Today's multinational businesses manage an average of 19,000 contracts annually. This volume would have been impossible to handle in the era of paper contracts, let alone clay tablets.

The evolution of contract management isn't just a story of technology—it's the story of how businesses learned to build trust at scale.

In this guide, we will trace the journey of contract management—from ancient merchants carving deals into stone to modern AI systems processing thousands of agreements at the click of a button.

The need for building trust—Clay tablets and Papyrus scrolls

The first contracts weren’t written on paper—they were carved into clay rocks. In ancient Mesopotamia, when the barter system was the way to do business, merchants faced a problem that sounded remarkably modern—How could they trust people they’d never met, trading goods across vast distances?

Their solution was to create permanent, unchangeable records by inscribing cuneiform or hieroglyphics into clay tablets.

The scripts outlined terms and conditions that mattered to people back then to establish a trustworthy partnership. Even though these scripts were hard to understand, they weren’t just carvings. Archaeological findings revealed that people used these tablets to inscribe sales contracts, labor contracts, and marriage contracts, similar to the ones used today.

Here's an example of a famous tablet from 2300 BCE detailing a sales contract with specific terms that wouldn't look out of place in today's sales agreements.

Despite being portable, clay tablets’ writing system was complex. 

Papyrus scrolls, made out of Papyrus trees’ wood emerged as an alternative, particularly in the Middle East. These scrolls could store extensive information and were easily transported, facilitating regional trade and communication. But the scarcity of papyrus trees restricted its global adoption.

The first contract revolution: When paper changed everything

Despite the invention of paper in China in the second century BC, Papyrus rolled-up scrolls coexisted with paper-based contracts for a long time. The complete shift from clay to paper happened in the 13th century, and it wasn’t just about convenience; it changed how businesses operated.

Paper’s portability and ease of production meant contracts could move as fast as the trade itself. But this created new problems: How do you prevent forgery? How do you standardize agreements across businesses and regions?

The printing press in the 15th century offered some answers, enabling businesses to standardized contracts at scale. Suddenly, businesses could create consistent agreements at scale. From the 15th century to date, various types of agreements (NDAs, employee agreements, vendor contracts, etc.) have been written and signed on paper.

This standardization laid the groundwork for modern commerce, but it also created a new bottleneck: the sheer volume of paperwork began to overwhelm organizations.

The digital transformation: When contracts became data

By the 20th century, small to large organizations were drowning in paper. A survey of 1,000 SMB owners revealed that 45% of SMBs still rely on paper-based agreements. The file cabinets holding these contracts not only signifies storing constraints but serious bottlenecks holding back business growth.

Take international shipping, for example. Till date, it is so paper-dependent that for a business to ship packages, the shipping document involves exchanging 50 sheets of paper, in some cases, among 30 different stakeholders.

Early digital solutions came to the rescue, focusing simply on storage—essentially creating digital file cabinets. Tools like Microsoft Word and Google Docs became godsends for lawyers who needed to generate digital contracts and build a repository.

But these solutions missed the bigger picture: contracts weren't just documents to be stored, they were data to be analyzed and automated.

The AI revolution: When contracts became intelligent

With large organizations managing an average of 19,000 contracts per year, a simple document-storing solution failed to streamline such a huge volume. 

The drawbacks of legacy solutions led to modern contract lifecycle management systems (CLMs). These solutions transformed how organizations think about contract management. And, with SaaS becoming the norm in the 2010s, CLMs gained traction due to their capability to offer more than just contract storage.

Here's what's different with modern CMLs:

1. Advanced contract repository: CLMs can store and manage contracts and offer quick retrieval with smart filtering, sorting, and tagging.
2. Contracts as intelligence: Modern systems can analyze thousands of contracts to identify risks, opportunities, and patterns human eyes might miss.
3. Proactive management: Instead of waiting for renewal dates or breaches, AI can flag potential issues before they become problems.
4. Cross-functional collaboration: Finance, sales, and legal professionals can get transparency into the contract lifecycle due to automated workflows and built-in collaboration tools.

