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What is contract automation and how do you do it?

Richard Mabey, 6 November 2020

What is contract automation and how do you do it? Find out how to automate contracts at scale with this Juro explainer.

In this deep dive we explain how to automate contracts and the benefits of doing so. We explore three of the most common use cases for contract automation: the non-disclosure agreement (NDA), master services agreement (MSA) and the employment offer letter. These worked examples should help to illustrate the process and benefits of contract automation. Use the menu below to navigate the page.

What is contract automation? | Why should I automate contracts? | What's the manual process? | What are the pain points?

How do I automate contracts? | Useful features | Handy integrations 

Use case 1: NDA | Use case 2: MSAs | Use case 3: offer letters 

Key takeaways 

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What is contract automation?

Contract automation is the use of software to enable both legal and non-legal teams to self-serve on routine legal documents, at scale, without needing to involve lawyers every time. 

Why should I automate contracts?

The daily volume of routine contracts in a fast-growing business affects numerous teams, and in different ways. In some cases, the contract process depends on the size of the business in question. For example, a small startup might not yet have a dedicated function in place to handle these documents, in which case, founders might run the process. Generally, the following teams could be affected:

  • Legal

  • Sales

  • HR

  • Operations

  • Finance

  • Procurement

They can be involved in different ways and at different times: legal typically own the the contract templates, and may have the approval rights too (although a particularly sensitive document may need the approval of someone specific in the leadership team). But sales managers, finance leaders, people and talent teams, and even the C-suite, might need approval rights too.

Authorized signatories internally will then need to sign - often this is still the CEO but could be CFO or sales leadership. The counterparty, or candidate receiving the document is also a crucial stakeholder in the document workflow, of course.

“I’m the General Counsel, responsible for the company’s legal affairs, and yet I spend significant portions of my time telling business colleagues where they can find a document on a shared drive over and over again” 

What’s the manual process?

A user in the business finds a contract template on a shared drive, fills in various fields and emails it to the legal team to review before sending to the counterparty. The counterparty may then comment and mark up the document in Word before emailing it back. This triggers a back-and-forth email chain, where negotiations aren’t efficiently tracked and everyone, at some point, loses visibility of the contract. 

Eventually both parties reach an agreement and sign - either with a wet signature in a sign/scan/send process, or via an eSignature provider. Once signed, the document will hopefully be emailed to the relevant parties and stakeholders (legal, sales, HR, for example), and hopefully saved on a shared drive. In most cases, the document actually lives as multiple versions across the business - on shared drives, personal desktops, and worst of all, as printed copies in the back of a filing cabinet.

What are the pain points?

A manual contract process causes bottlenecks and friction. These typically include:

  • Low-value work: “I’m the General Counsel, responsible for the company’s legal affairs, and yet I spend significant portions of my time telling business colleagues where they can find a document on a shared drive over and over again.” 

  • Duplication of work: “I’m doing the same work twice - first in Word, then in the tools other teams use everyday.”

  • Wasted time: “This manual process of printing, scanning, posting and so on takes too long. We’re missing out on golden opportunities because we can’t close deals or get offers out fast enough.”

  • Poor counterparty experience: “We’re a tech company claiming to be disruptive and innovative, but our contract process is something from the 1970s. Our documents look just like everyone else’s do - we don’t stand out.”

  • Version control risk: “People aren’t using the most up-to-date version of the template - these terms have been superseded.”

  • Data integrity: “Our documents vary so much and aren’t standardized - as well as being risky, this looks amateurish.”

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How do I automate contracts?

By using a contract automation platform, legal teams can create an automated workflow that allows colleagues in the business to generate their own contracts, without legal needing to be involved every time. Having selected a contract automation platform, users would follow the steps below.

1. Create templates

Usually, legal would want oversight of contract templates, so they will own the wording of key provisions. Templates might have input from marketing and communications teams, as these commonly-used documents represent a key touchpoint for the brand. An attractive, dynamic document with engaging branding can be the difference between a strong commercial relationship or an unresponsive outcome.

"It’s still commonplace for CEOs to be the ultimate signatory for certain contracts. If a business is adding dozens of employees each month, an eSignature flow is common to make sure signatories can speed through their backlog"

2. Self-serve contracts

The teams directly involved with the use of the contract will be the ones to create and send it. For example, with offer letters, talent acquisition teams will work with hiring managers and senior leadership (depending on the role being hired) to nail down the specific details of the contract. Sales teams might use contract automation to create their order forms or partner agreements. 

The teams will use a Q&A flow to quickly enter data, like names, addresses, and dates, into smartfields. This metadata will autopopulate the generated contract, and be searchable afterwards.

