Why centering your contracting transformation on technology can lead to its failure (and how to stop this)

Nearly 70% of Chief Legal Officers (CLOs) planning to invest in technology over the next 24 months will invest in new or updated contract management tech, according to the 2023 ACC Chief Legal Officers Survey.

Still, Gartner predicts that by 2025, corporate legal departments will capture only 30% of the potential benefit of their contract life cycle management (CLM) investments.

Better contract management is clearly a priority for in-house legal teams – and one that they’re willing to invest in, but those investments rarely live up to their full potential. Why?

For most organizations, the fundamental issue comes down to an overly simplistic view of the contracting ecosystem.

Common view of the contracting ecosystem

In many organizations, “contracting transformation” and “CLM tech” aren’t just mutually inclusive, they’re virtually synonymous.

It’s easy to see why: CLM software promises tremendous improvements – if successfully implemented. So, for many teams, the contract ecosystem equals CLM tech. With stories of failed CLM tech implementations so common, many have adjusted their view of contracting to include a thin layer of process (but only those decisions immediately surrounding tech, like workflows, templates and playbooks).

Legal departments endeavoring to transform contracting are generally guided by this viewpoint, tempted by the promises of AI silver bullets, and it severely limits the (necessary) scope of their project.

A broader view of the contracting ecosystem

Because the common understanding of contracting is too narrow, “contracting transformation” often falls short of anything remotely transformative.

A broader view of the contracting ecosystem must consider the approach to work, contract artifacts, contract data, people, and culture in addition to tech and a more comprehensive understanding of process.

These inputs help inform a target operating model – a vision of contracting built on a clear understanding of demand and supply capacity, guided by the objectives of stakeholders across the organization.

Why consider all contracting inputs during contracting transformation projects?

In instances where bad contracting processes lead to consequences, the tech is rarely the central issue. Failed CLM tech implementations are generally derailed by deep-rooted, systemic issues, such as departmental silos or bad contract data (no surprise given that the average organization holds commercial data in 24 different systems).

The cost of poor contract management

Poor contract management costs companies 9% of their bottom line, so it’s little wonder that so many teams are eager to improve. Tech solutions have sold many in-house legal teams on the promise of “plug and play” improvements, but reports on CLM suggest that transformation generally takes at least 12 months – and often much longer. alarmingly high rates of CLM tech implementation failure (and the fact that 30% of legal departments who currently have contract management software in place acknowledge that it is underutilized) tell us that CLM software isn’t a silver bullet.

Technology is a powerful enabler, but only if it’s implemented thoughtfully as part of a larger strategy – it can’t solve operational issues. When organizations approach contract transformation from too narrow a viewpoint, they don’t realize that they should be considering broader issues at all. The larger, critical context goes unseen.

Better contract management helps mitigate risk, save money, and generate revenue faster. But achieving a contracting target operating model takes planning and legwork, which can only begin once a broader perspective is established.

Designing a contracting target operating model

Designing a target operating model starts with an assessment of the current state of contracting to understand capabilities and uncover opportunities for improvement.

Before this assessment can begin in earnest, it’s important to do some early legwork. Take the time to complete initial tasks like developing a project plan, identifying key stakeholders, and collecting project data. This is particularly important in industries where a large percentage of the workforce is involved in contracting – such as telecoms, where the average organization involves 26% of its workforce in contracting. Not only is it more difficult to identify key stakeholders in these instances, but it’s also easier to forget someone.

Assess the contracting current state

With a plan in place, teams can analyze data and stakeholder needs (through interviews or questionnaires), define and prioritize pain points, and conduct root cause analyses. Because so many organizations know something is causing issues within their contracting ecosystem, but few have clarity on exactly what that is, a root cause analysis is a critical step in connecting the dots.

At the end of the assessment, organizations are left with greater visibility into the current state of their contracting, including a view of process, operations, pain points and underlying causes.

Understanding the current state is vital. As the saying goes, you don’t know what you don’t know. Less than 11% of organizations view their existing contracting process as very effective, so it’s clear why many teams want (or need) to improve contract management. But without an understanding of the starting point, they can’t see where breakdowns are occurring or how much improvement is truly possible.

With the current state established, design of the target operating model through future state visioning can begin. This involves efforts such as conducting a future state workshop and identifying barriers to achieving the desired future state, then assessing and simplifying the path to the desired future state (including with respect to CLM tool functionality).

