Contract reviews are time-consuming.
Every contract review means checking a legal document line-by-line to avoid risks and unwelcome liability whereas any associated documents must also be reviewed during the process. And the more complex a contract, the more stakeholders it involves, the longer contract review lasts.
Is there a way to speed up the contract review procedure?
Good news ― it’s a yes. Through the power of contract automation.
So how do we do that?
Keep reading this post and you’ll learn:
- what contract reviews are and why you should do them,
- who’s supposed to do the review,
- the contract review procedure and a checklist of what to look out for,
- and how you can automate the steps with a contract automation software.
If this sounds good to you, then let’s start.
What is a contract review?
A contract review is an integral part of the contracting process that involves going over the legal document in detail. The goal is to make sure all essential elements of a valid contract are covered and see if there are any provisions that could be interpreted in different ways.
Usually, a review of contracts happens before the document is signed. However, an existing contract can also go through a review to make sure that all the terms are still accurate and up-to-date.
Why should you review contracts?
Simply because contracts are legally binding. So when they’re signed, the parties are bound to contractual duties or be held liable for non-compliance.
By conducting a legal review of contracts, you can confirm that you are fully aware of what you’re committing. Here are more good reasons to review a contract:
- It makes sure that all the terms and conditions are in line with your agreement. You can legally contest if the contract states otherwise.
- It eliminates the risk of typos or errors. Catching them early on lets you fix them before it’s too late.
- It lets you clarify clauses that you don’t understand. Contracts can sometimes be confusing, especially if they’re written in legal jargon.
- It allows you to catch any potential problems right away so you can negotiate a change sooner.
- It will save you money over the long term. Reviewing contracts carefully can help you avoid costly mistakes down the road.
So here’s the question…
Who is supposed to review contracts?
Contract legal review is typically done by professionals, like an accountant (for financial feasibility), paralegal, or corporate lawyers but sometimes business heads, stakeholders, and the management also participate in the process.
Before proceeding, here’s what you need to know first ― not every contract needs to be reviewed by a lawyer. For simple agreements such as purchasing goods, it may be enough for the sales manager to do a quick review. An employment contract can likewise just be reviewed by the HR executives.
However, it’s ideal for more complex business agreements to have lawyers/legal teams involved. Here are some reasons why.
- They’re well-equipped to spot potential legal problems and can help to negotiate better terms on your behalf.
- They have a deeper understanding of the law.
- They’re experienced in negotiating terms.
There are also times when an outside consultant is hired to do contract reviews. Besides having a legal or business background and expertise in the relevant legislation, they’re not emotionally invested in the deal so they can give an unbiased assessment.
So let’s get into how contract reviewers do it ― how to review contracts.
Contract review procedure
The contract review procedure is the steps reviewers take to ensure that written deals are fair and equitable for both parties involved.
In the event, that you’re on the receiving end, the review process depends on the complexity of the requested contract. If it’s not too complicated, the initial review of related-department heads is enough. They can just make sure that the proposed terms are fair and include provisions for addressing changes or other potential disagreements.
Here’s the typical contract review procedure:
- Prepare the customer requirements
To start reviewing contracts, make sure you first understand the requirements of the customer ― their deadlines, terms, and conditions. All the contract-related facts should be consolidated here.
- Initial review of the contract author, business manager, or stakeholders
Before legal help steps in, the preliminary review should be initiated by the department related to the contract. This includes ensuring contracts are within company format standards.
- Contract risk forecasting
This is where lawyers or consultants read the contract thoroughly where they identify and mitigate contractual risks associated prior to signing. The goal is to assess all the provisions so future disputes are avoided.
- Negotiating with the other party
After the lawyer goes over the contract (and finds any issues) then he/she will work with both parties to negotiate a new contract that everyone can agree on.
- Amendments to the contract
When negotiation is done and no further adjustments are needed, it’s time to draft a new contract.
So back to our question in our opening, is there a way to automate the contract review procedure? Well, here’s where contract review software comes in.
Contract review software
When it comes to reviewing complex contracts, most people would probably prefer to leave it to the lawyers ― but that’s inefficient especially if these professionals have other high-priority tasks.
Fortunately, there’s now contract review software that can help make the process easier and more efficient. If you’re in the contracting process, you know how important it is to get the details right.
Hence, here are three big reasons to use them:
- Contract review software helps to ensure that all the important details are covered. They can help you to spot any potential issues and make sure that they’re addressed before you sign.
- Contract review software saves you time. Using software can help to speed up the process by automating some of the tasks involved. This means that you can get through the review more quickly and move on to other things.
- Contract review software makes it easy to track changes. If there are any changes made to a contract during the review process, contract review software makes it easy to track these changes. This ensures that everyone is always aware of the latest version of the contract.
👉 We’ve rounded up our top 12 contract review software in this article: Top 12 Contract Review Software For Businesses — Avokaado Blog
One of the options is Avokaado contract lifecycle management software that can definitely streamline your contract review process. Contract management workflows are automated which makes even the review of contracts executed faster ― plus everything in between is more organized.
Here’s what Avokaado’s contract review automation looks like.
Contract review automation in Avokaado
Avokaado is a modern CLM that can automate contract review workflows related to contract processing.
It helps streamline the contract review process, saving time and money. To be more specific, let us show you the features of this modern CLM.
- Avokaado comes with 100+ pre-lawyered templates. Basically, when you use these templates you produce standard agreements that automatically comply with the legal language and formats.
- Avokaado is a data-driven document workflow management that can extract metadata from contracts and enables full-text search when you need to draft based on past docs. So when reviewing, you can cross-reference quickly and update the document when necessary.
- Avokaado gives you full control of the contract approval process. You get to decide who the approvers or signers are among the contract reviewers as well as their workflow order. That’s what you call queue based approving.
- Avokaado supports user collaboration within the team or outside with external collaborators. Your team can review your contract draft by adding them with viewing or editing rights. Or external collaboration and negotiations via a public link.
- When reviewers are also signers they can proceed to contract execution, there’ll be no need to jump to another digital signature software. Avokaado’s seamless integration with international electronic signature providers ― Dokobit and SignNow ― lets you sign from anywhere around the globe.
Wrap up: Contract review checklist
A contract review is the best way to identify any potential risks before they become a problem. By having a legal professional analyze your agreement, you can feel secure knowing that everything is in order.
Here’s a short contract review checklist with the important items to ensure:
- the contracting parties and their respective roles in the agreement
- purpose of the contract
- duration of the contract
- terms and conditions such as payment terms, the indemnification clause, and intellectual property rights
- milestones and timelines
- the contract’s fine print, including any disclaimers or exculpatory clauses
- blank spaces