Transforming life sciences legal departments: making the most out of Contract Lifecycle Management technology - Part 5

The rise in the use of Contract Lifecycle Management (CLM) technology by life sciences organizations has been driven by the industry’s increasing complexity and related concerns, including changing regulations, intellectual property (IP) protection, risk reduction and increased contracting efficiency. The COVID-19 pandemic accelerated CLM technology adoption as companies adapted to remote work and increased their focus on digital solutions to maintain business continuity.

But choosing and implementing the right CLM technology can be challenging. It requires careful consideration, extensive research and due diligence to evaluate different vendors and systems that serve the organization now and in the future. I sat down with EY senior managers Lee Carver (Legal Function Consulting) and Markell Smith (Legal Managed Services) to discuss the ways in which they help our life sciences clients optimize CLM selection, setup and adoption.

Kristi Gedid (KG): Where does Contract Lifecycle Management fit in with your work for EY clients?

Lee Carver (LC): I support legal transformation initiatives, predominantly in the CLM space. This includes contracting function assessments and process optimization; technology selection and design; integration/interconnectivity planning; data model development; operating model analysis and alignment or “right sourcing;” stakeholder engagement; and change management strategy design.

Markell Smith (MS): CLM accounts for about 25% of my work, with the remainder of my time dedicated to business development, managing engagements as operational leadership, and providing subject matter insight. The majority of these workstreams are for clients in the life sciences industry.

KG: Do you focus on big pharma, biotech or a range of life sciences clients? And which of these have the most challenges where CLM is concerned?

MS: I work with a range of life sciences clients, including big pharma, small to mid-sized biotechs and research institutions. Each presents unique challenges. Large pharmaceutical companies may have more resources to spend on technology, but they also have a higher volume of contracts, more systems to integrate, more business units and multinational offices, so they’re complicated. Smaller companies may have fewer resources but less volume and are potentially more nimble.

LC: I work with a variety of clients in various business sectors, and I would agree with Markell that typically, the larger the organization, the more involved and complex CLM implementation can be.

MS: I want to add that in my experience, a robust CLM process and system is just as important for small or mid-sized pharmaceuticals, biotechs and research sites. They have to be ready for everything, including imminent growth or the prospect of being bought out by a larger organization. And this is exactly what happened with one client, whose General Counsel was in a rush to get the CLM process in order. A big pharma company acquired them.

KG: Who are you working with on the client side? What part do legal teams in particular play?

LC: While Legal is typically a key stakeholder in the selection and operation of a CLM system, oftentimes, it is not the purchaser. Procurement, Sales, Information Technology/Security or Compliance may be the buyer. Given the typical budget constraints of legal departments today, it’s not uncommon to see other business functions pair up with Legal and split ownership so they can both benefit from the system’s design and deployment in their broader enterprise technology landscape.

MS: I agree. Legal departments typically work on high-value tasks, or at least they should be able to. No doubt, they need a CLM system that aligns with their processes and reduces risks – including standardized templates, integrated playbooks, automatic escalation, etc. But in the end, the right CLM will make their jobs easier so that they can focus on the bigger picture. I worked in an in-house legal department, so I have first-hand experience in how essential this can be.

KG: What are some of the biggest challenges that your clients face when transitioning to a CLM system?

LC: Change management. In the best-case scenario, everyone wants CLM technology, and they all work together to secure and implement the best system for their needs. But in reality, we are creatures of habit, and walking down the hall to visit our “favorite lawyer,” or shooting off an email, are still common practices. Using a standardized, digital format to submit and facilitate legal requests such as contracts can be a huge hurdle at first. When put into practice, two things can happen: either the process enabled by the system doesn’t really work because it doesn’t match the way people in the organization actually work; or it works, but people aren’t used to following guided processes. They “freak out” and revert to old habits.

MS: I may be biased, but it’s usually not the lawyers who complain. While CLM technology streamlines the entire process and shortens turnaround, early adoption can be an issue. There is a general sense of: “This isn’t how we do it.” And since the system is transparent, it shows where the contract is at any given time, including any holdups. This might be intimidating at first. That’s why it’s important to involve key stakeholders from the beginning – from technology selection to personalization, from workshopping to testing, through to training and launch.

KG: How specifically do you help life sciences and health care legal teams optimize their CLM process?

LC: CLM technology is only as good as the process it enables. So, an important part of what we do is to have detailed conversations with clients to more fully understand their current contracting processes. We try to answer the question: “How should contracting be done from here on?” We help design an optimal workflow from start to finish. For example, when a new contract comes in, who owns it? Who clicks the button? What happens next and who is responsible for that step? Is the right work being done by the right people at the right time? CLM is logic and business rules matched to a client’s process. Sometimes the best solution is not a new or updated technology, but a refined process and/or redistribution of resources.

