TL;DR

• CLM manages contracts from creation to renewal or termination
• Stages: Request, negotiation, approval, execution, storage, compliance, renewal
• Automation speeds approvals, reduces risks, and eliminates manual errors
• Implementing CLM successfully requires process audits, team training, and performance tracking
• SpotDraft automates CLM, helping legal teams work faster, stay compliant, and make smarter decisions

"A room without books is like a body without a soul."

~ Marcus Tullius Cicero

If Cicero were in-house counsel today, he’d probably say the same about a company without a proper Contract Lifecycle Management (CLM) system. 

Contracts are everywhere, from your biggest vendor agreements to that suspiciously expensive coffee subscription. And yet, most companies treat them like a last-minute book report—rushed, neglected, and only revisited when disaster strikes.

But contract inefficiencies are fixable. 

With a proper CLM system, contract management shifts from a reactive, last-minute panic attack to a proactive, well-oiled process. 

So let’s understand the biggest contract management challenges (and how to fix them) and how to implement a CLM system that works effectively.

What is contract lifecycle management (CLM)?

Contract Lifecycle Management (CLM) is the process of managing contracts from creation to execution, renewal, or termination. It keeps agreements organized, accessible, and enforceable, helping businesses mitigate risks, prevent revenue loss, and ensure compliance.

Without a structured CLM system, organizations risk inefficiencies, missed opportunities, and costly disputes.

Remember when Netflix lost The Office and Friends? That was because of contract failure. They mismanaged renewal negotiations, and instead of keeping two of the most-watched shows in history, they let them slip away.

The six stages of contract lifecycle management (CLM)

Contracts are like relationships. They need attention, tracking, and occasional tough conversations. A well-managed contract ensures obligations are met, risks are minimized, and no one accidentally gives away revenue like an unclaimed lottery ticket.

Here’s the step-by-step breakdown of how contracts move through their lifecycle:

#1 Contract request and creation: The starting line

• Someone in the company needs a contract—maybe sales is closing a deal, procurement is onboarding a vendor, or HR is hiring talent
• They either draft it from scratch (rare, and usually a bad idea) or use a standardized template from the legal team’s playbook
• Clause libraries and pre-approved terms help speed things up, so legal doesn’t have to reinvent the wheel every time

#2 Negotiation and collaboration: The back-and-forth 

• Internal teams and counterparties review, redline, and (sometimes aggressively) negotiate the terms
• Changes fly back and forth, tracked carefully
• Legal steps in to make sure no one sneaks in risky clauses or vague commitments that will cause problems later

#3 Approval and execution: The final boss stage before signing

• The contract moves up the approval food chain—legal, finance, leadership—depending on value, risk, or company policy
• Approvals can either be smooth (with automated workflows) or painfully slow (hello, email chains from the abyss)
• Once the green light is given, signatures are collected via e-signature if the company is modern, or actual paper if someone enjoys making things difficult

#4 Storage and retrieval: The "where did we put that contract?" phase

• The signed contract is stored securely in a digital repository (or, in some cases, a folder named “Contracts_Final_FINAL”)
• A well-organized CLM system makes retrieval easy so legal isn’t spending hours searching for a contract that should be there
• Metadata tagging helps track key details like parties, terms, and renewal dates

#5 Compliance and performance monitoring: The "stay out of trouble" stage

• CLM tools send automated alerts for key milestones—renewals, obligations, deadlines—so nothing slips through the cracks
• Risk assessment tools flag non-compliant clauses, missing approvals, or performance issues.
• Performance tracking ensures vendors and customers actually do what they promised.

#6 Renewal or termination: The big decision moment

• CLM software tracks expiration dates and renewal terms, preventing unwanted auto-renewals (or missed opportunities)
• Renewal decisions are based on contract performance
• AI-powered analytics help negotiate better renewal terms, ensuring companies aren’t locked into outdated or unfavorable agreements

Also read: Contract Lifecycle Management Process: All You Need to Know

The benefits of contract lifecycle management

A CLM system is the difference between managing contracts and actually controlling them.

With automation, AI-powered insights, and real-time tracking, legal teams can ditch the admin drudgery and focus on what really matters—risk mitigation, business strategy, and keeping the company out of expensive trouble.

Here’s how CLM helps legal teams work smarter:

#1 Faster contract execution: keep deals moving

Contracts shouldn’t take weeks to finalize when everyone already agrees on the basics. A clear CLM process reduces delays and ensures contracts get signed without unnecessary roadblocks

• Standardized contract templates eliminate the need for teams to draft from scratch every time
• Defined approval workflows route contracts to the right people at the right time, avoiding bottlenecks
• Streamlined contract negotiation processes ensure contract terms are finalized without excessive back-and-forth

When contracts move faster, deals close on time and business operations stay on track.