3. Use an approval workflow

Legal may not need to approve every single document that goes out. Depending on the counterparty, some contracts may require more scrutiny, both from legal and the leadership team, but often, stakeholders are empowered to approve these documents for everyday use. This speeds up the contract process without various teams waiting on legal for sign-off each time.

4. Send for signing

It’s still commonplace for CEOs to be the ultimate signatory for certain contracts. However, depending on company size and structure, department or function heads may be empowered to sign contracts. In a high-growth environment, if a business is adding dozens of employees each month, an eSignature flow is common to make sure signatories can speed through their backlog.

Useful features

Businesses looking to implement a contract automation platform should look for a system that has the following features:

  • Rich, dynamic editor: to include images and GIFs for branding, as well as tables and charts to codify remuneration, pension, stock options and so on, you’ll need a dynamic text editor.

  • Smartfields: these contain contract metadata, making sure key fields (like dates, values, names, addresses and so on) are tracked and searchable. They should also live-sync with CRM in both directions to make sure data is always accurate.

  • Internal commenting: if standard terms are to be varied, it’s useful for internal stakeholders to be able to collaborate in real time on the document, without needing to worry about audit trails and version control.

  • External redlining: similarly, counterparties need to be able to negotiate the contract without having to move into Word and lose audit trails and data. 

  • Visual timeline: approvers and signatories often want to scroll back through negotiated versions to keep track of changes and variations.

  • eSignature: a mobile-responsive, native eSignature tool allows teams to sign anywhere, at any time. 

Handy integrations

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  • Companies House: the best contract automation solutions allow UK users to use the Companies House API to make sure data, such as a company’s legal name or registered address, is accurate.

  • Google Drive: an integration with the team’s shared drive means agreed documents are auto-downloaded and securely stored. 

  • Slack: high-growth tech companies often live on Slack. This means it’s useful for contract automation to integrate with Slack, for transparency between teams.

Use case #1: how to automate NDAs

In a non-disclosure agreement (NDA), the parties agree on confidential material they’d like to share with each other, but prevent from being shared with third parties. NDAs enable confidentiality and privacy when it comes to sensitive or proprietary information, like commercial terms, product information or trade secrets. NDAs are amongst the most common contracts in the business world, with applications everywhere from sales to employment or publishing.

NDAs without automation

There are several problems with a manual NDA process: 

  • Multiple tools across different systems make version control challenging

  • Valuable contract data is lost in the workflow

  • Legal team is wasting time on low-value work, such as chasing colleagues and correcting simple, avoidable mistakes

  • There’s friction when teams lose sight of the process and don’t know what is slowing them down

"By using a Q&A flow to create documents from locked templates, business users can generate legally compliant contracts in seconds, without needing legal input"

Automated NDAs

Who owns the templates?

Legal counsel should still be the owner of the NDA template, or templates, in an automated workflow. They can define terms and enable business users to generate their own contracts. 

Who creates the contracts?

Typically the highest volumes of NDAs come from sales teams, who send along with MSAs and order forms to new prospects. However, people teams might send NDAs to new employees or contractors; or in the media industry, journalists and editors might send NDAs to ensure exclusivity for a story. 

Who are the approvers?

Although NDAs have many applications, and are comparatively low-risk, it’s important that legal teams retain control and oversight of terms. NDAs are seldom heavily negotiated, but it can happen, and the decision-makers as to those negotiations still need to be legal personas.

Who are the authorized signatories?

Authorized signatories for NDAs won’t vary too much from other kinds of contracts - they could range from sales managers to CEOs depending on the size and structure of the company. Find out more about how to automate NDAs.

Which features are useful?

  • Self-serve contract generation: by using a Q&A flow to create documents from locked templates, business users can generate legally compliant contracts in seconds, without needing legal input. 

  • Approval workflows: defined roles for legal approvers are necessary to ensure that NDAs can move quickly between stakeholders.

  • Internal commenting: if standard terms are to be varied, it’s useful for internal stakeholders to be able to collaborate in real time on the document, without needing to worry about audit trails and version control.

Which integrations will I need?

A Salesforce integration is useful if you’re automating your NDAs. If sales documentation lives primarily in CRM, then it’s useful for NDAs to be live-synced between the two systems. Sales teams also achieve velocity by creating NDAs directly from Salesforce.

What benefits do automators report?

The automation of the NDA workflow is often the first place that Juro customers start, and the benefits can be realised immediately. They include: 

  • Version control: if teams generate NDAs from a defined template that legal owns, the risk of the wrong version being used is mitigated. 

  • Getting to ‘yes’ faster: as a low-negotiation document, there’s no reason why NDAs should take much time at all to agree. Automation can make this a reality by removing bottlenecks from the process.

