Discover how Contract Lifecycle Management (CLM) software is transforming the role of the CLO.
The role of the Chief Legal Officer (CLO) is undergoing a profound transformation.
No longer confined to being the gatekeeper of legal affairs, today’s CLOs are emerging as strategic partners who are deeply embedded in the fabric of business decision-making. They play a pivotal role in corporate governance, risk management, and regulatory strategy. Advancements in in Contract Lifecycle Management (CLM) software have played no small part in driving this transformation, as it not only streamlines legal functions, but also enhances the overall efficiency and effectiveness of legal departments within organizations. By leveraging CLM solutions, CLOs can better manage contracts, ensure compliance, and mitigate risks – all critical functions within an organization’s broader strategic goals – as well as answer questions like:
· Which suppliers consistently meet their obligations?
· Which countries are the best investment for the company?
· What’s the ideal contract length for optimized margins?
Wearing many hats
According to Deloitte, today’s CLO must balance four key roles: Catalyst, Strategist, Guardian, and Operator. This multi-faceted approach allows CLOs to drive organizational change;, develop and implement strategic initiatives;, ensure compliance and risk management;, and oversee efficient legal operations.
Deloitte provides a little more detail on each roles as follows:
· Catalyst: CLOs act as catalysts for change, driving initiatives that align with the company’s strategic goals. They are instrumental in fostering innovation and ensuring that the legal department supports broader business objectives.
· Strategist: As strategists, CLOs are involved in high-level decision-making processes. They provide legal insights that shape the company’s direction and help navigate complex regulatory environments.
· Guardian: In their guardian role, CLOs ensure that the company complies with laws and regulations. They manage risks and protect the company’s reputation by overseeing compliance programs and ethical standards.
· Operator: CLOs also function as operators, managing the day-to-day operations of the legal department. They implement efficient processes and leverage technology to enhance productivity and reduce costs.
How CLM can support the CLO role
A robust CLM system can support the evolving role of the CLO in a variety of ways. By automating and streamlining contract processes and leveraging artificial intelligence (AI), CLM software helps CLOs manage risks, ensure compliance, and drive efficiency.
Consider the following benefits:
· Compliance and risk management: CLM tools help ensure that contracts comply with regulatory requirements and internal policies. They provide features such as automated compliance checks and audit trails, which are essential for managing risks and maintaining accountability.
· Performance monitoring: Helping CLOs identify and address issues before they escalate, CLM systems track contract performance and compliance, providing real-time, actionable insights. · AI governance: During a recent CCBJ webinar, experts discussed how CLOs are leveraging CLM software to manage AI governance within their organizations. By establishing guidelines for third-party use of generative AI and ensuring that data- use language in contracts aligns with company policies, CLOs can mitigate risks associated with new technologies, such as terms of service alterations and the use of customer data.
· Managing third-party ecosystems: Due to the challenges that come with keeping up with regulatory changes and ensuring compliance, automation is key to managing a third-party ecosystem whose size and complexity is growing exponentially. Connecting contract data with operational systems aids in tracking performance, detecting early signs of potential disputes, and releasing trends and insights formerly trapped in well-hidden contract documents. A data-first approach together with generative AI (GenAI) yields benefits like suggesting red lines, flagging risks, and identifying obligations in contracts.
The future of the CLO
As Alla Valente, Senior Analyst at Forrester, put it: “Transformation is no longer voluntary…it’s absolutely critical for both continued growth as well as organizational resilience.”
Looking forward to 2025, the role of the CLO will become even more centralas businesses continue to evolve. CLOs will need to stay ahead of emerging trends and technologies, such as artificial intelligence and blockchain, to effectively manage legal risks and drive business value. They will also need to continue developing their strategic and leadership skills to navigate the complexities of the modern business world.
The contribution of GenAI and digital transformation to business growth and resilience shouldn’t be underestimated. Many companies that are already investing in GenAI are experiencing significant strides in productivity and innovation. However, as the pace of innovation accelerates, it’s critical to develop resilient business processes that can update strategies in real-time. To ensure continued growth, companies must overcome inertia and old thinking and commit to new technologies, data streams, and strategic planning processes that benefit from access to all the contract data in the CLO’s purview.
Conclusion
The CLO role is evolving to become the enabler of informed decision-making, the mitigator of risk, and, ultimately, the cultivator of success. Through their legal know-how, technological insight, and use of CLM software, CLOs can usher businesses through the digital age at lightning speed. As they continue to adapt to new challenges and opportunities, CLOs are playing an increasingly pivotal role in shaping their organizations’ future.
Learn more by watching “Data-Focused Chief Legal Officers are Evolving Business at the Speed of Technology” webinar on demand.
Published October 10, 2024.
