted into the final document. This will allow you to cut down the amount of templates in your repository, eliminating the need for different version of the same contract.

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Map to Third-Party Paper: Allows you to highlight their language and replace it with your own. You can also set up smart fields which allow writing back changes to the language itself and track the changes that happen. Mapping lets you to align the third-party paper with your own language and puts you in an advantageous position when entering negotiations.

Conclusion A centralized template library and automated contract playbook can make your company’s contract lifecycle management more effective, more efficient, and ultimately more profitable. It will also help eliminate the usage of already executed or outmoded contracts as template opens your company up to tremendous compliance risk. Overhauling the embedded legal process can be accomplished in 5 practical steps. It is important to identify and organize the existing contracts by common groups and components. This will allow you to easily find and reuse specific clauses within your template library. By automating your legal playbook, you can streamline your contract management process, implement standard timelines, and work from actionable data.

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About Apttus Apttus, the category-defining Quote-to-Cash software company, drives the vital business process between the buyer’s interest in a purchase and the realization of revenue. Apttus is delivered on the Salesforce1 Platform, the world’s most trusted and comprehensive cloud delivery infrastructure. Applications include ConfigurePrice-Quote (CPQ), Renewals, Contract Management and Revenue Management. Additionally, Apttus’ patent pending X-Author technology enables Microsoft Office to be a user-interface with full interaction and control between SalesforceTM and Microsoft Office. Apttus is based in San Mateo, California, with additional offices in London, UK, Bozeman, Montana and Ahmedabad, India. For more information visit: www.apttus.com

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