Establish a contracting capacity model

A key part of target operating model design is understanding and quantifying both demand and supply – the “why, how and what if?” behind both sides of the equation. This process entails some further examination of the current state. Ask questions like these around both the supply and demand sides to create a capacity model:

Demand side questions to identify contracting capacity:

• Is all current contracting necessary?
• What are the demand flows?
• What segments and types of contracts?
• What quantitative measure of complexity drives resource matching? How is this being done today?

Supply side questions to identify contracting capacity:

• Where, how and by whom is contracting done?
• What are the productivity metrics? Is this optimized?
• How will technology affect productivity?
• How do low-touch and no-touch contracting assumptions affect the capacity model?

A clear capacity model better illustrates future state potential, and the gap between that vision and the current state.

Envision the target state and map a path

A target operating model is driven by a number of inputs across the contracting ecosystem, each of which bring benefits that grow more pronounced when they build off each other.

This marks an opportunity to prioritize changes and identify quick wins. For example, if an organization realizes that all current contracting is not necessary, or that expensive resources are currently handling low-complexity contracts, they may find opportunities to affect change and realize savings quickly.

From here, organizations have enough information about their starting point, target operating model and potential roadblocks create a map that links the current state of contracting to the future state vision.

Depending on the current state and target operating model, this roadmap may include improvements, negotiation artifacts, process flows, technology enablement and change management.

Achieving the target operating model

Once developed, implementing the contracting target operating model requires three key workstreams: artifact development, contract management system (CMS) enablement and data migration.

Updating contract artifacts

During artifact development, teams can leverage the information gained throughout the assessment and planning process to update their master service agreement (MSA) or other primary agreement templates. With these foundational artifacts in place, teams can update ancillary documents and finally, develop a playbook.

As part of this workstream, teams can harmonize or consolidate remaining documents to work alongside the new MSA. They will also develop an index of provisions for their clause library, which supports the creation of playbooks inclusive of rationale for standard risk positions, acceptable fallbacks and use-cases, escalation protocol and more.

Selecting the right CLM technology

Part of CMS enablement may involve selecting CLM technology. It’s important to leverage a complete understanding of user and system requirements to select a solution with features that align to stakeholder goals.

But of course, even an ideally suited CLM tech solution is only one piece of the puzzle. A data hygiene plan, which focuses on ensuring the data going into the new system is correct (and correctly formatted), and a system to ensure more seamless, widespread adoption help ensure that the tech does its job as an enabler of process.

Migrating (clean) data

Given that bad contract data is one of the main roadblocks that ruins CLM tech implementations, a carefully considered contract and data migration plan is critical once technology has been selected. As part of the contract and data migration process, teams must create a data hierarchy and metadata validation report to better understand the value of their contract data (and to ensure that it is complete), followed by a migration plan (outlining details like who will do it and when it will be done).

By completing efforts like metadata cleanup and contract clause analysis to ensure that contract data is being leveraged properly and consistently, organizations achieve a clean, complete, easily searchable, de-duplicated and properly tagged document corpus in their selected CLM technology platform.

These steps support the journey from current state to target operating model. But once achieved, the TOM still has to be maintained – much like any optimized state of being, it requires upkeep.

The value of holistic contracting transformation

If the risks of too narrow an approach to contract transformation are wasted investments, organizational incongruity and ongoing revenue leakage, then the benefits of a broader view are just the opposite.

What’s more, when a contracting target state is achieved, work is aligned with the resource(s) best suited to handle it.

Contracting transformation case studies

The assertion that a holistic approach to contract transformation drives results isn’t conjecture – it’s based on years of experience.

For example, a multinational healthcare company engaged Factor to support procurement contracting transformation. At the time, the team handled 4,500 contract requests per year, but the process lacked oversight and standardization.

By designing – and continuously optimizing – a streamlined contracting process, Factor now supports 6,000 contract requests per year for this company while achieving a 25% reduction in cycle time.

In another instance, a Top 3 Management Consulting firm engaged Factor to assess current contracting processes, desired future state and complete a root cause analysis for the implementation of contract lifecycle management technology. As part of this process, Factor completed a large-scale document review across a variety of document types, including MSAs, SOWs, NDAs and more. We uncovered and provided qualitative data on issues that must be resolved before CLM tech can be implemented, avoiding a failed implementation.

In still another example, an educational publishing company was looking for cost savings, associated process improvements and operationalization. Factor introduced self-service contracting for lower complexity contracts – with the right tooling and training, they are now executed by business managers, contract owners or purchasers. This speeds up time to contract for business stakeholders and increases capacity for higher complexity, strategic contracts.

