I have spent most of my career working as an in-house lawyer. One perennial problem that each legal team I’ve worked in has grappled with is: How do you deal with the ever-growing pile of signed contracts you receive? Where do you file them? How do you know what’s in them? How do you get them all organized?
But first things first. Is this really a burning problem worth solving?
Managing signed contracts is not about getting organized for the sake of being organized. The problems of losing track of contracts are obvious, especially to those who have experienced them:
- Tangible costs, due to missed dates: a peer once recounted the story of how she had no visibility into the hundreds of active vendor contracts they had. A 5-figure contract they wanted to terminate was accidentally renewed because they forgot when they needed to terminate it by and missed the deadline. Then the business person who owned the relationship left the company, and when next year came around, they forgot to terminate it, again. Ouch.
- Needless distraction and time wastage: hunting down a single lost contract once took me a week and required emailing five people in four countries. Unfortunately, that was far from the only time that happened, and it sometimes gets embarrassing.
- Inefficiency: if you’ve ever needed to work out which contracts in a pile of 100 contain a change of control or assignment consent clause, you’ll probably have thought, “there must be a better way”.
But let’s shift the focus from the negative to the positive.
Contracts are a company’s official record of its business decisions. They are documentation for business transactions, backed by the authority of law. As such, contracts contain a lot of important information and are strategic assets.
However, even with that awareness, most people can’t do anything to leverage that asset, because the information is held in a relatively inaccessible format. In an increasingly data-driven world, unlocking the data in contracts allows legal departments to help the businesses they serve to make better, more timely decisions based on relevant, quantitative information.
What if you could easily answer questions like: What is the average deal value for contracts that aren’t on your paper versus those that are? Do the risk allocation positions in your contracts correlate to deal size? Which customers do you need to notify if there is a data security incident, and how quickly? Who needs to be named on your certificates of insurance? How many contracts were signed during the last 12 months?
Ok, if it’s so important, why don’t people do a better job of managing their contracts?
Because getting organized is a chore. People with messy, disorganized desks often say they’d prefer to be tidier, but they don’t get around to it. It’s too difficult, or time consuming and they have other things they need to do. They might clean things up once a year, but are back to being messy a couple of weeks later.
It’s a similar story with contracts.
Legal teams that file into a mass of folders in Dropbox or Google Drive are doing a manual, unrewarding chore — saving down a contract attached to an email, renaming the file, navigating to the right folder (or creating one), moving the contract to the folder — it’s mind-numbing and, over time, things get messy. And as for tracking the information in those contracts? No one enjoys using unwieldy spreadsheets to do that.
Legal teams that use traditional contract management systems actually encounter the same problem. Sure, they help you to get more organized, but you still have to do a lot of mundane and repetitive work to get there — you still have to review contracts one-by-one and fill out metadata fields one-by-one. You may get more benefit, but you have to do much more work to get it. The result is poor user adoption because it turns out to be too much work.
I know this personally because I reviewed dozens of these systems in the course of trying, and failing, to find the right solution.
What’s the answer? To change a habit, find a new approach
Author Marie Kondo wrote a book, The Life-Changing Magic of Tidying Up: The Japanese Art of Decluttering and Organizingabout how to tidy up homes. It became a best-seller and led to a popular TV series on Netflix because being tidy and organized holds universal appeal, and she showed people a system to doing it in a way that leads to lasting results and, in turn, happiness. No one wants to be untidy; people just need to find the right way to get organized, and turn it into a habit.
Similarly, everyone acknowledges that knowing where your contracts are and what’s in them is a best business practice. And it’s psychologically beneficial as well — lawyers hate loose ends. They just don’t know what to do about it, and when there are so many competing priorities in their day, they just go back to what they know best and let the clutter build up.
I’m part of a team building a product called Aerofiler because I want to help legal teams find a way to effortlessly and sustainably organize their signed contracts. There’s always some work involved in getting organized, but our ethos is that we want to take the chore out of the process and make it satisfying. We want to show people that there’s a solution to getting organized that doesn’t involve the drudgery they’ve come to expect, and enable them to reap the benefits of being organized. To free them from the mundane and let them focus on higher-value, strategic work.
This ethos guides every design decision we make at Aerofiler to focus on two things: saving time and reducing work. We’re building the fastest, easiest, fully-featured system for managing signed contracts on the market, and we’d be excited to show it to you.
Imagine being able to find any contract in your organization in under 20 seconds. Or to see at a glance all your contracts that are renewing next week. Or to review 10 contracts for change in control clauses in just a couple minutes. Or to file, OCR, de-duplicate, and tag 200 contracts from that small company you just acquired in under 10 minutes. Or 10,000 contracts in a single afternoon. Aerofiler can do all of those things.
To borrow a Kondo-ism, surely that has to “spark joy”.
To learn more about Aerofiler, contact us at email@example.com.
This post was written by Stuart Loh, a co-founder of Aerofiler.