How to Find the Best Contract Management Software for Your Legal Department in 10 Steps

Benefits of a focused contract management solution

To ensure the successful selection, implementation, and adoption of CMS solutions, follow the golden rule: start small and stay focused!

Don’t attempt to tackle all your contracting problems at once. Start by identifying the top problems you are trying to solve and then seek out solutions that are designed to solve those problems without getting distracted by all the other bells and whistles. This is especially important for legal teams who are transitioning from manual approaches, such as using spreadsheets and shared drives to track and store their contracts.

The allure of enterprise CMS vendors, with their attractive “one-stop shop” guarantee to address every legal and business challenge, might initially captivate buyers. However, it’s crucial to tread this path with a discerning eye and a healthy dose of skepticism. End-to-end contract management solutions that try to be everything to everyone often fail to deliver key features for the legal team.

That’s why 75% of in-house counsel are dissatisfied with their existing contract workflow technology and 53% of organizations with an enterprise CMS are considering switching providers (InnoLaw Group CLM Market Study). It’s impossible for one technology solution to be good at every phase of the contract lifecycle.

A focused CMS solution allows your legal team to take an iterative “crawl-walk-run” approach to solving their most pressing contract management workflow challenges without the resource-intensive implementation and high risk of failure that come with end-to-end solutions.

The benefits of a focused CMS solution include:

• Specialized for legal – One of the primary reasons for choosing a focused CMS solution is they are purpose-built to address the unique needs of legal teams. These specialized tools are designed to solve the most pressing contract management challenges.
• Shorter implementation time – Unlike enterprise CMS solutions that include modules for CRM, ERP, procurement, and more, focused CMS solutions concentrate on contract-related functionalities. This specialization means they need minimal input from IT and require only basic training, allowing them to be rolled out in a matter of weeks to months.
• Easier change management – These solutions are often more straightforward and user-friendly because they are built for the day-to-day operations and needs of legal teams, with interfaces, workflows, and features tailored to contract management.
• Faster time to value – Faster implementation and adoption means quicker return on investment, which can be a critical factor for legal departments looking to demonstrate value and gain organizational support for further technological advancements.
• Scalability and flexibility – These solutions are designed to grow with your organization. Companies can start with the basic functionalities they need and add more features as their contract management and business needs evolve. This scalability ensures that the value of the system continues to grow over time without significant additional investment or disruption.
• Better price to value – With enterprise CMS solutions, you are likely going to pay for a lot of functionality that you don’t need. This is not the case with focused CMS solutions as you will only purchase features that are essential to the legal team’s operations.

10 steps to evaluating and selecting a CMS solution

With hundreds of options to consider and various features and pricing models, identifying the right solution requires careful consideration and planning.

[For more details and tips for finding the right CMS for your legal department, download our complete Buyer’s Guide to Contract Management Software.]

1. Map your current and future contracting processes

Before you dive into the process of evaluating and implementing a CMS at your organization, you should first assess your existing contract management process and clarify your vision for the future state.

Download our Contract Management Playbook for workflow essentials, including a step-by-step checklist for establishing and maintaining a contract management framework and a sample audit questionnaire to help you identify gaps and areas for improvement in your existing process.

2. Identify the contracting problem you want to address first

Don’t tackle all your contracting problems at once. Identify quick wins for fast time to value. For example, consider addressing one or a few of the following areas:

• Requests: intake and workflow management
• Contract generation: template creation and clause library
• Storage: repository, search, and metadata
• Management: post-signature obligations tracking

3. Determine who will be impacted by the solution and who will be involved in the purchasing process

Are you looking to implement a solution that solves the needs of the legal team? Multiple departments? The entire company?

Identify the key stakeholders to consider in your contract management process:

• Who makes decisions?
• Who provides input?
• Who needs to be informed?
• Who will be power users?

4. Form a buying committee

Assign an individual or group of key stakeholders to lead the selection process from beginning to end and ensure your evaluation process works as seamlessly as possible.

5. Determine your annual budget for contract management software

As detailed above, there are two primary categories of CMS – focused and enterprise – and these different types of contract management tools can vary widely in cost. There is the baseline annual cost of the software, often priced by the seat, and additional implementation or support costs might also factor in.

Focused solutions are often a minor investment typically starting around $20,000 per year. Enterprise solutions can be a significant investment of $100,000 or more per year.

6. Research solutions that can address your identified needs

There are many ways to dig deeper into vendors and their contract management offerings, including:

• Check out third-party software review sites, such as G2, Capterra, and Gartner Peer Insights.
• Read vendor websites to learn more about their features, pricing models, and customer success stories.
• Ask your fellow in-house counsel peers for insights, advice, and references.

Tip: Proceed with caution when exploring startups in the CMS space. Due to the rapid pace of innovation, the CMS marketplace is constantly shifting, with startups frequently consolidating, exiting, and entering the market. There’s an inherent risk in the potential for startups to fail or change direction quickly, which can impact the continuity and reliability of their service. By 2026, 25% of existing legal tech providers will no longer exist, according to Gartner’s 2023 Legal Technology Trends and Predications report.

This constant state of flux underscores the importance of careful consideration and due diligence to safeguard your investment. It’s important to evaluate not just the products and services offered, but also the long-term viability of the technology vendors you’re considering.

7. Develop a decision-making framework

Rank your priorities and avoid valuing any two as equal. This will help you make decisions and identify the solution that excels in the areas that matter most to you.

Take your list of criteria and divide it into two clear categories: “must-haves” and “nice-to-haves.” This approach will refine your evaluation of options. Specifically, if a product is missing a must-have feature, it can be ruled out without further consideration, regardless of the number of nice-to-have features it might include.

8. Evaluate your finalists (take your time here)

Host discovery calls with each vendor to discuss your goals and determine whether their product can help.

Tip: Don’t forget to carefully vet each vendor’s privacy and security measures and protocols. It’s essential to assess their ability to protect sensitive contract information from unauthorized access, breaches, and leaks. This includes encryption of data in transit and at rest, regular security audits, and compliance with data protection regulations (such as GDPR or CCPA).

Schedule initial demos with each vendor to see the product in action and gain an understanding of whether their features address your must-haves.

Tips for successful CMS demos:

• Schedule a prep call with the vendor to set priorities and expectations.
• Include all relevant stakeholders to avoid buy-in and change management issues down the road.
• Record the demos so you can revisit them later and share with stakeholders who were unable to attend.
• Gather stakeholder feedback and follow-up questions to ensure you have all the information you need to make a final decision.

9. Turn your decision-making criteria into a scoring system

Evaluate each demo and rank them against each other, including an assessment of each organization’s track record and implementation support staff. When you invest in any software, you’re also investing in the people who build, refine, and support that technology. Their expertise, commitment, and service quality significantly impact the software’s value and effectiveness within your organization.

10. Craft a persuasive business case and present it

Building a convincing business case involves addressing the specific concerns of key stakeholders and demonstrating how your solution aligns with the organization’s broader goals. Illustrate the pain points you’re addressing with the selected technology and the potential consequences of inactions, backed up by data.