Additionally, we have helped the legal team refine templates, create playbooks and train their team members to enhance their contracting capabilities. As a result, the organization has seen 35% shorter cycle times across all procurement categories.

There’s no denying that technology is a critical part of modern contracting, but organizations that zero in on CLM and gloss over the bigger picture sow early seeds of failure. If a contract transformation project is a key objective for you, start by shifting your perspective – take a broader approach and realize faster results.

For more on how to drive the greatest impact from your contract transformation project, get in touch.

Contract management represents one of the largest resource drains for organizations of all sizes.

The American Bar Association tells us that “a typical Fortune 1000 company manages between 20,000 and 40,000 active contracts at any given time, at least 10% of which are misplaced, difficult to find … or otherwise unmanaged or forgotten.”

Drilling down into the details of the contract management challenge, the situation appears even worse. A 2022 DocuSign survey of more than 1,300 contracting professionals worldwide revealed that:

• Contract professionals take 45 minutes on average to find a completed contract
• 46% of respondents have been unable to locate a contract
• It takes an average of 84 minutes to find specific information within a contract
• 68% of respondents need to access completed contracts at least weekly

The challenge is acute, even for moderate-sized teams. On average, it takes 30 hours of staff time to generate, negotiate and locate a contract. For a mid-sized organization that manages around 500 contracts a year, that works out to 7 full-time employees worth of annual labor.

Fortunately, a digital, centralized contract repository has proven highly effective at improving efficiency of an organization’s contract operations and reducing the number of hours organizations waste searching for contracts.

What is a digital contract repository and why do you need one?

In the simplest terms, a contract repository is a place where contracts are stored. Today it has evolved to mean a centralized, cloud-based storage system for completed agreements. To be most efficient and productive, a contract repository must be searchable by extracted fields and key terms. It also must be easily updated with contract amendments, renewals and legal/regulatory changes. It is a living, breathing tool rather than a static location.

Often the commercial contracts team in the office of general counsel is encumbered by inefficient document generation, review, management and storage processes. Before a signature, in-house attorneys and contract managers are shackled to manual workflows and disconnected systems for negotiating, reviewing and approving contracts. After completion, there are new problems that arise related to managing renewals, obligations and risks. Part of the difficulty lies in not knowing where contracts are kept and part of the problem is the lack of searchability for key data.

According to Gartner, contract generation, negotiation, review and approval can take up to half of a law department’s time. In addition, siloed functions and departments make it harder for legal departments to manage and locate the thousands of agreements and contracts held throughout the organization. Moreover, the office of general counsel is charged with ensuring that proper security and confidentiality are maintained with permission-based, need-to-know access.

Traditional contract storage systems, such as general-purpose tools like Microsoft Sharepoint or a shared drive, represent an unbalanced and inconsistent approach to risk and obligation management. A centralized digital contract repository introduces advanced collaboration features, which quickly improve transparency, efficiency and information security.

A digital contract repository solves many common legal and business challenges

A modern digital contract repository can address many of these pain points, accelerating the contract lifecycle and reducing the burden on staff by:

• Speeding up contract location: With a single source of truth, finding contracts doesn’t have to take hours.
• Reducing the number of systems used: Eliminate the need for constant “swivel chairing” among multiple systems and applications where contracts may be stored and managed (including Microsoft Word, email, SharePoint, shared drives, CLM and CRM solutions).
• Simplifying handoffs among multiple parties: Simplify legal review, negotiations, approval and signature.
• Monitoring of existing contract provisions: Track obligations and treat contracts as codification of business relationships.
• Identifying current vendor relationships: After signing or during contract creation, easily identify prior contractual relationships with the counterparty or with a competitor.
• Screening for nonstandard terms and clauses: Quickly comply with requests to identify current contracts containing provisions such as nonstandard payment terms, force majeure clauses or nondisclosure language.
• Fostering remote working relationships: Empower employees with centralized, online access to templates, ensuring consistency and providing access to a broader wealth of resources.
• Providing multiple departments with real-time access: Legal departments often don’t have permissions to use Salesforce, which limits their ability to access contracts and other critical documents and With CLM’s built-in Salesforce integration, legal, sales and other key functions gain real-time access to contracts.
• Standardizing common sales agreements and contracts: Reducing variance among common documents (like NDAs) will reduce legal/finance intervention and minimize manual review.

