The Complete Guide to Choosing the Right CLM Tool
Buying a CLM tool was one of the most exciting things I ever did during my in-house career as a General Counsel. At the time, I was first legal hire at a rapid-scale Irish tech company after its Series B raise, and we were growing fast: headcount tripled inside a year with new account executives and territories being set up each day.
After my first quarter, I knew we would pay for our contracting chaos by missing a precious customer deal or worse - by sacrificing my mental health. CLM software helps speed everything up, but the biggest emotional benefit for me was eliminating burnout caused by repetitive work that should either be automated or that business users should self-serve on.
Before diving into the selection process, it's worth acknowledging how much the market has changed. Today's CLM vendors are racing to integrate AI capabilities, from contract drafting assistance to automated risk scoring and obligation extraction. Point solutions have also proliferated, offering targeted fixes for specific contract challenges like redlining, negotiation analytics, or clause libraries.
This guide assumes you have weighed up the two and are going for it with a full end to end CLM tool. Happy shopping!!
Understanding CLM vs CLM Software
Contract Lifecycle Management (CLM) describes the management of your commercial contracts during their entire lifecycle: creating, reviewing, negotiating, executing and storing contracts, plus managing post-execution obligations.
CLM Software is a cloud-based digital solution designed to replace manual contracting processes and significantly speed up how long it takes to close contracts and manage obligations.
Not all CLM tools are created equally. Functionality varies significantly - some do everything your heart desires with continual feature updates, whilst others only cover basic needs or have significant limitations.
When Should You Buy a CLM Tool?
The golden rule of legal operations:
First map the people
Then the processes
THEN buy the tech
Here's a quick checklist - if you answer "yes" to three or more, you probably need a CLM tool:
Do you spend significant time on manual contract processes?
Are you struggling with version control and document management?
Do you lack visibility into contract obligations and renewal dates?
Are approval processes causing deal delays?
Do you need better integration between legal and other business functions?
Are you missing revenue targets due to slow legal processes?
Common Pain Points CLM Tools Solve
The right CLM tool addresses multiple efficiency and risk issues:
Process Issues: Slow deal cycles, version control chaos, approval bottlenecks, poor collaboration between teams
Business Impact: Missing revenue targets, operating in silos, employee burnout from repetitive work
Security Concerns: Using unsuitable platforms like Google Drive for legal documents, lack of access controls
Data Problems: No visibility into contract performance, inability to track renewals and obligations
How to Prepare for CLM Selection
Essential Preparation Steps
1. Stakeholder Engagement: Pick the right internal people to support you - I worked with Head of Sales Operations and Finance who shared my pain points.
2. Audit Current State: Identify what's working and what isn't in your current contract processes at each stage.
3. Prioritise Requirements:
Non-negotiables: Must-have features you can't compromise on
Nice-to-haves: Features you'd drop if pricing becomes an issue
4. Build Your Business Case: Quantify time and costs from inefficient processes. Include both tangible costs and intangible benefits like avoiding burnout.
5. Create Your Scorecard: Turn pain points into vendor evaluation criteria, ranked by importance.
Key Features to Evaluate
When assessing vendors, focus on these core capabilities:
Integration & Workflow: Does it integrate with your existing tech stack (Salesforce, DocuSign, etc.)? Can it automate approval workflows?
Centralisation & Security: Can it migrate legacy contracts and auto-extract key terms? Does it provide secure access controls and regulatory compliance?
Collaboration & Accessibility: Does it create a single workspace for stakeholders? Is it cloud-based with easy search functionality?
Automation & Reporting: Can it automate repetitive tasks? Does it provide data-driven insights and KPIs on contract performance?
Adaptability: Will the tool grow with your business as contract volume and complexity increase?
Navigating AI Features
The explosion of generative AI has transformed CLM tools. Key AI capabilities now include:
Smart clause libraries and contract template creation
Automated metadata tagging and risk highlighting
Instant redlines and compliance checking
Comprehensive due diligence across multiple contracts
AI Evaluation Checklist
Data Security: Verify compliance with data protection laws and assess encryption methods and access controls.
Accuracy: Ensure AI functionality actually solves your problems reliably without constant manual oversight.
Compliance: Confirm the tool meets legal and ethical standards specific to your jurisdiction.
Remember: AI should support your legal judgment, not replace it.
The Selection Process
Demo Strategy: Space out vendor demos and use your scorecard to guide evaluation. Involve internal stakeholders in the process.
References: Ask for customer references - this was my easiest way to validate final decisions. Tap into legal operations communities for recommendations.
Decision Criteria: Keep evaluation criteria simple and ensure all stakeholders are aligned on scoring.
Vendor Relationship: Assess post-purchase support. Will they help build workflows and migrate contracts? You need a strong long-term partnership.
Making It Work
The selection process should be collaborative. I made the final decision with internal stakeholders, ensuring everyone felt heard and bought into the choice.
Key success factors:
Start with strategy, not software: Understand your needs before falling in love with features
Involve the right people early: CLM affects multiple departments
Focus on integration: The tool must work with your existing systems
Plan for change management: Factor in training and process changes
The extra time invested in proper selection pays dividends in implementation success, user adoption, and long-term value delivery.
Take a strategic approach rather than rushing into the first impressive tool that catches your eye.
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