  • Time spent on high-value work: without a constant stream of NDA queries, lawyers are empowered and enabled to do the actual work they trained to do, and be strategic partners to the business.

Automate NDAs with Juro

“We empowered the commercial team to self-serve NDAs through Juro. Templating an NDA is so quick and easy now - we’ve removed that task from legal’s plate entirely” 

- Senior Legal Counsel, RVU (read the full case study here)

Supercharge your NDA workflow with Juro and solve one of legal’s permanent headaches forever. Empower your business to self-serve and make sure paperwork doesn’t block your company’s growth. Get a demo of Juro to find out more.

Use case #2: how to automate MSAs

In a master services agreement (MSA), a business and its client(s) agree the majority of the terms that will govern their future relationship. It may be appended to an order form, and it may refer to separate DPAs, SOWs and other three-letter acronyms but it’s the framework that governs the legal and commercial relationship. This type of contract is extremely common in high-velocity sales organizations, especially SaaS businesses, like the high-growth tech companies we often work with.

MSAs without automation

Without automation, the process of agreeing an MSA can be drawn out and painful, with several issues that affect multiple teams in the business:

  • Data integrity is a problem. When the data in the MSAs doesn’t align with the data in the sales team’s CRM, then it’s difficult to forecast properly

  • Teams feel like they’re wasting time throughout the negotiation stage - legal spends too much time chasing down correspondence, and sales spend too much time trying to keep track of current negotiations and agreements

  • Sales teams lose visibility of contracts post-signature, which makes it challenging to report effectively to managers and increases risk

"To really enable sales, automation needs to be about self-serve. With confidence in the currency of the MSA template and control over it, legal counsel can empower salespeople to generate their own MSAs"

Automated MSAs

Who owns the templates?

An efficiently automated MSA workflow has defined roles for its various stakeholders. Legal counsel still own templates; but instead of creating new Word versions of the latest MSA and hoping that sales users find it, they can simply define and update one master template, meaning there are no alternate versions with which sales can confuse it. 

Who creates the contracts?

To really enable sales, automation needs to be about self-serve. With confidence in the currency of the MSA template and control over it, legal counsel can empower salespeople to generate their own MSAs from the defined, approved template. 

Who are the approvers?

Legal can retain control by having approval rights before contracts go for signature. This workflow is common, and ensures legal has oversight, without putting too much friction in the process. Other stakeholders, like sales managers, project teams and IT teams, might also need to approve. 

Who are the authorized signatories?

Authorised signatories could range from sales managers to CEOs depending on the size and structure of the company. If an automated workflow has native eSignature, then authorized signatories can quickly and securely sign deals that have received legal approval.

Which features are useful?

Users looking to end manual processes for MSAs typically look for the following value areas from an automation provider: 

  • Locked templates: legal will often want to define MSAs at template level and prevent their sales teams from departing from the latest terms.

  • A locked approval workflow: with defined roles for legal and CFOs, as well as signatories. The best approval workflows are ‘sequential triggered’ which means multiple approvers can be notified in a specific order. This prevents users departing from standard terms and gives visibility to those who need it. 

  • Defined playbook: being able to enable contract stakeholders with alternative clauses and fallback positions on various clauses is built via conditional logic.

  • 2-way data sync to CRM: only a two-way integration with live data sync can ensure that data is accurate across both contract and customer relationship management. This helps to avoid double-work with data entry.

Which integrations will I need?

Salesforce is the dominant CRM and system of record for a majority of high-growth sales organizations, a frictionless integration with Salesforce is vital. Sales users can then create contracts without leaving Salesforce, safe in the knowledge that legal has oversight. The integration should be two-way in case data changes during the MSA negotiation.

What benefits do automators report?

An automated MSA workflow can deliver significant benefits to the business. These typically include: 

  • System of record: with all contracts generated, negotiated, approved, signed and stored in one system, visibility pre- and post-signature is no longer an issue. 

  • Sales enablement: a self-serve process, with a transparent approval workflow, means sales don’t feel like they have to wait on legal for paperwork to be approved.

  • Less friction for legal: similarly, legal doesn’t have to spend its time crawling through email chains to unearth risk, nor haranguing salespeople to check that the latest version was used. Lawyers can enable the business instead of blocking it, but without losing control. 

  • One audit trail: when the MSA is up for renegotiation, it’s clear how and why any changes were made last time. 

Achievable time savings

“Juro removes friction from the final yard, ensuring contracts aren’t painful and don’t impede our velocity and growth” 

 - VP Global Channel & Alliances, Unbabel (read the full case study here)

Join the high-velocity sales teams taking the pain out of MSAs with Juro. Our customers typically get to value within weeks - not months. To find out more, get a demo of Juro.