A “crawl-walk-run” approach to implementing CLM

While eSignature has changed the way that many organizations execute a contract, there is often not a clear path to a CLM solution that can tame the growing complexity before and after signature.

Fortunately, organizations can introduce the time-saving efficiency of a modern CLM in a modular, step-by-step deployment with DocuSign CLM that adapts and grows as your needs evolve. For smaller businesses, DocuSign CLM Essentials is a great first step to simplify contracting processes. As you grow, you can access AI-powered contract analytics and enable real time activity tracking with DocuSign Monitor for CLM.

Our experts can help your team map out plans for an audit, implementation, training integrations, change management and continued support throughout adoption.

“How do I know I’m getting a good price from my law firms?”

Traditionally, that type of data simply hasn’t been available to in-house teams or firms — a fact that causes widespread discrepancies in cost across the legal industry.

In this article, we’ll show you a process PERSUIT uses to find what we call the “true market price” for a legal matter.

It may seem counterintuitive, but finding a true market price makes the price less important when you select your firm for a matter. By doing so, you can empower your team to better manage risk by choosing the best firm — not just the one with the best rate.

What is a True Market Price?

A “true market price” is the average transaction price that buyers and sellers can commonly be expected to agree upon for a particular good or service. But without transparency and competition within a market — like in legal services — it’s difficult to discover what a true market price actually is.

In legal, that’s starting to change.

In-house teams are under pressure to demonstrate their value to the business more than ever before — and to justify and document their decisions around external spend.

For all these reasons, legal teams are increasingly adopting a new process for engaging outside counsel — one that introduces transparency and competition so a true market price can emerge.

A Four-Step Process to Find the True Market Price for Legal Services

At PERSUIT, we teach in-house teams a process they can use to determine a fair market price for legal services.

Here’s how it works:

Step 1: Segment the matter by milestones and deliverables

Most legal work falls into repeatable patterns. You may not know exactly how a matter will go, but you know the types of activities that often happen.

For example, in litigation, you know there will be depositions, even if you don’t know exactly how many you’ll need. Nearly any matter can be broken down into predictable phases and activities to arrive at the “deliverable” or outcome.

In our litigation example, those milestones and deliverables would include depositions, discovery, pre-trial, trial, appeals, etc. The same concept can be applied to advice or transactional matters as well.

The same holds true even for complex matters such as IP litigation. Certain phases and types of work, like claim construction and the Markman hearing, can be scoped and outlined. It will take some up-front investment, but the process will yield a better environment for competition and transparency with your firms.

Having a library of pre-built templates for many types of matters also helps make the scoping process significantly easier.

Step 2: Invite preferred firms to submit proposals

After you’ve scoped your matter by phase, invite three to four of your preferred firms to submit proposals detailing how they’ll approach the work.

Ask them to submit their price estimate, a summary of how they’ll approach the matter, and any other information you’ll consider when awarding the work (DEI, relevant experience, etc.)

If you’re doing this manually, you can send emails inviting the proposals. Or use a firm relationship platform to simplify the process.

When appropriate, some companies invite bidding firms to ask questions and further scope the matter, helping you ensure a true “apples to apples” comparison when you receive proposals.

Step 3: Use a competitive process

Sometimes, the proposals you receive will have similar price quotes.

In those cases, the competitive RFP process — on its own — has revealed a “true market price.” This gives you confidence that you’re not overpaying for the matter.

There are other cases where you’ll receive proposals with price estimates that are wildly different. In that case, you can’t know if the prices you’re looking at are a true “market price.” It may be that the firms simply don’t know what other firms are charging for similar types of services.

In this scenario, the process we recommend is a “reverse auction” — a competitive process where you set a time window, show the price quotes (or their rankings) you received from firms, then give those firms a chance to revise their price quote.

This is usually done as a live event with a time limit between 30 minutes to an hour.

Here’s an illustration of a real reverse auction taken from the PERSUIT platform.

At the start of the auction, there was a $1.275 million spread between the highest-priced quote and the lowest.

One hour and six minutes later, the price spread had narrowed dramatically, with all four firms having price quotes within $270,000.

In this case, the “true market price” is about $1 million — the price the firms are grouping around at the end of the auction.

Step 4: Choose the firm you think has the best chance of giving you the result you need

At the end of this competitive process, you and your team can evaluate the proposals and make a choice about who to work with for the matter.

It may be counterintuitive, but a competitive process actually makes price less of a factor when choosing a firm.

