5 CLM Developments to Consider for the 2023 Road Ahead

The champagne bottles have been popped and placed in the recycling; the holiday decorations are tucked into their bins ready to re-emerge from storage in another 48 weeks.?I’ve digested all the ‘New Year, New Me’ memes, so I know it’s time to roll up my sleeves and start my first full work week of 2023. And while I have historically avoided hard-set new year’s resolutions, I do love kicking off with 2023 predictions. Here are five trends I foresee shaping the CLM/contract intelligence space in the next 12 months:

Increased margin pressure and hiring freezes amid a recession will force legal departments to rely on CLM to automate processes. With historically high labor costs and economic uncertainty driving hiring freezes and other HR adjustments, companies will opt for technology that can automate time-consuming tasks—with particular attention paid to contract management. Today’s increased speed of business has put unprecedented demands on corporate legal teams, who are asked to reconcile, negotiate, approve, and execute contracts in record time. Deals can’t slip because contracts are stuck in approval. As companies brace for a recession, legal and contract teams, particularly with limited staff, will lean on technology to work faster and more efficiently, manage risk, and enforce compliance across an entire portfolio of contracts.

Integrated enterprise data systems will become a ‘must-have’, not a ‘nice to have.’ Legal departments in 2023 will continue to face ever-increasing challenges, such as governance concerns, risk and compliance requirements, procurement intricacies, and diverse sales transactions. Organizations must rely on enterprise-wide contract management solutions to unify their entire body of contracts, rather than segmenting CLM by department. By managing all contracts on a single platform, departments and legal operations teams can gain a holistic view across all of a company's contracts for optimized workflows and reduced risk and expenses. Indeed, enterprise-wide CLM will allow organizations to better navigate the current market uncertainty of today, and more importantly and optimistically, propel them ahead of their competition when companies emerge from post-uncertainty.

?There will be no going back on ESG.?As companies grapple with the current macroeconomic environment in 2023, they must not forget that ESG initiatives have become strategic imperatives for companies looking to gain a competitive advantage in the marketplace. In a survey conducted last year with the Economist Group, we found that 73% of surveyed executives said demonstrating their corporate ESG commitments was a "high or business-critical priority." In 2023,?firms will adopt an array of tactics and AI-powered tools?to?ensure they’re?meeting their environmental, social, and governance commitments. Deloitte is taking the lead in this area with their announcement that they’ll include sustainable delivery clauses in their client contracts—putting in writing their commitments to ESG goals in every business relationship. ?

?Legal department operations professionals will put aside “Big Bang” implementations and embrace a “Smart Start” implementation strategy.?One of the most exciting spaces to watch in 2023 will be the maturation of CLM technology as demonstrated by how Legal Department Operations approach implementations. I expect to see LDOs in 2023 widely embrace a “start smart” approach to their CLM initiatives. This should not be confused with starting?small?but rather approaching your implementation through a series of incremental phases.?Phased approaches can deliver some fast wins, like building credibility and confidence for the deployment team; creating vocal champions in strategic stakeholders and users; developing learnings to apply as you leave one phase and enter a new one, even smarter and faster than before.?Starting smart in 2023 will pay dividends as your implementation progresses.

?Lawyers will stop trying to outsmart ChatGPT and use it to get smarter instead. It’s hard to find a legal technology article that doesn’t mention ChatGPT—and this is not one of them. Slowly but surely, in 2023, the profession will move from submitting experimental and light-hearted queries to ChatGPT ("Please submit your response in the form of Shakespearean English") to identifying powerful ways that this revolutionary technology can practically change legal processes, including the drafting of certain contracts. Because it’s already studying to pass a bar exam.

There is no doubt in my mind that 2023 will bring many challenges to organizations as they face economic uncertainty. But I believe this year will also see legal departments turn these challenges into opportunities and take a smarter approach to contracts through contract intelligence—how’s that for a New Year’s resolution?