Navigating the complexity and future of Contract Lifecycle Management

Contract Lifecycle Management (CLM) technology continues to progress as businesses and organizations face increased pressure to manage contracts more efficiently. Companies now understand that contracts are strategic tools that can affect revenue, risk, and relationships.

However, the challenges lie in turning that understanding into an effective practice. Legal departments grapple with various challenges when managing contracts at scale, including a lack of visibility and tracking, as well as gaps in compliance and risk management.

The good news is that technology has expanded the possibilities for contracting professionals, opening doors that were previously unavailable.

CLM Basics

Intro to CLM

Best practices for CLM

Selecting a CML Solution

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Understanding the obstacles of contract management today

Today’s contracts are far from being straightforward and easy to understand. The are complex documents involve multiple parties, contract-specific language, and conditions that can vary based on jurisdiction, industry, or relationship type. Managing this level of detail creates multiple risks for legal departments, regardless of the size or scope of the business. 

Common obstacles include:

• Coordinating across departments and multiple parties: Contracts rarely stay between two parties anymore. Subcontractors, vendors, partners, and internal departments all play important roles. According to Gartner, two out of five employees lack access to the legal information they need to make appropriate business decisions. Coordinating input, approvals, and obligations across all these parties quickly becomes overwhelming.
• Defining and tracking contract terms and conditions: Standard legal clauses are just a small part of a contract’s structure. Contracts also often include financial terms, performance metrics, intellectual property rights, data handling protocols, and Service Level Agreements (SLAs). Each component must be defined and consistently tracked throughout the lifecycle — if one detail is missed, the consequences can lead to disputes and financial losses.
• Managing different contract types and lifecycles: Legal teams rarely have the luxury of managing just one type of contract. Non-Disclosure Agreements (NDAs), Master Service Agreements (MSAs), Statements of Work (SOWs), vendor contracts, customer agreements, and employment contracts each have unique lifecycle requirements and compliance considerations that need expert attention. Management strategies that might work for an NDA might be entirely irrelevant when dealing with a vendor contract.
• Coordinating across borders and various languages: Global organizations face additional hurdles when contracts span multiple countries and languages. A contract drafted under United States law might need various adjustments to comply with foreign privacy regulations or business practices. Legal teams must account for various regulatory frameworks, language requirements, and cultural expectations — all while making sure the contract holds up legally in every jurisdiction involved.
• Integrating data across multiple systems: Contract data doesn’t reside in a single location. Managers often pull contract information from Customer Relationship Management (CRM) platforms, Enterprise Resource Management (ERM) systems, and financial databases. When teams have to piece together data from multiple sources without automation, mistakes occur and create problems that become harder to fix as the contract progresses.

All these challenges can add up quickly. Manual errors slip through, negotiations take longer than they should, and terms get misunderstood. The impact is evident in strained vendor relationships, missed revenue opportunities, and financial losses that could have been avoided with effective management strategies.

Keeping track of contract changes

Many contracts often undergo multiple rounds of edits before they become final. Legal, procurement, vendors, and other internal teams constantly review, redline, and make bulk revisions to language and content structure. Keeping everyone on the same page during these phases can become a logistical nightmare.

Changes get tracked inconsistently — some in Word documents with track changes enabled, others in PDF markups, and some with important language buried in email threads. These factors result in multiple drafts circulating simultaneously, and it doesn’t take long for confusion to set in about which version is current.

Working from outdated versions can lead to disputes over terms, compliance failures, or agreements that aren’t legally valid. Trying to reconstruct the full history of changes and approvals after the fact is nearly impossible, especially when audits or legal reviews require that documentation.

Without proper communication, teams waste time figuring out which contract is correct. Outdated versions can cause disagreements about terms, which can stall deals or trigger legal disputes. When no one knows what was actually agreed to, the contract essentially becomes worthless.

Staying compliant

Legal and procurement teams must juggle compliance requirements from multiple directions, including industry regulations, corporate policies, and legal frameworks that vary by jurisdiction. Miss one requirement, and the organization faces fines, legal action, and damage to its reputation.