At the beginning of the auction illustrated above, there was little chance that an in-house team could justify paying an extra $1.275 million to engage with the highest-priced firm competing for the work — unless it was a “bet-the-company” type matter.

By the end of the auction, however, the bid spread had been reduced to only $270,000 between all four firms; even less between the top three.

With the emergence of a true market price for the matter, the decision becomes less about price and more about who is the best team to manage the relative risk and drive the right outcomes.

The Payoff: Make Price Matter Less When Selecting Outside Counsel

Our internal data — which includes over $8 billion in proposals and $1 billion in legal work awarded through the platform — show that time and again the competitive process detailed above takes large price differences out of the equation.

By driving firms closer to a consensus price, or true market value, cost becomes less of a deciding factor than in a traditional RFP process. This price convergence empowers in-house teams to move beyond price in deciding which firm is the best fit based on the things that really matter — experience, strategic insights, diversity and ESG metrics, and more.

You can read more about the benefits of competitive sourcing in our recent report, 5 Myths About Reverse Auctions in Legal. You can also hear about how competitive sourcing strengthens the relationship between in-house teams and their firms in our webinar featuring Gopal Burgher, partner at BurgherGrey, and Kimberly Williams, head of Legal Operations at SMBC.

Ready to uncover the true market price for your matters? Sign up for a demo today.

PERSUIT is used by the world’s leading in-house legal teams to engage outside counsel in a way that’s more fair, more objective, more diverse, more equitable, and more effective for everyone involved. Learn more about PERSUIT.

As digital transformation continues apace across organizations, contracts are gaining more and more attention as an area crying out for automation and data. One leading technology advisory firm reports significant and continued year-over-year growth in inquiries around contract lifecycle management (CLM) as companies grapple with ongoing market disruptions that impact their contractually defined commercial relationships. 

For legal operations, this focus on contract technology can be a double-edged sword. Legal is heavily involved in contracting (naturally), and, in theory, contract technology should make contract processes faster and easier for law departments and for the benefit of the entire enterprise.  

In practice, however, two common challenges emerge: 
 
In some cases, legal teams get put in the proverbial back seat with contract transformation efforts when other departments take the lead in choosing a solution that works best for their use case—one system for procurement contracts, another for sales, a third for corporate contracts like NDAs. Legal is left jumping between disparate systems for reviews, approvals, template management, etc. 

In other cases, legal teams take the lead on contract transformation in their organizations but focus on what the technology can do for legal, not the rest of the company. Little surprise, this approach leads to solutions gaining little to no adoption from other departments that generate the agreements.  

Both these outcomes point to the unique challenge contracts present when compared to other legal processes: they require input and cooperation from across the enterprise. One report, from World Commerce & Contracting, suggests that 25% of a company’s workforce plays a part in managing contracts. Ostensibly, that means any contract management system should be accessible and enabling to a quarter of a business. No small feat! 

The good news is that it can be done. The better news is that legal operations professionals are in the best position to make it happen.  

In one of my favorite examples, the legal operations department at a major technology company worked with its procurement and IT teams to stand up a contracting system that 220,000 employees could access to self-service sourcing contracts. These users are generating 150,000 SOWs a year with little to no help needed from expensive legal resources.  

Key to this successful deployment is the teamwork shown by the legal operations team. They engaged outside stakeholders early and often, understanding what their users need and how they can support them. To borrow a phrase from John F. Kennedy, they asked not what CLM could do for legal, but what legal could use CLM to do for the enterprise. 

This enterprise focus goes right to the heart of CLOC’s description of the desired state for technology:  Create a clear technology vision that spans all of the needs of your organization” (emphasis mine). 

From this and other success stories, three important considerations emerge for legal operations teams that want to drive successful contract transformation efforts across the enterprise: 

1. Listen & Learn: A successful team should work to understand what matters to other departments. Each division will have its own frustrations with contract processes, will see different risks, and will have a wide array of opportunities. A successful blueprint depends on accurate information, which in turn comes from a thorough survey of needs and requirements. 
    

2. Integrate: Integration is the key to widespread adoption. It’s much easier for departments and teams to adopt new solutions when the technology is presented in tools they already use. For legal, this might mean Microsoft Word; for procurement departments, it might be Ariba; for sales teams, Salesforce. Notably, integrations are often overlooked in CLM projects – a recently survey of hundreds of legal operations professionals found that only 1/3 had integrated their CLM into other systems. 
    

