As I was looking through some industry stories recently, I came across this report of a ski resort in Park City, Utah, that lost its lease on land it had held since the 1970s due to a data management oversight. Had the contract been renewed according to standard procedure, there never would have been an issue. Unfortunately, because of poor data management, no one knew the lease was coming up for renewal; and by the time they realized the deadline had passed, the landowner was already looking for new tenants.
The Park City debacle is exactly the kind of situation that legal departments are there to avoid. The legal department’s ultimate goal is to keep the company out of court to begin with – and if they do end up in court, they want to be sure that their side wins. This got me thinking about how effective CLM methods help businesses avoid litigation and access the information they need to win if a contract does end up in court. Legal departments need tools that allow them to gain visibility into data and proactively respond to risk, litigation, investigations, and compliance requirements. Effective use of CLM software can provide that visibility.
Here are a few information governance tools that can help legal departments avoid litigation:
End-to-end archiving. This is true comprehensive information management that keeps everything in one place. It eliminates the need to move things around a piece at a time, which risks corruption and inconsistencies between different contract versions and makes it difficult for the legal department to access the accurate information they need. End-to-end archiving helps keep data intact.
Single-solution approach. With all contract lifecycle information easily accessible in one single database, the legal department gains more comprehensive awareness of the contract data that comprises the enterprise. This sort of “control-tower view” brings potential issues to light more quickly, so that legal can deal with them before they become serious problems.
Purpose-built. Every business is different, and so is every legal department: one-size-fits-all solutions are almost always impractical when it comes to contract management. Businesses need systems that have been built to handle their specific contract data, based around their unique workflows and management demands, to ensure consistent data management and keep things from falling through the cracks.
Highly automated processes. The more things are accomplished automatically, the lower the possibility for human error. Legal departments need consistent contract templates and automatic renewal reminders, among other automated processes, to streamline operations and prevent costly errors such as missing a lease renewal deadline, as happened to the Park City resort.
These checks and balances that are part of organized data management could easily have prevented the Park City issue, but in the end the resort did indeed lose its lease – all because no one noticed that their most important contract was coming up for renewal. Effective use of CLM tools can help your legal department avoid those costly errors and oversights, and focus on more strategic enterprise initiatives. Contact us with your contract management questions, and start the trend in your business toward better information governance.
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