Regulations change constantly. New rules get introduced, existing ones get updated, and legal teams need to adjust active contracts and templates for future contracts. Staying on top of these changes while managing day-to-day contract work can be highly time-consuming and resource-intensive.

Navigating evolving legal and regulatory frameworks

Artificial Intelligence (AI) regulations like the European Union Artificial Intelligence Act have reshaped contract requirements. Vendor and customer agreements involving AI technology must now include language around data governance, who’s liable for AI-driven decisions, and how AI systems will operate transparently. Contracts with the wrong language or structure can result in fines and legal exposure.

Financial institutions in the EU are also dealing with stricter requirements under the Digital Operational Resilience Act (DORA). Under DORA, contracts with Information and Communication Technology (ICT) service providers must clearly outline processes for due diligence, describe how monitoring will be conducted, and specify what actions will be taken in the event of an incident. This level of oversight extends far beyond what most standard contracts typically cover.

Additionally, Environmental, Social, and Governance (ESG) commitments are now being written into contracts with increased frequency. Organizations must verify that their suppliers and partners are meeting environmental sustainability standards, following fair labor practices, protecting human rights, and maintaining ethical governance. Many of these commitments are difficult to measure objectively, making verification, management, and enforcement challenging.

Complying with specialized industries

The biotech and pharmaceutical industries operate under some of the strictest compliance requirements. Contracts must comply with Good Practice (GxP) regulations, the Health Insurance Portability and Accountability Act (HIPAA) privacy rules, intellectual property licensing requirements, and reporting obligations for clinical trials and drug development. Each of these areas has its own set of detailed requirements that legal teams must understand and get right.

Regulatory agencies closely monitor these types of contracts. A single compliance violation can shut down operations or trigger fines that run into millions of dollars. There’s absolutely no margin for error.

Managing deadlines and renewals

Some organizations must manage hundreds or even thousands of contracts, each with deadlines and obligations that constantly need attention. When critical details slip through the cracks, the consequences escalate quickly.

Common timing challenges include:

• Missed renewals and expiration dates: Contracts auto-renew under terms that no longer make sense, or they expire without anyone noticing until a service or supply chain gets interrupted. Companies often end up paying for services they no longer use or scrambling to replace critical vendors at the last minute.
• Overlooked obligations: Contracts contain ongoing responsibilities like payment schedules, delivery obligations, and reporting deadlines that both parties need to meet. Tracking these manually across a large contract portfolio means things get overlooked, leading to penalties, breaches, and damaged business relationships.
• Operational delays: Delays in executing or renewing contracts can halt projects, disrupt supply chains, and slow down sales. The operational impact and downtime add up quickly.
• Resource drain: Chasing down signatures, approvals, and missing information eats up hours that Legal could spend on core responsibilities and more important work.

Making a case for CLM modernization

Most organizations are not dealing with a single contract management problem — they face several at the same time. 

When contract information lives in spreadsheets, email chains, and shared folders, keeping up becomes impossible. Legal teams spend more time fixing mistakes than preventing them. Spending endless time tracking which version is current often leads to missed deadlines and other oversights. 

The organizations that manage contracts successfully have achieved this by transitioning their contract management processes to centralized platforms that offer numerous benefits, including accelerating contract review, reducing business risks, and expanding visibility. These tools already exist — what matters most is utilizing them efficiently and effectively.

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Trends shaping the future of contract management

All of the above challenges have pushed CLM innovation forward faster than ever. Technology is changing what’s possible, giving organizations tools that are smarter, more efficient, and more connected. 

Several trends leading the way include:

AI-enhanced automation in CLM solutions

Today’s AI-enhanced CLM platforms offer capabilities like:

AI is becoming increasingly sophisticated in its use for contract management purposes. Agentic AI does a lot more than analyzing data or flagging potential problems — it can now take action independently to complete tasks and achieve specific goals. This shift is changing what Legal and Procurement can accomplish without endless hours of manual work.