3. Align on KPIs: Nothing builds momentum in digital transformation like showing improvements in the areas that matter most. When the team knows which KPIs to measure first, analyzing data can provide definitive results. For example, procurement might say their biggest pain point is the delay in getting suppliers under contract. If so, have the team measure how contract turnaround time improves. When stakeholders can see the immediate benefits of digital transformation, they become CLM champions.  

Contracts don’t stay inside the four walls of the legal department, and neither can any digital transformation effort aimed at gaining value and efficiencies from these critical documents. With the right cross-functional approach, legal operations can get in the driver’s seat for a consequential digital transformation project that will pay significant dividends for the entire organization. 

To learn more about your legal operations peers are addressing the challenges and opportunities facing them today, access this free copy of the 15^th annual LDO Survey. 

The role of legal operations is having its well-deserved moment in the spotlight. There are wide-ranging benefits of adding this team of professional efficiency drivers to your legal team. Publishing firm Legal 500 also pushes General Counsels (GCs) to “unbundle internally” – and establish a legal operations department to improve planning, technology, communication, and financial management – everything beyond giving legal advice.

The advantages are clear, but it’s challenging to go from creating a legal ops team to building one that runs like a well-oiled machine. In this blog, we’ll cover principles that will transform your legal ops team. Let’s dive in!

Build bridges within your business with legal ops.

Communication gaps erode performance. Enterprises often experience these in two areas: financial reporting and sales cycles. But a well-tuned legal ops function bridges these divides.

Financial Reporting

The Corporate Legal Operations Consortium (CLOC) guides legal operations professionals to pursue activities that maximize resources through sound financial management. Often, companies need more visibility and predictability in their budgeting and forecasting. This leads to material cash impacts, including shortfalls and a lack of economic context when making investment decisions.

Given its proximity to deals and contracts, legal ops can share critical reporting that boosts finance team effectiveness. Opportunity areas include: 

• Streamlining invoice review
• Allocating legal costs to business areas
• Deriving spend insights from vendor contracts
• Supporting budget development with centralized reporting

Legal ops teams have become an indispensable part of budgeting and financial planning by supporting activities like these.  

Sales Cycle

When legal and sales fall out of sync, the deal pace slows. To avoid this, legal ops must pinpoint problem areas. This often means eliminating communication gaps by centralizing and integrating both teams’ data and systems.

Practically, this should include creating processes that move contract drafting and management workflows out of the inbox. LinkSquares, for example, built a Salesforce CRM integration within its contract lifecycle management (CLM) platform. This becomes a low-hanging fruit opportunity for many to reduce the email clutter that’s compounding poor communication. Reps benefit from automated contract status updates, and managers sharpen their ability to forecast, assess time-to-close, and predict revenues.

To support sales (or any critical business function), legal ops must also understand what their colleagues need and expect. This doesn’t mean becoming an order taker. Spend time defining common sales cycle disruptors and identifying process risks. Talk to key stakeholders; come up with step-by-step procedures and workflows to improve ownership, clarity, and accountability.

When teams don’t discuss these, sales process confusion turns to frustration. As one legal leader told us, “Communication missteps are rare when everyone knows who is doing what by when.” Once exposed, legal ops must rebuild the processes that once slowed down deals. Consider deploying tools to speed up contract creation by allowing sales to draft or request agreements directly from their CRM. Additionally, consider pre-approved terms or contract language that sales or customer success teams can use without interacting with legal.

Explore self-service reporting as well. Legal ops may streamline communications by adopting software to give business users access to custom contract reporting. For example: Does the revenue ops team need to pull reports on how many contracts renew this quarter or understand how many clients are headquartered in London?

Automate it  – eliminate back-and-forth emails that paint the picture of other teams waiting on legal to comb through contracts. Ready now? Download this guide today.

The rapid growth of generative Artificial Intelligence (AI) promises to fuel seismic changes throughout every aspect of the business world. A quick glance at recent headlines gives a good sense of just how the expanding power of AI-spawned text, images, and media is reverberating: 

• Google added the power of Generative AI to its search engine, allowing users to receive AI-generated summaries to select queries. 

• IBM is launching a new “WatsonX” studio for organizations to create their own generative AI workflows. 
• A Goldman Sachs survey forecast “significant disruption” to labor worldwide from Generative AI — potentially affecting up to 300 million jobs. 

The legal industry will be in the middle of the Generative AI revolution. But what will that transformation look like for the legal world — and how can the industry best take advantage of its promises and potential?  

