NOTE: This is the third article in this series. Start here if you missed the previous articles in the series: CLM Health Check Pillar 1.
Marshfield’s CLM Health Check service, a systemized, holistic evaluation to identify inefficiencies, gaps, and improvement opportunities, is designed to turn your CLM software into a maximized tool to deliver the most business value it possibly can. This blog series takes the 10 pillars of the Marshfield Method, briefly defines and describes each pillar, and then walks you through evaluating the health of your CLM system as it relates to each individual pillar.
The fourth pillar: Contract Redlining. What is it, and how can you tell if this pillar in your process is in good shape?
The Contract Redlining pillar entails efficient handling of contract modifications and negotiations, ensuring that all changes are captured accurately. This includes the methods and means of sharing the redline-able contracts with counterparties in a low-friction way to promote collaboration as well as the toolkit offered by the CLM to quickly parse
changes and compare versions prior to iterating through the review and approval processes. Here are factors to consider in evaluating the health of the Contract Redlining pillar:
Indicators of Good Health:
- The mechanics of the process work well:
- All parts are automated
- The process is being utilized internally and externally
- The users have everything they need at their fingertips
- The process of negotiating and updating terms is optimized:
- The users can see the full redline history in a way that is fast and efficient
- There is a reference version
- The users know how to use the features and functions
- The counterparty redlines are efficient
- The product is built out so that all users know what they are doing.
Indicators of Poor Health:
- Users struggle to see the full story of iteration and changes in the document
- Users don’t understand versioning: internal and external
- Users are not using the tool
- Manual steps that can be automated are still being used
- There bottlenecks in the process
- Contracts are being negotiated incorrectly based on issues with the tool
Moving on, the fifth pillar following Contract Redlining is Contract Execution, which is the seamless integration of signature processes that accommodate various signing scenarios, enhancing execution efficiency. This could be as simple as sending a document for signature using your own eSign provider, or it could encompass wet signing or using the counterparty’s eSign provider. Either way, the proper execution methods need to be available for recapturing the signed document into your process and the CLM system.
Indicators of Good Health:
- The process is fully automated
- The automation accommodates all possible or potential use cases and scenarios
- Agreements are executed in a timely fashion and don’t get lost in the abyss
- All information is captured as part of the esignature process
- The document has been built from a template and has signing tags already placed
- The burden on the end user for accommodations, use cases and scenarios is as light as possible
Indicators of Poor Health:
- The user needs to do a lot of leg work to send the process to various users for signature
- The process is derailed by edge cases that are not built into the system
- The system is too rigid and does not allow for variance where necessary
- Agreements are not executed correctly because options and functions are turned off versus on
Efficient Contract Redlining and seamless Contract Execution are foundational to a healthy CLM system. These pillars ensure that your organization’s contract processes are collaborative, accurate, and automated—reducing friction while maximizing efficiency. A well-optimized redlining process keeps negotiations transparent and manageable, while a robust execution process ensures every agreement is completed correctly and without delays.
By addressing the indicators of poor health and building on the markers of success, your CLM system can drive meaningful improvements in operational performance and user satisfaction. These aren’t just best practices; they’re opportunities to turn your contracts into strategic assets.
We would welcome the opportunity to help you optimize your CLM system. Contact us here to get started.
