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One of the trends making its way through the legal industry (and all professional services industries) is the need to get more work done with fewer resources and a smaller budget.
But the truth is, at a high level, this isn’t a new trend. After the 2008 financial crisis, there was a shift for legal counsel to implement cost-saving measures, and within a few years, legal operations teams were formed to manage outside counsel spend.
What is new are the drivers of these challenges: An uptick in job changes, onboarding challenges, employee values, and corporations looking in new areas to find more efficient processes all play a big part.
At the same time, these challenges have also provided opportunities to improve processes, learn new, more efficient ways to automate repetitive tasks, and make it possible for employees to spend time on more valuable tasks.
While looking through every nook and cranny of the legal department to find where improvements could be made, the efficiency detector sounded an alarm once departments started taking a closer look at the contract management process.
Contracts are intrinsic to a business’ goals and time consuming for employees.1
26% of a member organization’s workforce is involved with contract or contracts management somehow—procurement, budgeting, or sales.2
There’s no time for low-value tasks that can be done in no time
We normally think of contracts as ways to outline and define our vendor relationships and to protect us (disputes, defining parameters, etc.) But it turns out the process that we go through to produce and monitor contracts has secretly been undermining the efficiency of legal department operations.
That’s because contracts take a long time to manage. Searching for files, tracking down missing documents, updating and managing spreadsheets, entering data, and redundancies because of errors3 are all mundane tasks that add up on the clock, sneaking up to reduce the efficiency of operations. But all of these can be automated, saving time for just about every person involved in the contract process.
Just how much time could a department save?
According to contract managers, 25% of their time is devoted to low-complexity, low-value tasks, such as the ones listed above.4
Time to turn inefficiency into opportunity
Recognizing that there were ways to standardize, automate, and pull insights from the contract process, new solutions were developed that focused on maximizing financial and operational performance while minimizing risk.4
Goldman Sachs reports that poor contract governance can lower contract value by 40%. With the right contract management technology, departments can protect the value of their contracts with:
- Better decision-making – Collect and maintain faster access to the information your department needs to negotiate better contracts.
- Shorter approval times – According to Goldman Sachs, the contract lifecycle could be reduced by 50% with the right contract management solutions in place.6
- Reduced risks – Ensure that your department adheres to the terms of contracts to avoid liabilities.
- Increased transparency and visibility – View and access the essential contract details in a centralized system that gives the whole legal department insight.
- Financial optimization – Reduce processing costs (10 – 30% according to KPMG), avoid missing automatic contract renewal dates and know the optimal time to renew contracts for discounted rates.7 According to World Commerce and Contracting, the average cost of managing a simple contract is $6,900, with more complex contracts reaching costs of up to $49,000.
- Security and privacy – Operate more securely (and more quickly) in today’s remote work environment.
Get trendy with contract processes
Contract management technology also comes with an added benefit: the ability to collect insights about your contract management process. That data makes it possible to look at your process as a whole, such as payment terms, delivery times, and any other insights that lend themselves to identifying successful trends or flags for underperformance.8
Integrated contract management tech
While providers are looking to provide intuitive platforms with a simplified user experience, it’s also important for a contract management system to easily integrate throughout legal department operations, including billing and invoice management, customer relationship management (CRM), and procurement.
These solutions execute and monitor a contract in a way that maximizes both financial and operational performance while minimizing risk—all things essential to business success. This allows for legal department scalability as the company grows and plays a key role in achieving all the benefits of a streamlined contract management process.
If you’re looking to streamline more of your legal department processes, starting with a single solution or integrating all operations under one enterprise management solution, get in touch with our award-winning Legal Procurement team, and we’d be happy to help!
Olga Mack is VP at LexisNexis and CEO of CounselLink CLM
1,4,8 Love, Bruce. “Pandemic Rewrites the Future for Commercial Contracts.” Pandemic rewrites the future for commercial contracts | Financial Times, October 27, 2022. https://www.ft.com/content/7bd74a72-d270-4a81-b24b-65a0dd911da5.
3 Ejekwe, Favor. “8 Benefits of Contract Management Software” 8 benefits of contract management software | Contractbook. Accessed November 27, 2022. https://contractbook.com/blog/contract-management-software-benefits.
5 Murphy, Keith. “The Benefits of Contract Management Software” PLANERGY Software, April 14, 2020. https://planergy.com/blog/contract-management-software-benefits/.
6,7 The BIG. “5 Reasons Why Contract Management Is Critical to Your Business.” BIG Language Website, July 27, 2022. https://biglanguage.com/blog/5-reasons-why-contract-management-is-critical-to-your-business/.