Three areas of transformation 

These three legal areas will see meaningful opportunities for value from generative AI:  

• SPEND MANAGEMENT. Generated AI can also boost departments’ ability to make sense of their tens of thousands of lines of invoice data by delivering insights into value, helping departments understand exactly what they are paying for. These quick, accessible insights are a powerful way to stop the attorney habit of “rubber-stamping” invoices and address capacity concerns for busy departments. It also increases the quality and speed of invoice review, flagging patterns that can violate billing guidelines (especially for lengthy, complex invoices).  
   
  Additionally, generative AI can assist with vendor management — particularly tough conversations around rate, value and performance. When backed by detailed, insightful data, it is easier to have productive, emotion-free, and surprise-free conversations. 
   
  EXAMPLE: Invoice summarization. Onit integration with ChatGPT provides a quick, insightful summary of a contract’s tasks to analyze overall value – allowing users to glimpse into the hours spent per task, the work done by specific timekeepers, and much more.  
   
• CONTRACTING. With Generative AI’s ability to generate content such as summaries and redlines, Contracting is a natural place where the technology will have significant impact. In fact, contracting is one area where we see more mainstream adoption of AI — for example, most of Onit’s CLM customers use AI in contracting. Fueling this growth? The improvement in legal comprehension by Generative AI; for example, GPT4 passed the bar exam, scoring in the top 90^th percentile on one 2023 tryout.   
   
  These advancements mean the industry can use AI as a co-pilot to run contract playbooks. AI serves as a powerful tool to help reduce some of the repetitive manual work plaguing this part of the process and improve consistency.    
   
  What about post-signature? In an era of constant mergers and acquisitions, regulation and compliance demands, companies often find themselves with questions about the contracts in their repository. AI-driven analysis gives a valuable look into these contracts and their clause libraries, allowing the new company to quickly identify risks and remediate them.  
   
  EXAMPLE: Contract analysis. Onit’s AI Co-Pilot sits alongside you as you review your contract. You can ask it to spot issues, suggest redlining, compare against your template language and flag deviations from your standards. 
   
• LEGAL REQUESTS. This impact is one our CGI panel and audience were extremely excited about; sometimes, the most beneficial use of AI is to remove manual work (like form filling), remove friction and encourage the adoption of our tools and processes. AI technology can help to kick off the workflow with minimal user intervention, automating legal request creation, determining routing priorities, and establishing tracking — removing significant administrative tasks for attorneys. It can also assist as the “first response,” automating common business requests before they go to Legal.  
   
  EXAMPLE: Creating a legal request. Onit’s AI integration can read an email chain and automatically generate a legal request.    

This is what our audience at CGI 2023 said when we asked them about the impact of Generative AI. Do you agree with their thoughts? 

Next steps for Legal: Three things to remember 

As Legal takes its next steps into the AI world, it’s a good idea to have these general principles in mind: 

• Keep on top of technology. Designate some time for yourself or ask a team to keep up with the possibilities and enhancements of Generative AI. In a world where rapid advancements happen weekly (if not daily), education and knowledge are king.  
• Address the fear of the unknown. The disruptive effects of new technology can be intimidating for many. Don’t rush or push anyone into this new world; encourage them to learn and engage with the space, focus on opportunities and use carefully tested and validated tools.   

In a recent CLOC Ask the Experts webinar, legal operations experts from the Northwestern Pritzker School of Law, Uber, NCR Corporation, and DocuSign shared why the digital transformation of contracting processes is essential for legal teams today. A modern contracting process can make your legal team more efficient, unlock scalable support for other business teams, and unearth a trove of useful data. By transforming your contracting process, you can drive efficiency and contribute real value to your organization.

Here are the three important reasons why legal departments and legal operations should modernize their approach to contracts.

1. Improve efficiency while reducing risk

With increased pressure on margins and a challenging economic climate, legal is beholden to budgets more than in the past. According to Nancy Kumar, law vice president at NCR Corporation, these new constraints make driving digital transformation and continuous improvement all the more critical. By partnering with sales and members of the legal department, legal ops can improve contracting processes and save their organization significant time and money.

Sandy MacDonnell, senior manager of legal operations at DocuSign, saw this firsthand. By implementing DocuSign esignature at her former workplace, she saved the company an estimated $1 million in the first year alone. “We no longer had stacks of papers sitting around,” MacDonnell says. “Legal was no longer being that cost center.”

