Managing contracts in-house is costly, time-consuming, and simply inefficient. It drains legal professionals’ time in repetitive processes like creating, reviewing, negotiating, and tracking contracts.
What’s the solution?
It is simple—outsourcing contract management to a legal firm offering contract lifecycle management services. If you are wondering about the hows and whats of CLM outsourcing, this guide is your complete resource, answering all your questions. Let’s get started.
What are the benefits of outsourcing contract management?
Let’s face it—contract management is repetitive. As per World Contracting and Commerce, approximately 32% of an organization’s workforce is somehow involved in contract management. Dedicating your in-house resources to contractual tasks isn’t the most efficient way to do things.
Instead, outsourcing helps make contract management swifter. Here’s how:
1. Provides access to global legal talent
With outsourcing, you can hire a legal firm to manage your contracts from all across the globe. This is beneficial for businesses expanding to foreign markets.
For example, if you are a US-based business with a target market in the UK, outsourcing contract drafting, negotiation, and compliance tracking to UK-based professionals can be beneficial since they possess a better knowledge of local jurisdictions and laws.
2. Helps save contract management costs
Hiring and managing an in-house legal team involves recruitment, infrastructure, and administration expenses—increasing contract administration costs.
Outsourcing is an affordable option because organizations only have to pay for the availed services. Additionally, hiring Asian-based legal firms enables cost savings for US-based businesses due to low hourly rates.
3. Elevates contracting efficiency and scalability
In-house legal professionals handle diverse legal tasks while outsourcing firms offer more specialized, expert-based services—guaranteeing better quality and efficiency.
Additionally, outsourcing contract management enables easy scalability based on demand fluctuations, which is challenging in in-house teams where upscaling requires hiring more team members.
4. Saves valuable legal time for core tasks
Managing contracts in-house exhausts valuable legal time in repetitive processes like contract creation, review, negotiation, and tracking. Outsourcing contract management frees up valuable legal time, enhances resource utilization, and provides legal professionals bandwidth for more value-generating activities like analysis and compliance management.
These benefits provide insights into why it is a good idea to outsource contract management. However, outsourcing isn’t always the right choice and is not a one-size-fits-all solution. Let’s take a look at the common challenges of outsourcing contract management.
Common challenges in outsourcing contract management
While outsourcing helps manage contracts more easily, there are a few factors to keep in mind while working with a contract management outsourcing company. These are:
1. Chances of security and confidentiality breaches
Hiring an external legal firm to manage your contracts exposes your confidential data to third parties. In cases where sensitive information and NDAs are involved, outsourcing raises security and confidentiality-related risks and may lead to contract breaches.
2. Limited control over contract management
Outsourcing service providers usually have their frameworks and processes for contract management. These processes may limit your involvement and control over the CLM process, possibly disrupting the efficiency of the contract lifecycle.
3. Possibility of disrupted communication
If you plan to outsource your contract management tasks to firms based in far-located countries, you are likely to face communication disruptions. From time zone differences to language barriers, these disruptions are a considerable hurdle in contract management.
These challenges raise questions about the efficacy of outsourcing for managing contracts. Ultimately, you can choose whether to outsource your contract management processes or continue with in-house legal counsel.
There’s one more way—to empower your in-house legal with smart, automated contract management software like HyperStart CLM. Using software helps manage contracts with more efficiency and less effort—balancing the sweet spot between in-house and outsourced CLM.
Streamline contract management with AI-powered software
Create, review, negotiate, sign, store, track, and analyze contracts 80% faster with HyperStart CLM. Get more work done through automation.
Next, let’s discuss how to find a contract management firm for CLM outsourcing.
How to find the right contract management outsourcing partner
Here is the step-by-step process for finding and selecting a legal firm to outsource contract management operations:
1. Identify your contract management objectives
Outline your goals for outsourcing: reduce costs, ensure compliance, improve efficiency, or scale operations.
Identify which parts of the contract lifecycle you want to outsource—drafting, review, negotiations, analysis, or tracking.
Define the scope of outsourcing, including the types of contracts, volume, and complexity.
Identify key performance indicators (KPIs) for contract management for focus—average turnaround time, review cycle time, or negotiation period.
2. Find potential legal firms offering contract management services
Find suitable legal firms specializing in contract management in your industry.
Platforms like Legal500 and Best Law Firms provide detailed listings of professional contract management firms across the globe.
Evaluate these firms based on services offered, client testimonials, portfolios, and reviews.
Look for firms with experience in handling contracts similar to yours (e.g., NDAs, vendor agreements, or SLAs).
Prioritize law firms offering specialized contract management services and hold compliance certifications for local laws and jurisdictions.