• Task completion: AI can handle specific objectives without constant monitoring, like flagging contracts missing key clauses, routing agreements for approval, or identifying renewal deadlines.
• Decision-making: AI platforms utilize predefined rules to make informed decisions that streamline contract workflows and minimize bottlenecks.
• Continuous learning: AI improves over time by analyzing the outcomes of its actions and refining its approach to similar tasks in the future.
• System compatibility: AI pulls information from CRM platforms, ERM systems, and external databases to make informed decisions and optimize contract processes.
• Independent operation: Once fully configured, agentic AI can handle repetitive and rule-based tasks independently, freeing up legal teams to focus on negotiations, relationships, and other strategic work that requires human expertise.

Predictive analytics

Many CLM platforms now feature predictive analytics that offer a wide range of benefits, including the use of historical data to forecast outcomes, identifying risks before they occur, and pinpointing opportunities that might otherwise go unnoticed. 

Examples include the following:

• Performance forecasting: AI can predict which contracts are likely to succeed and which ones may underperform by analyzing supplier delivery performance, compliance rates, financial outcomes, and similar metrics.
• Negotiation optimization: An analysis of past negotiations reveals which pricing approaches and strategies are most effective, providing teams with a stronger starting position for future deals.
• Revenue and spend forecasting: By analyzing when contracts renew, understanding payment terms, and identifying upcoming obligations, teams can build more accurate financial projections and plan budgets with higher confidence.
• Early risk detection: Predictive analytics identifies warning signs of potential disputes, compliance failures, or contract breaches before they happen.
• Value identification: Analyzing past contracts reveals which terms have delivered the best outcomes, providing teams with a blueprint for future negotiations.

“GenO” and the transformation of the legal operations profession

Generative AI (GenAI) is changing the way legal operations professionals perform their daily tasks. This shift has given rise to Generation Operations (“GenO”) — a term for the new era of legal operations professionals who are spending less time on administrative tasks and more time on strategic work enabled by AI.

The average legal operations professional spends a significant part of their day on manual or tedious work. AI automation frees up that time, allowing staff members to focus on strategic planning, risk analysis, and vendor relationship management. They’re also helping other departments adopt CLM and AI tools while providing training and support to drive efficiency across the organization.

Current legal ops roles include designing and overseeing AI-enhanced workflows within CLM platforms. These professionals configure how AI handles tasks, set parameters for automation, and ensure AI is being used ethically and in compliance with regulations. They act as the bridge between legal expertise and technology.

New skills are emerging as part of this shift. “Gen O” legal operations professionals are learning to craft precise instructions for AI to generate contract drafts, summaries, and analyses — a practice commonly referred to as prompt engineering. They’re also taking ownership of data governance, ensuring the information feeding into AI systems is accurate, consistent, and reliable. As AI becomes more central to contract management, legal ops becomes more strategic.

Moving forward with modern CLM solutions

Contract management has evolved from what was previously a back-office role to a must-have capability. Organizations that manage contracts effectively and efficiently can strengthen vendor relationships, reduce risk, and support faster business growth. However, getting there means addressing real obstacles, from complex agreements and compliance requirements to version control issues and resource constraints that can bog teams down.

Advanced CLM platforms help address these challenges at their root. They automate repetitive tasks, utilize AI to identify risks early, and centralize data so contracting professionals don’t spend hours searching through emails and shared drives. Team members get time back to focus on work that matters most, including negotiations, relationships, and strategic decisions.

Agiloft’s award-winning CLM platform is designed with these needs in mind. With its AI capabilities included at no additional cost, organizations can automate contract workflows, track obligations across their entire portfolio, and generate data-driven insights that streamline future contracts. The platform integrates with existing CRM, ERP, and other systems, ensuring that contract information flows where needed. 

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Organizations that invest in robust CLM solutions position themselves for sustainable growth and long-term success. They create systems that easily scale upward, empower teams to make informed decisions, and turn contract management into a competitive advantage rather than an administrative burden.

See how your team can turn contracts into strategic tools for the future.

Advanced CLM technology makes it easier to track contract changes, navigate evolving regulatory frameworks, and remain compliant. Legal departments can meet the demands of various industries and manage deadlines with greater efficiency. With AI-enhanced automation and predictive analytics, teams can improve decision-making, reduce risks, and optimize negotiation.