GDPR Contract Review: How To Read The Fine Print
Privacy is always at the top of any legal team’s priority list. But when the European Union issued its GDRP Law, it upped the ante. These standards for data privacy quickly pushed enterprises to consider their data collection and management practices more carefully.
While GDPR affects many parts of an organization, the way companies handle personal data often starts with contracts and their included terms.
But, to efficiently and proactively protect against heavy non-compliance penalties, you need to leverage advanced contracting technology that can make GDPR contract review a breeze.
In this article, we’ll walk briefly through the current GDPR guidelines (there’ve been a few changes since 2018) and how to ensure and maintain compliance through your contracts.
What is GDPR?
You can only protect your business once you know what you’re up against. Before implementing any contracting changes, learn what this law is, how it affects your business, and the penalties you could face for non-compliance.
Understanding the EU’s GDPR Law
The General Data Protection Regulation (GDPR) is the strictest data privacy law in the world.
Put into effect in May 2018, it defines and outlines the specific rights European-based people have when it comes to how organizations collect and use their data—or data about them. It also lays out data collectors’, processors’, and controllers’ responsibilities in protecting the information they access.
Contracting processes collect hundreds of data points about counterparties, third parties, etc. So, performing a thorough GDPR contract review and maintaining compliance can be intimidating.
The Consequences of Non-GDPR Compliance
The EU has made its stance on data privacy clear, and they’re more than willing to dole out GDPR penalties for non-compliance.
- Less severe infringements can result in a fine of 10M EUR, or 2% of your firm’s worldwide annual revenue from the preceding financial year—whichever amount is higher.
- More severe infringements can result in a fine of up to 20M EUR, or 4% of your firm’s worldwide annual revenue from the preceding financial year—whichever amount is higher.
How to Conduct a GDPR Contract Review
The key to maintaining GDPR compliance and reducing risk is through careful, clear contract review. You just need to make sure you cover all your bases.
1. Onboard a Data Protection Officer
GDPR requires some businesses that process and control relevant data to have a dedicated Data Protection Officer (DPO) to review and amend all internal documents.
You’ll need to implement a DPO if:
- You’re a non-court, public authority acting in a judicial capacity
- Your core activities require constant, large-scale monitoring of people (You’re a search engine)
- Your core activities involve large-scale processing of sensitive data listed in Articles 9 and 10 of the GDPR (Ex: a healthcare office)
2. Identify Relevant GDPR Language
Having the correct GDPR-related language in your contracts can help ensure you proactively comply with all regulations.
Review contracts to find clauses relating to:
- Data protection addendums (DPAs)
- Data protection impact assessments (DPIAs)
- Breach notifications
- Data subject rights
- International data transfers
While you can do this manually, AI contract analysis gets the job done much faster, at scale, and with less room for human error—but we’ll get to that later.
3. Address Missing Clauses
Some contracts will require updating if they don’t contain language that complies with GDPR. Review your agreements, ensure language is consistent in every existing and new contract, and add GDPR clauses where necessary.
Also, consider working with your legal department to develop standard language for GDPR compliance and save that language in a clause library. This will speed up contract negotiations since you’ll have the approved clauses on hand.
4. Track GDPR-Related Obligations
Reducing contract risk related to GDPR is not only an internal job. The external teams you work with also play a role in maintaining compliance.
Keep track of how third parties and vendors collect, store, and use data so you can proactively ensure you’re only working with compliant parties. Spotting a non-compliant supplier and addressing the issue now can save you millions later.
How AI Refines GDPR Contract Review
We’ve established that GDPR penalties are something no enterprise wants to face. However, reviewing thousands of contracts in your portfolio, identifying the specific agreements needing changes, and inputting those edits is not easy.
AI contract analysis allows you to perform GDPR contract reviews continuously and at scale since the technology completes tasks faster and with less room for error.
Here’s what that would look like:
- Simplified Legal Review – Built-in risk analytics support automated third-party contract review. Easily extract contract metadata, clauses, and obligations to streamline the review of your contract repository.
- Efficient Clause Integration – Establish a standardized library of clauses and templates that incorporate standardized GDPR and data security language. This feature enables you to swiftly draft and update existing contracts.
- Streamlined Approval Process – Use customizable workflows to smoothly navigate contract revisions through approval loops all while managing tight version control..
- Better Metadata Management – Once you digitize your contracts in a CLM, you can easily search metadata (using machine learning and NLP) for relevant language and update metadata fields as laws and regulations. You can do this across multiple contracts or complex contract packages with just a single click.
Using Contract Management to Protect Your Business
You don’t have to find out your processes aren’t GDPR compliant the hard way. Using advanced technology at your fingertips, you can proactively ensure your contracts meet GDPR standards and avoid nasty penalties.
See how Sirion’s AI contract analysis can help you manage your contract portfolio, reduce manual efforts, and ensure compliance across your entire organization. Contact us to schedule a live demo and start improving your CLM processes.