Our legal department is responsible for a large number of contracts for several different areas. These areas include property leases, janitorial services, franchising and computer services in different locations. This department needs to constantly review the details of the various contracts to ensure that important criteria such as renewal dates, costs, lease payments and the like are not missed.
The review of the contracts typically involves a number of people for a specific site- – the branch, premises, marketing, and senior administration managers. Someone in the legal department must pull the paperwork and send it out to the managers in question six months to a year before the renewal dates. Once they have been sent out to the managers, someone in legal must track who has the various contracts for review and if they have been sent onto the next manager. This process on handling physical documents means that there is the potential for errors and delays if people are away or do not realize the need to review the document in a timely fashion.
We learned this in a very expensive manner. Our company had a very successful retail operation in a high traffic with good parking and excellent signage to attract customers. There were three contracts involved – one for the site, one for the sign and one for janitorial. The problem that arose was that only the janitorial and signage contracts were pulled but the lease for the site was missed. Our company lost the right to renew and had to start negotiations from the outset. The landlord knew he could raise our rent significantly due to the cost to change locations.
With an Electronic Documentation Management System (EDMS)such as FileHold (www.filehold.com) which I learned about from a friend, the legal department can link contracts so that all of them are retrieved on time and send them out to the appropriate managers. Using the Workflow functionality, only the first person on the electronic “routing” list can make changes before the document is passed to the next person on the list. This means only the most recent version of a contract is being worked on at any one time. The system can pinpoint roadblocks in the process when a manager has not signed off the document and sent it on the next person.
When we reviewed what went wrong with the renewal process, we realized that our paper based system had a lot of problems. If we wish to continue to grow, we need to manage our documents so that we can keep controls in place and handle things properly. We have assigned two staff members to research the costs of putting an EDMS in place.