Also read: How to Standardize a Contract in 7 Easy Steps: Contract Standardization Guide 

#2 Lower legal and compliance risks: avoid costly mistakes

Regulatory violations and missed contract obligations are expensive. A structured CLM process ensures every contract is compliant and enforceable

• Compliance tracking ensures contracts meet regulatory requirements like GDPR, HIPAA, and industry-specific laws
• Contract obligations are monitored, so payment terms, deliverables, and renewal deadlines don’t slip through the cracks
• Version control prevents unauthorized edits, ensuring the integrity of contract terms

#3 Better financial control: no more revenue leaks

Contracts have a direct impact on revenue. Without a structured process, companies lose money due to missed renewals, untracked payment terms, and unfavorable clauses that should have been renegotiated

• Payment deadlines and invoicing terms are tracked to prevent revenue leakage
• Auto-renewals are managed, ensuring no contract gets renewed without proper review
• Costly contract clauses are identified early, allowing companies to negotiate better terms

#4 Stronger internal collaboration: keep everyone aligned

Contracts involve multiple teams—legal, sales, finance, and procurement—but without a clear process, coordination breaks down. A structured CLM process makes sure the right people have access to the right contracts at the right time

• Centralized contract storage gives teams real-time access to the latest contract versions
• Approval workflows ensure legal, finance, and leadership teams can review contracts without unnecessary delays
• Role-based access controls protect sensitive contract terms while ensuring transparency for key stakeholders

#5 Data-driven decision-making: turn contracts into business intelligence

A contract is a data source that can provide valuable insights into business performance. A strong CLM process helps companies make better decisions by analyzing contract trends and performance metrics

• Contract analytics track vendor performance, compliance, and fulfillment rates
• Negotiation insights identify patterns in pricing, renewal terms, and risk exposure
• Custom dashboards provide leadership with visibility into contract obligations, financial impact, and legal risks

Key contract lifecycle challenges and how to overcome them

Source: AI-generated image

Managing contracts might seem straightforward—draft, sign, store, repeat. But in reality, traditional contract lifecycle management (CLM) is riddled with challenges that can bog down legal teams and expose businesses to unnecessary risks.

“There are various judgements in courts that refer to our precedents. We have a good litigation database, and we want to leverage it better by implementing an AI-powered tool that would help us with relevant precedents from the cases we have previously settled and ultimately reduce the time we clock with external counsel.”

~  Sandeep Chowdhury, Group GC, HCC Ltd.
Transforming the Legal Function at a Large Enterprise

Let’s break down the biggest contract management headaches and how AI-based CLM software swoops in to save the day.

#1 Lack of standardization: inconsistent contracts increase risk

• The problem: Different teams use inconsistent contract formats, leading to legal and compliance risks. Non-standard clauses sneak in, making enforcement difficult. Custom-drafted agreements create confusion, increasing the chances of disputes
• The AI solution: AI-based CLM software offers pre-approved templates and clause libraries, ensuring consistency across all contracts. It automatically detects and flags non-standard language, reducing the risk of unenforceable terms

“You can either be part of the cleanup crew or do stuff to avoid that cleanup situation altogether.”

~ Gitanjali Pinto Faleiro, General Counsel, Company Secretary & CCO at Greenhill & Co
Navigating the C-Suite as a GC

#2 Slow, manual processes: bottlenecks delay deal closures

• The problem: Contract approvals get stuck in email chains, delaying execution. Manual data entry increases the risk of errors, slowing negotiations. Version tracking is inefficient, causing confusion over the latest draft
• The AI solution: AI-driven CLM automates approval workflows, instantly routing contracts to the right stakeholders. It streamlines redlining and version control, ensuring changes are tracked in real time. E-signature integrations enable swift, paperless contract execution

“Every stakeholder sought quick contract approvals, but they were unfamiliar with the review and risk assessment process associated with contract approvals. Now everybody knows no contract can be signed or executed without going through our CLM tool, and every stakeholder has clarity on where the contract is in the pipeline.”

~ Nadia Louis Hermez, Legal Ops Manager, Next Insurance, Inc.
Building a Robust Legal Ops Function with Nadia Louis Hermez, Legal Ops Manager, Next Insurance, Inc. 

Also read: What Is an Executed Contract?

