Simplify Contract Negotiation and Risk Management in Docusign CLM

Of all the steps in the contracting process, negotiation is the most time-consuming. Docusign research in 2022 found that agreement negotiation was the least likely step to be described as “efficient” and almost 60% of contracting professionals say it is “frustrating.”

For most teams, contract negotiation is a necessary inconvenience. If you want to make sure your organization is getting the best value out of your agreements, you need an efficient way to review the proposed terms in an incoming contract and replace risky language during negotiation. Streamlining this process is an easy way to maximize value while decreasing risk. The faster your team can come to agreeable terms, the sooner you start benefiting from those business relationships.

To help your team simplify negotiations, Docusign offers a suite of CLM solutions (CLM Essentials, CLM and CLM+), with varying levels of risk assessment and negotiation tools. In this post, we’ll walk through the Docusign tools that can simplify the pre-signature process.

CLM+ provides an AI-powered snapshot of contract risk

Throughout the contract negotiation process, your team needs to analyze any language that didn’t originate internally. Whether that’s the entirety of a contract on third-party paper or individual sections on first-party paper that come back with redlines, you need a quick way to process those terms to accurately understand the risk contained in that language. It’s not efficient or scalable to have a team of legal colleagues read every version of a contract from end to end at each stage of negotiation.

CLM+ solves this problem with an AI-powered tool to manage this process in seconds. Any document that is uploaded to CLM+ can be examined using the “Analysis” tab, which will ingest all the language in a contract and highlight clauses that pose low, medium and high levels of risk. That determination is based on two customizable factors: how much the language in the contract conflicts with your team’s preferred terms and your organization's specific appetite for risk in different areas.

The analysis scorecard highlights the number of clause-level risks for each contract, allowing the organization to quickly assess which agreements contain the most aggregate risk. An individual reviewer can use that scorecard to prioritize review and jump directly to the clauses that pose the most risk. That reviewer will have the option to review the risky language, then replace the clause in question with recommended fallback language from an internal clause library or collaborate internally to replace it with terms that are favorable. Those edits will be tracked in the document history and will appear as redlines when the contract is ready for the next step in negotiation.

Simplify internal collaboration with comments and Slack alerts

Once an agreement has been reviewed and the risky language has been identified, there needs to be simple internal workflow steps to make edits that remove or reduce risk. It’s often the case that one team member will analyze the agreement to find problematic language, but based on the areas of risk, that person will need to involve a series of colleagues to replace those clauses with less risky options.

The simplest way to point a colleague to a specific part of a contract under review in Docusign CLM is with comments. If the risk scorecard highlights a particularly risky portion of a contract, any reviewer can create a comment that notifies specific colleagues or teams to that section so they can take action. Comments can be added to specific parts of the contract (similar to how comments work in other digital word processing tools) or the entire contract in general, pinpointing tasks that need to be addressed. All users can see review tasks assigned to them in their CLM dashboard.

Thanks to the Docusign integration with Slack, CLM can be configured to send employees a Slack alert when they are mentioned in a comment or assigned any other contract review task. That alert will open up the contract that is being negotiated and take them directly to the comment that requires their expertise. Whether one person can review all risky language throughout the entire document or individual clauses need to be handled by separate specialists, Docusign CLM offers the simplest way to get risky contract language in front of the right people to revise those terms before a deal gets signed.

Easier agreement review for external parties

Once your team has had a chance to revise all the risky clauses in a contract, the next step is to send that version of the agreement back to external collaborators so they can review the updates. CLM offers the option to send a contract to external parties as a locked (read only) or unlocked (editable) document. Any reader has the option to view the current version of an agreement or turn on a version comparison that will highlight changes that were made in the last round of review.

Throughout the back-and-forth review process, Docusign keeps a detailed log of all activities, including revisions, comments, tasks assigned, view history and more. That information is available to internal parties at all times. External reviewers can see all comments that require their attention as they review the current version of a contract.

Once external parties have had a chance to review, the analysis process can begin again. CLM+ can automatically mine any new language for risk, internal experts can address any clauses that need to be rewritten and the document can be sent back to external parties for their own review. These negotiation steps can be iterated as many times as necessary until all parties are satisfied with the terms.

To learn more about how Docusign CLM simplifies contract review for your entire organization, download the Gartner Magic Quadrant for CLM.