Confessions of an Operations Guru Turned Legal Ops Novice, Part 6:
3 Tips for Setting Up Contract Templates
Document and contract templates are a key part of making your CLM or legal operations solution work for you. Templates reduce the amount of time required to draft contracts, bring consistency to your contract terms, reduce errors, and reduce risk. Contract templates make it easier to track exceptions to your standard, approved contract language so that you can easier track and manage compliance.
While implementing new software, I find the contract templates are where clients often experience delays in their implementation. There can be many reasons for this, several common reasons I see are:
- They don’t have existing approved/standard language for their contracts
- They don’t have existing standardized clauses
- They don’t have standardized formatting across the templates
- They aren’t sure which information they want to pull into their templates from their software
None of these are wrong, or even problematic. Every movement to increase consistency and productivity is important and happens in its own time. Implementation of a new CLM tool can be an excellent fire under the seat to get the development of templates started.
To help you avoid some of the time-consuming elements of setting up your templates, I’ve outlined three areas you should consider as you set up your contract templates:
This is a step that many of our clients bring in at the end of the template implementation process, but if it’s determined early, it can save your team a lot of time in the long run. A few things you might like to think about when it comes to formatting are:
- Letterhead – do you have a letterhead that you want to mimic?
- Header – potentially part of the letterhead; do you require an address, contact name or number, etc. prominently displayed in the header? Are there multiple potential addresses that can be pulled in based on the location of the negotiating attorney?
- Footer – do you require a copyright date on your templates? Who will update this when it needs to be renewed? Do you want to have a key on the template so you know which matter in your software solution is associated with the contract?
- Paragraph styles – we often see that styles may be consistent within a single document, but different across documents. This often doesn’t become apparent until you’re looking at the templates side-by-side. If you have a preference for how all your templates should appear, decide early.
- Signature boxes – this item may come as a surprise, but I’ve found there are often unnamed preferences that we find when setting up contract templates. Whether you want your signature boxes in a table, require specific lines, or want to ensure they are on a separate page, consider setting a standard as you create your templates.
Document templates and the fields you want to auto-populate in them help you determine which fields you need to collect when creating a new matter. When you desire to add a field from your software, I recommend highlighting it while preparing the template so that nothing is missed in the set up. A few fields that are commonly used that you may want to consider including in your templates:
- Other Party Name
- Other Party Address
- Effective Date
- Expiration Date
- Event Date
- NDA Purpose
- Contract Purpose
- Payment Term
- Payment Amount
- Maximum Amount or Term
- Case Number
- Internal Signatory Name
- Internal Signatory Title
- External Signatory Name
- External Signatory Title
- Matter key (internal note to track where to find related information in your system)
Unless you already have preapproved clauses that you’ve made standard across your contracts, this portion of setting up your document templates will likely take the most time. To be clear, not every organization needs or desires a clause library. If you’re not utilizing a clause library in your software, then you don’t need to set clauses. Finalizing your standard language for each document is enough.
If you anticipate creating clauses that should be used across templates so you can update the clause in only one place (your clause library), and it flows to all your templates, you’ll want to created some standard clauses.
One question we often get on clause libraries is where teams should start if they are new to the process. The simplest and most annoying answer is: wherever the most effort goes for your team. Realistically, each department tends to have different priorities and different clauses they need to account for. That being said, a few clauses we often see utilized in clause libraries are:
- Force Majeure
- Term and Termination
- Right of Inspection
- Insurance Standards for Counterparties
- Ownership and Confidentiality
- Notice Address
- Dispute Resolutions
- Trademark License
While I as an implementation specialist cannot make recommendations for what your standard contract language should be (to the chagrin of many of our busy clients), I hope these tips can help you make a plan for your template set-up. The devil really is in the details when it comes to contract templates, so accounting early for the little things that will drive you crazy at the end of your implementation can help streamline that process and save a little headache.