#3 Poor visibility and missed deadlines: contracts shouldn’t go missing

• The problem: Contracts are scattered across shared drives and emails, making them impossible to track. Renewal deadlines creep up, leading to costly auto-renewals or lapsed agreements. There's no real-time visibility into compliance requirements, increasing legal exposure
• The AI solution: AI-based CLM provides a centralized, searchable contract repository. Automated reminders notify stakeholders about key milestones and renewals. Real-time dashboards offer insights into compliance status, ensuring nothing slips through the cracks

#4 High legal costs: inefficiencies drive up expenses

• The problem: Legal teams spend excessive time on manual contract reviews. Errors in contracts lead to costly corrections and external legal fees. Disputes arise due to unclear language, increasing litigation costs
• The AI solution: AI-powered risk assessment flags problematic clauses before contracts are finalized. Automated compliance tracking reduces regulatory risks and legal exposure. Pre-approved workflows and templates minimize the need for costly external reviews

“SpotDraft has helped cut our contract review and extraction time in half. SpotDraft provides a legal summary of each deal for our clients in any easily digestible format and helps keep us and our client deals organized.”

~Aurora P., Founder and President
Review hosted on G2

Also read: Effective Contract Risk Management: Top Tips & Strategies

#5 Lack of data-driven insights: contracts shouldn’t be a black box

• The problem: Contracts contain valuable insights, but manual processes make data extraction difficult. Legal and finance teams struggle to make informed decisions due to limited visibility. Opportunities for cost savings and better vendor negotiations go unnoticed
• The AI solution: AI-based CLM offers real-time dashboards highlighting contract performance, renewal rates, and risk exposure. Analytics identify cost-saving opportunities in vendor agreements and reduce procurement costs. Custom reports provide executives with insights into contract risks and financial trends

“To me, AI is the next internet. If you're not using it, you're falling behind. AI is going to move rapidly in a direction where it will help a lot of us make processes more efficient. I don't think the GC goes away. AI is a tool but it doesn't replace decision making.” 

~ Celaena Powder, VP of Legal, Seismic
From Security to Sales: Building Cross-functional Bridges

Also read: Find out how you can automate contracts with SpotDraft

Key features of contract lifecycle management software

Source: What is contract lifecycle management

A solid Contract Lifecycle Management (CLM) software eliminates these nightmares by automating workflows, reducing legal risks, and making contracts work for the business rather than against it. But not all CLM tools are built the same. The best ones come packed with features that actually solve real-world contract challenges.

#1 A template library that makes drafting painless

If every contract starts from scratch, you’re doing it wrong. Pre-approved contract templates ensure teams aren’t reinventing the wheel (or worse, copying old agreements with outdated terms). With a built-in clause library, legal can drop in standard provisions without having to manually check if the language aligns with company policies.

The result is faster contract creation, less back-and-forth, and a process that scales without drowning legal in review requests.

#2 AI-powered risk analysis that catches red flags early

No one wants to be the person who approved a contract with a missing indemnity clause or a questionable auto-renewal term. AI-powered risk detection scans agreements for non-standard clauses, missing approvals, and compliance issues before a contract gets signed.

Automated compliance tracking ensures agreements align with GDPR, HIPAA, SOC 2, and whatever regulatory framework your industry demands. With real-time audit trails, legal can see exactly what changed, who approved it, and when.

Pro Tip: Choosing the right CLM for your business can be tricky. Check out SpotDraft’s CLM Buyer’s Guide to make sure you’re investing in the right solution.

#3 E-signatures and secure storage that eliminate contract chaos

Paper contracts belong in the past. Legally binding e-signatures ensure contracts get signed instantly, no printers, scanners, or courier services needed.

Once executed, contracts are stored in a centralized, cloud-based repository, searchable in seconds. No more digging through email chains or misnamed folders to find the latest version. Role-based access controls keep sensitive agreements protected while ensuring visibility for those who need it.

#4 Contract analytics that turn documents into business intelligence

A contract is not just a piece of paper; it’s a goldmine of business insights. The best CLM tools come with real-time dashboards that track key contract metrics—financial exposure, vendor performance, renewal deadlines, and risk levels—giving legal and finance teams the data they need to make better decisions.

AI-driven analytics identify trends in negotiation patterns, pricing structures, and dispute frequency, helping businesses optimize contract terms and avoid costly mistakes.

Also read: Data-Driven Decisions: Leveraging Contract Analytics for Legal Process Optimization 

#5 Seamless integration with the tools you already use

A contract doesn’t live in a vacuum—it touches sales, finance, procurement, and legal. A strong CLM software integrates with Salesforce, HubSpot, NetSuite, SAP, and other business tools, ensuring contract data flows directly into existing workflows.

“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

Need to sync contracts with e-signature platforms? Done. Want to connect with ERP systems for automated payment tracking? Easy. With seamless integrations, contracts don’t just sit in a repository, they actively drive business processes.

