Want an all-singing, all-dancing contract database? It's less of a moonshot than you think

Want an all-singing, all-dancing contract database? Well, you’re probably already sat on one, it may just need a bit of clever ‘moon walking’ (aka reverse engineering).

It’s hard to believe in 2020 that a significant number of large organisations still crave having a robust contract database. A single source of the truth.

Having been in this perilous position myself I can tell you most legal leaders would give their right arm to know the current status of all their contractual commitments, be that with suppliers or customers. And they dream of being able to see all their key obligations at a glance, with the ability to understand the interrelationship between contracts.

What surprises me is the lack of creativity in reaching that end goal at a time when the digitisation of corporate documentation continues at a pace. Albeit digital data is often stored in silos and is recorded discreetly at various stages of the lifecycle of a contract.

Five or so years ago when I was head of contracts at a major retailer, it used to frustrate the hell out of my team and I that if the company ever found itself in a dispute, the simple ask of ‘do you have a contract’ was met with bemusement. We’d often be shown a letter from 2011 at best, leaving us without a legal leg to stand on.

A couple of years ago at the prestigious FT Intelligent Business Awards in San Francisco I took the opportunity to ask the audience – 70 or so legal leaders from across the globe – to raise their hand if they had all their contracts stored digitally in one place, and to keep them raised if they were in a format that meant they could interrogate them at the touch of a button.

Only a couple of hands remained aloft. I think I may have quipped at the time that we had our work cut out.

In my experience the state of play today is not much better than it was back then. Even amongst some of the most technically advanced companies on the planet, who are leading the charge on legal tech innovation, the goal of having a comprehensive contract repository is seemingly out of reach.

Yet putting together a dynamic, robust, and easy to search storage platform is much easier and more achievable than you think.

According to the World Commerce and Contracting (formerly the IACCM), actively managing your contract base could be worth 9% of the contract base value – which begs the question why such resistance to do it?

Part of the issue is the perceived barrier and cost of moving from a world of organised analogue chaos to one of digital order and control.

Ironically most major corporations are already sat on the ingredients of a comprehensive contract database, they just haven’t realised it yet.

At the start of the year a large, multinational embarked on a journey to build a contract repository. Over a period of around six months they threw manual resources in the form of external consultants at the problem (not us I might add). Despite processing tens of thousands of agreements each year, when tasked with unearthing them from across the company, the consultants were only able to lay their hands on around six thousand.

The conundrum required a different approach. So after a fair amount of head scratching we had a brainwave that led us to consider how we could do it more quickly and efficiently, utilising smart technology to do most of the heavy lifting.

It struck us that the company’s agreements are completed using an e-signature platform and then held in the cloud.

So we began at the end of the CLM process and reverse engineered our way back to the start - a repository. Our initial trawl found more than one million signed agreements or to put it another way 994,000 more than the previous approach.

After scanning and decoding them, a process that involved OCR to turn the unstructured documents into readable data, we extracted key meta tags such as start and end dates, whether agreements were for procurement or employment teams etc. We then used intelligent search tech, to sift and sort the information into a structured contract database.

Within a matter of a few weeks we were able to find, categorise, distil and organise millions of pages of agreements into a fully operational, relatively low cost, contract database. It is now being used to significantly enhance their contract management capability.

I genuinely believe this is a fabulous opportunity for many other organisations looking for a short-cut to a contract repository. It is no longer pie in the sky.

If you’d like to discuss how we did it, or explore how it could work for you or one of your customers, get in touch. My team and I would be delighted to share our learning.

We may even showcase our moon walking skills.