3. Share your requirements and request proposals
Create a detailed Request for Proposal (RFP) outlining your objectives, scope, and timeline.
Share contract samples and key performance expectations with the potential firms.
You can then share your service requirements with these firms and request a proposal and quotation.
4. Shortlist and select a legal firm based on proposals
Evaluate their proposals for understanding, feasibility, and alignment with your goals.
Compare proposals based on pricing, expertise, scalability, and turnaround times.
Conduct interviews or meetings to assess their understanding of your requirements and communication approach.
Based on the proposal analysis, you can shortlist one legal firm and finalize the deal with them.
5. Negotiate the deal with the selected legal service provider
Discuss pricing models (e.g., fixed fee, hourly, or retainer) and agree on terms that fit your budget.
Address key points like data security, confidentiality agreements, and SLAs (Service Level Agreements).
Ensure the contract includes provisions for performance reviews, dispute resolution, and termination clauses.
Determine the terms and conditions of contract management outsourcing services.
6. Start outsourcing with contract data handover and onboarding
Onboarding includes knowledge transfer and the organization’s handover of the contract portfolio.
Conduct an onboarding session to align the provider with your business processes and goals.
Provide all necessary documentation, including current contracts, templates, and workflows.
A smooth transition is essential to ensure the new service provider swiftly adapts to your requirements.
The onboarding phase also involves training on processes, systems, tools, and protocols.
7. Track performance and maintain communication
The legal firm will take over the contract management operations upon successful onboarding.
Track the performance of the legal firm to ensure they are fulfilling the business objectives established in stage one.
Schedule regular meetings to review progress, address challenges, and discuss improvements.
Clear and continuous communication with the outsourcing vendor helps convey feedback, understand hurdles, and eliminate bottlenecks from processes.
Follow this process to find the right legal firm to outsource your contract management operations. However, one key factor to look for in an agency is the cost of their services. The coming section talks about the costs involved in CLM outsourcing.
How much does outsourcing contract management cost?
Earlier, we discussed how contract management outsourcing is a cost-effective alternative to in-house contract management. However, how much does it cost to outsource contract management?
As per Salary.com, the average hourly rate of hiring a dedicated contract manager ranges from $59 to $77. Furthermore, Upwork states that contract law lawyers and legal professionals on Upwork charge $30–$100/hr for their services.
Here’s an in-depth comparison between hiring in-house legal teams, outsourcing CLM operations, and using contract management software:
| Solution | Cost Range | Key Benefits | Challenges |
| Outsourcing | $30–$100/hr (freelancers) | Access to global experts | Limited control over processes |
| In-House Team | $59–$77/hr (Salary.com) | Full control, in-depth knowledge | High recruitment and overhead costs |
| Software (HyperStart CLM) | $7–$700/month (Capterra) | Affordable, automated, and scalable | Requires initial setup and training |
As for legal firms, the charges vary based on pricing options, locations, and services. These packages can start from a few thousand dollars to 6-digit figures based on your requirements.
If you want to manage contracts in your budget, using contract management software like HyperStart CLM is a highly economical option. As per a report by Capterra, the average cost of contract management software ranges from $7 to over $700 monthly, making it a budget-friendly option for in-house self-sustained contract management.
While outsourcing reduces operational costs, consider onboarding and transition expenses, which can impact the overall budget. Ensure that your outsourcing partner provides transparent pricing to avoid unexpected costs.
Accelerate contract management with AI
Switch to HyperStart CLM and use AI to manage contracts. Spend less time managing contracts and focus on what matters.
Ultimately, whether to outsource contract management or use contract management platforms is a business decision. If you are looking for a reliable, automated platform to handle your contracts’ management, HyperStart is an excellent choice.
Manage contracts 80% faster with HyperStart CLM
HyperStart CLM is a start-to-end contract lifecycle automation platform to help your in-house legal team manage contracts effortlessly. Built using AI technology, HyperStart CLM automates:
Drafting, reviewing, and redlining contracts.
Negotiating, signing, and storing agreements.
Tracking obligations and analyzing performance.
With HyperStart CLM, you can manage all agreements in one place without hiring any outsourced partner for the process. The result? Faster, efficient, and precise contract management at low costs.
HyperStart has simplified tracking crucial clauses like liability, indemnity, and the terms of the contract. Multiple teams, including finance, business, and operations, benefit from having all this data in one place. Now, we receive email reminders for contracts due for renewal.
Mayuri Jaltare
Company Secretary
Want to know more about using HyperStart CLM? Book a demo today and discover how our AI can transform your LegalOps.