Perhaps most importantly, these systems are solving the same fundamental problem that Mesopotamian merchants faced: how to create trust between parties at scale.

“Leveraging a CLM has been key because it has reduced a lot of friction from handoffs between legal and business. Rather than going back and forth over email, Slack, Word, Zoom, DocuSign, and a whole tech stack, the CLM acts as a single source of truth.”

~ Jonathan Franz, Head of Legal, Crunchbase
Navigating Economic Turbulence and Thriving in Chaos

Also read: Developing an Effective Contract Management Strategy: An Essential Guide

Contract lifecycle management software use cases: Documentation to analysis

Modern CLMs offer an all-in-one solution, eliminating relying on ten different solutions for managing contracts throughout its lifecycle. Whether you want to draft a contract or loop in stakeholders for contract review, CLMs support varying use cases.

Review large volume of agreements

With CLMs, you can create and review contracts without relying on external tools like Google Docs. This software has built-in editors that flag non-compliant clauses, run checks against law rulebooks, and keep audit trails of all the changes. So, you can maintain and share the most updated agreement that complies with your brand's legal guidelines.

“We are able to draft and redline contracts inside the CLM tool. Therefore, we no longer need to rely exclusively on tools such as MS Word and Google Docs. Now, all stakeholders can view and access just one true version of the contract.”

~ Igor Poroger, Director of Legal, EMEA, Vectra AI
How CLMs Empower Legal Teams in B2B SaaS Companies

Automate contract workflows, from agreement routing to collaboration

The sales team can establish clear workflows to route contracts to the right stakeholders, providing visibility across all business operations.

Here's how an automated workflow might look like:

• The sales team can set up a workflow to send contract creation requests for approval to legal when the deal reaches a certain stage.
• By integrating CLM with your CRM, legal teams can automatically populate a contract template with relevant customer data, including company name, contact details, pricing information, etc.
• When the status is changed to approved, the sales team can route the contract to the client for signature.

Also read: Why Contract Management Is Important

Maintain legal compliance

The finance department can keep track of upcoming renewals through the CLM solution and commit to fulfilling them without delays. Other departments, like the procurement team, can cross-check vendor agreements against the legal rulebook to conduct due diligence before finalizing the deal.

Generate contract reports

CLMs house contract data throughout the contract lifecycle. How many contract terms were flagged as non-compliant? How long does it take to get a contract approved? How many contracts did we sign in a given time frame? With the contract data collected by CLMs, you get insights into your contract management processes and identify improvement opportunities, bottlenecks, and potential risks.

The Future: Where are we headed?

As we look ahead, the next frontier isn't just about better technology, it's about rethinking contracts entirely.

Smart contracts on blockchain platforms are already enabling self-executing agreements. AI is moving from analyzing contracts to helping write them. Ron Friedmann, Senior Director Analyst at Gartner, analyzed that by 2026, legal teams will use AI tools to generate 1/4th of a contract's first draft and other written documents.

SpotDraft, for instance, offers not one but two AI-powered tools: VerifAI and SpotDraft AI. VerifAI is like a personal editing assistant that helps teams streamline contract review processes, while SpotDraft AI enables smart contract management through automated template drafting, contract redlining, and analysis.

But there's more.

Besides contract management, AI will be crucial in ensuring your contracts are compliant. It will heavily impact legal data management and analysis practices, as said by 75% of legal and regulatory compliance, while 43% believe AI to be an effective instrument in mitigating legal risks.

“AI just may well be the final frontier in terms of how legal services are utilized and provided. As in-house counsel, don’t run away from it and don’t ignore it. Rather, embrace it as, ultimately, it will allow you to do things lawyers love to do: thinking, analyzing, and counseling, while leaving the “grunt” work to the computer.”

~ Sterling Miller, CEO Hilgers Graben PLLC
Ten Things: AI – What Every Legal Department Really Needs To Know