Use case #3: how to automate employment offer letters

The employment offer letter is an important touchpoint for negotiations between the employer and candidate. document that offers the job to your best candidate, giving them basic information about the role, as well as salary details, employment terms, start date, and more. 

Employment offer letters without automation

The Offer Letter workflow is painful for many reasons - some of the most commonplace are listed below.

  • Inputting the same data into a Word document, and then into an ATS, is a time drain

  • Despite repeated data entry, data in various systems still doesn’t match, so people and talent teams risk making mistakes in Offer Letters. This makes the business seem unprofessional

  • The manual print/sign/scan process takes too long. People and talent teams feel like they’re missing out on the best talent because they can’t get offers out fast enough

  • … And of course, this has an impact on candidate experience. The clunky process can cause frustration between employers and the candidate, creating a poor (and inaccurate) impression of the company that the candidate was excited to join

"High-growth scaleups with hundreds of employees receiving a new equity award can use a contract automation platform like Juro to mass-generate those variation letters and have them signed"

Automated employment offer letters

Who owns the templates?

Offer letters are used in certain jurisdictions in conjunction with employment contracts. In other jurisdictions (like the US) there is typically no separate employment contract. As such they should still have oversight from the legal team. Typically they will own the wording of key provisions. 

Who creates the contracts?

Talent acquisition teams usually work with hiring managers and senior leadership (depending on the role being hired) to nail down the specific details of the contract. They’ll use a Q&A flow to quickly enter data in smartfields like candidate name, contact details, remuneration, bonus, equity, start date and so on. This data will autopopulate the generated contract, and be searchable afterwards. 

Who are the approvers?

Unless there’s a culture of departing significantly from templates, legal may not need to approve every Offer Letter that goes out. Senior hires like a VP or C-suite role might require more scrutiny, both from legal and the leadership team, but hiring managers are usually empowered to approve Offer Letters for the majority of roles. 

Who are the authorized signatories?

It’s still commonplace for CEOs to be the ultimate signatory for employment contracts. It’s good for both branding and candidate experience. However, depending on company size and structure, department or function heads may be empowered to sign Offer Letters. In a high-growth environment, if a business is adding dozens of employees each month, an eSignature flow is common to make sure signatories can speed through their backlog.

Which features are useful?

Automating contracts and documents that relate to employment requires a specific set of features from a contract automation platform. These include: 

  • Rich, dynamic editor: to include images and GIFs for branding, as well as tables and charts to codify remuneration, pension, stock options and so on, you’ll need a dynamic text editor. 

  • Mass generation: a related feature for HR users is the ability to create letters varying employment terms at scale. This is relevant in the context of, for example, high-growth scaleups with hundreds of employees receiving a new equity award: you can use a contract automation platform like Juro to mass-generate those variation letters and have them signed.

Which integrations will I need?

A Greenhouse integration is handy - this will ensure reliable, synchronized data across your ATS and your contract automation platform. High-growth tech businesses often use Greenhouse to track applicants, although other legacy providers are of course available.

What benefits do automators report?

Automating your Offer Letters brings benefits to all stakeholders and the company itself. They include: 

  • Less admin work: an automated workflow means never having to copy and paste text from an old template in Word, nor having to print, post, sign and scan hard copies of documents. Spend more time finding great candidates instead. 

  • Faster time-to-hire: if you can send offer letters out within minutes of making a decision, and have candidates eSign on any device, it’s likely to decrease your time to hire and give you an edge in the war for talent. 

  • Employer branding: if your documents are attractive, dynamic, digital and branded, they reflect well on your company and stand out from the crowd. Check out our privacy policy and learn how to create engaging, well-designed documents that people actually want to read.

Manage offer letters with Juro

“The time I spend replying to candidates and negotiating terms has been reduced by 75 per cent thanks to Juro” 

- HR business partner, Curve (read the full case study here)

Give candidates the offer letters they deserve, and empower your people team to provide a best-in-class onboarding experience, with the contract automation platform trusted by high-growth companies around the world. Get a demo of Juro to find out more.

Key takeaways

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With automation projects, a common mistake is to aim too high, start too big, fail to get (and keep) buy-in, see weak adoption, make little to no impact, and ultimately fail. If you don’t want to reinvent the wheel and tear down your whole process then it’s simple. Get a low-negotiation, high-volume document that causes problems for your business - it won’t be hard to find one - and see if you could win big from solving that one problem with automation.

By following the steps above you can automate contracts quickly and see value within weeks, rather than months. This will help you to evaluate whether to embark on a wider automation project.

Read more

Superpowered contracts: the specialist automation blog | The Modern Contract Handbook

World CC (formerly IACCM) | Juro for legal teams | Artificial Lawyer

Topics: Contract magic

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