Also read: 6 Must-Have CLM Integrations with Business Tools 

How to implement contract lifecycle management

Implementing a Contract Lifecycle Management (CLM) system is like moving from a cluttered, dimly lit basement archive to a sleek, AI-powered command center. When done right, it transforms contracts from a slow, chaotic mess into a strategic asset—speeding up approvals, reducing risks, and ensuring legal isn’t stuck chasing signatures like a detective in a noir film.

But most companies don’t get it right the first time. According to Gartner, 50% of first-time CLM implementations will fail in 2024. Not because the software was bad, but because teams underestimated what it takes to align processes, people, and technology.

So, how do you ensure your CLM implementation doesn’t end up as an expensive lesson in frustration? Follow these steps.

Step #1: Assess your current contract management process

Before introducing AI-powered automation, take a hard look at where your contract process is actually broken.

• Are contracts getting stuck in drafting, negotiation, approvals, or execution?
• Are compliance risks slipping through? Missed obligations, overlooked renewal deadlines, contracts no one remembers agreeing to?
• How long does it take to go from the first draft to the final signature, and what’s slowing it down?

Step #2: Choose the right CLM software (no pressure, but this is critical)

Not all CLM platforms are created equal. The right choice depends on your business size, contract volume, and industry needs.

• Compare vendors based on actual use cases, not just shiny feature lists
• Check customer reviews and case studies to see real-world results
• Make sure the platform integrates with your existing tools

Step #3: Standardize and automate workflows (because email chains are not a workflow)

If every contract in your company looks different, CLM won’t save you; it’ll just organize the chaos. Standardization is step one.

• Create pre-approved templates with standardized clauses, so legal doesn’t have to redline every contract manually
• Automate approval workflows to eliminate back-and-forth emails (seriously, stop with the email chains)
• Set role-based permissions, so the right people review contracts without unnecessary delays

Step #4: Train your team and drive adoption (because software doesn’t implement itself)

Even the best CLM software won’t work if no one actually uses it. Training is not optional—it’s the difference between success and another unused tool collecting digital dust.

• Train legal, procurement, finance, and sales teams—because contracts touch every department
• Assign CLM champions who understand the system and can help teams adopt it
• Gather user feedback early and refine workflows based on real-world usage

Step #5: Monitor performance and optimize over time

CLM is an evolving system that should continuously improve how your company handles contracts.

• Set clear KPIs: contract approval time, compliance rates, renewal tracking, and overall cycle time
• Review contract analytics dashboards to identify bottlenecks and areas for improvement
• Adjust workflows and templates based on real-time data

Metrics like contract risk, deviations, dispute reduction, and negotiation speed are your best friends. Without them, you’re just guessing. And no one wants to guess when contracts (and revenue) are on the line.

Also read: Your Ultimate Guide to a Successful CLM Implementation Process

Stop managing contracts, start mastering them

Contracts shouldn’t cause stress, delays, or unexpected auto-renewals that throw your finance team into panic mode. Yet, for many in-house legal teams, that’s exactly what happens. Contracts often get lost in email chains, renewal deadlines appear out of nowhere, and negotiations stretch on longer than a classic Russian novel.

A well-implemented Contract Lifecycle Management (CLM) system brings structure and clarity to the process. It streamlines workflows, reduces legal risks, improves collaboration, and transforms contracts from administrative headaches into strategic assets.

How SpotDraft helps businesses master CLM

Most CLM systems promise efficiency—but SpotDraft actually delivers it.

• End-to-end automation: From contract creation to execution, SpotDraft ensures seamless workflows
• AI-powered risk management: Detects risky clauses before they become legal nightmares
• Centralized contract repository: No more lost agreements, misplaced amendments, or frantic last-minute searches
• Advanced contract analytics: Real-time insights on renewals, obligations, and vendor performance
• Seamless integrations: Works with Salesforce, HubSpot, DocuSign, and more, ensuring contracts move at business speed

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Shift your contracts from being a legal burden to a legal advantage with SpotDraft, so that your team can work faster, stay compliant, and make smarter decisions.

Get a demo!

FAQs

1. What is CLM vs CRM?

CLM (Contract Lifecycle Management) manages contracts from creation to execution, renewal, or termination, while CRM (Customer Relationship Management) focuses on managing customer interactions and sales relationships.

2. What does CLMS stand for?

CLMS stands for Contract Lifecycle Management System, which is the software used to streamline and automate the contract management process.

3. Why use CLM?

CLM improves efficiency, compliance, and collaboration, reducing contract delays, legal risks, and revenue leakage through automation and centralized contract tracking.