MS: We are in the business of building and implementing optimal CLM workflows aligned with the right technologies. In the life sciences sector, our secret sauce is that we offer custom-built, life sciences CLM processes that only need about 10% personalization by the client. The EY organization made a huge investment to figure this out, leveraging our life sciences industry professionals so that our clients can benefit. And as clients test and launch their systems, EY professionals get continuous feedback, which in turn results in continuous improvements and fit-for-purpose CLM design that addresses nuances across commercial, clinical and research agreement types.

KG: How involved are you in the technology selection?

LC: We advise based on what a client prioritizes as most important to them but don’t make the final decision. We help clients ask the questions they didn’t know they needed to ask, based on what they are trying to achieve, which in turn assists them in making a more informed decision. For example, we go through the RFP process with our clients, and if needed, scan the market for leading vendors that fit their needs, sit in demos, develop scoring frameworks based on their requirements, etc. While we have several vendor partners that we work with, we always aim to find the best technology match for our clients, partnerships notwithstanding. As transformational partners, we often operate as implementation professionals, bringing our knowledge of the business and technical processes of select platforms to bear and helping clients get their systems running in short order.

MS: True. You might say that we’re tech agnostic; that is, we can help design, build and/or operate any platform. For example, we recently worked with a life sciences company on their CLM selection. To facilitate their selection, we discussed not only the EY proprietary Contracts Operations Platform, but also other systems that could implement our life sciences-tailored workflows. Ultimately, the company selected our platform to reduce the burden of designing requirements.

KG: What is the new and next in CLM technology? How are EY professionals employing it?

MS: It’s early on, but we are beginning to apply some newer technological tools in innovative ways. For example, to expedite Clinical Trial Agreements (CTAs), we have had success in employing automation workflows, which work both locally and remotely (on your mobile). Clinical trials involve high volumes and high dollars, and automation workflows provide a set of prebuilt actions for common tasks, making it easier to automate repetitive steps. For example, CLM can expedite the CTA negotiation process by identifying high-risk IP provisions and recommending alternative or previously negotiated terms to accelerate the time-to-close on these contracts. Furthermore, these provisions can be input manually or extracted by artificial intelligence (AI) as normalized, searchable metadata points in the CLM to help those individuals responsible for managing the portfolio of IP assets and related contracts to quickly locate deviations from standard contracting provisions. This speeds up trial initiation, which benefits patients by expediting access to potentially lifesaving treatments, and benefits the sponsoring pharmaceutical company by reducing time-to-market and time-to-revenue and providing operational efficiency and a competitive advantage.

KG: What advice can you give life sciences companies who are looking to optimize their CLM process? What are things to watch out for?

MS: The solution must enable:

??????? Management of life sciences-specific contracts and agreements, with an understanding of the regulatory complexities specific to the industry

??????? Compliance with changing rules and regulations

??????? Seamless integration with existing systems

??????? Protection against data breaches

??????? For larger companies, global operations across multiple languages and jurisdictions

??????? Complex partnerships and alliances

??????? Scalability as the company grows

??????? Adaptability and updatability to keep pace with new discoveries, changing regulations and technological advancements

Contract harmonization and standardization provides universal terms and consistency that can be applied across the organization and can simplify the CLM implementation process, with an additional layer added in to address specific regional and regulatory requirements.

LC: On the practical side, I can offer the following advice:

One: Change management. Get in front of stakeholders as soon as possible. Give them a seat at the decision-making table – not only at the steering committee level, but also in the design and review sessions throughout the implementation process. Enlist change champions to create excitement about the initiative, draft a policy to clearly explain expectations on the system’s usage, and keep people informed on the CLM’s progress.

Two: Do a test pilot. Use a high-impact, high-value task that will make for a solid success story that you can scale out – something with “meat on it” that people care about. Look for contracts in your organization that are high-volume, operate under a mature and generally well-understood process, and have detailed alternative/fallback provisions for negotiating that you can operationalize quickly.

Three: Don’t aim for perfection. There will always be an exception to whatever process you design. Build your process around the common 80% of situations; exceptions can continue to operate under ad-hoc workflows until you can determine if the process needs to be enabled in the system or re-evaluated entirely.

Four: Track your results. Set clear objectives and key performance indicators (KPIs) from the start. KPIs should be objectively measurable, for example, the number of contracts executed on non-standard templates, average cycle time for contract completion and the number of deviations from standard terms and conditions. Having reportable KPIs from the start will help with the design of the initial data model and allow teams to show from the onset where they are creating benefits for the organization.

Implementing a robust CLM system can be daunting. Life sciences companies must assess whether the cost of the system is justified by the anticipated benefits, including efficiency gains, reduced risk and compliance assurance. To help ensure high adoption rates among stakeholders, the chosen CLM solution must be user-friendly, and stakeholders must be involved in the decision and implementation/refinement process. Life sciences companies also need to look for partners who have a proven track record in and deep understanding of the life sciences sector, including evolving CLM technology to meet the unique regulatory, compliance and operational challenges of their industry.

This blog includes information gathered from the EY GenAI think tank, EYQ.

The views reflected in this blog are the views of the interviewer and interviewees and do not necessarily reflect the views of the global EY organization or its member firms.

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