Just as electronic signature tools and digitization have improved efficiency for countless legal teams, so too can building integrated contract management processes across the organization. A contract lifecycle management (CLM) tool like DocuSign CLM consolidates all contracts and related data in one place, and automates key generation, approval, and signature tasks, allowing for more connected workflows.

It also makes it easy to track obligations and milestones, which can greatly reduce contract value leakage, says David Silbert, senior director of Agreement Cloud strategy at DocuSign. “Everyone works so hard to get their favorable terms into an agreement, but if you’re not actually tracking what you’re entitled to under that agreement in the real world…you’ve left dollars on the table.”

Improving contract management not only enhances efficiency but also helps legal teams reduce risk. Centralized repositories and systems lead to better security and allow you to easily find critical documents, while best contracting practices prevent recency bias or missing unfavorable terms during negotiations.

2. Allow your legal team to scale

Historically, legal teams have taken a reactive stance to address problems in the contract process instead of a proactive one, entering the picture after a problem has been identified. This hinders an organization’s ability to scale, notes Dan Linna, Jr., senior lecturer, and director of law and technology initiatives at Northwestern Pritzker School of Law and McCormick School of Engineering. 

“Through innovation and transformation, we really have an opportunity to shift to a prevention mindset,” says Linna, Jr. “We need to think about how we can design systems and processes to identify and prevent problems early when the cost of addressing them is lower.”

A potential solution lies in automation and data. By leveraging automation, legal can build processes that provide employees in other departments access to legal guidance, as well as self-service options like pre-approved terms and clauses. These new systems and processes are not only more efficient, freeing up time and supporting growth, but they also mitigate risk. Pre-approved terms and contract workflows, for instance, help catch non-standard terms, reducing risk exposure. Meanwhile, analytics can help identify and predict outcomes, empowering legal teams to avoid undesirable downstream consequences to poorly written contracts or unclear obligations.

3. Unlock more and better data

With a digitized contract management system, legal ops can gather useful information to improve legal processes. Features like centralized storage, automation, and analytics all allow for greater insight and provide legal ops with critical data points, including contract volume, time to signature, and context on where escalations occurred.

Document generation forms, which allow your sales team to stay within Salesforce when generating agreements and other sales documents, are another key tool for gathering data. By looking at document generation templates, legal ops can gather metadata to better support their colleagues, advises Jonathan Johnson-Swagel, senior legal and business operations manager at Uber. 

“When groups think intelligently, carefully, and preventatively to identify that metadata at the outset of designing the CLM product and those document generation forms, they end up with a treasure trove of valuable data,” says Johnson-Swagel. “This data can be visualized and tailored to the audience to help them identify and understand trends, highlight risks, and drive business decisions at the management level.”

Kumar adds that document generation forms also provide insight into how often people in the organization use templates. If usage is low, legal operations teams can make adjustments to better meet their needs. Ultimately, better data allows for better decision-making, from financial decisions to hiring.

For Sibert, having technology that provides structured information at scale removes the guesswork from establishing and achieving goals. Rather than answer complex questions about the use case or the business based on best practices or estimates, he can now answer them based on actual information.

“I used to have to explain to people, yes, there’s this thing called AI and it can apply to contracts,” he says. “Now we’ve moved so far past that. People are all bought in on the idea…But the key is having people and organizations think about what they want to attempt to solve for and how to get there.”

Legal ops as drivers of contract transformation

Legal ops teams are well-positioned to help their organizations design and meet goals around digital transformation of contract processes. For one, because the contracting process touches so many disciplines, legal ops works with multiple departments, making them qualified to lead and facilitate cross-organizational change.

Legal ops teams are also practiced at building relationships across the organization and understanding stakeholder needs—essential skills for launching a digital transformation initiative. Kumar suggests legal ops teams consult stakeholders throughout the process to avoid delivering a solution that doesn’t meet end users’ needs.

“As you look for types of transformational activities or process improvements, look at your end-user…and bring them along in the journey,” Kumar says. “You need to understand what their pain points are and what you’re trying to solve for.”

Another strength of legal ops teams is that they’re well-versed in tech evaluation and process improvement, both of which are important for digitizing contract management. They understand the value of an integrated platform, from centralized systems to integrating with other enterprise solutions.

Contracts impact stakeholders across the organization, from legal to sales to finance. Panel members agreed that it’s important to take initiative and not to wait for a business-critical event like a missing contract to start thinking about this technology.

“Everybody should own [this] and be at the table,” says Johnson-Swagel. “CLM is sort of the watering hole where all of the animals of the savanna come together to drink. It’s a peaceful place where we all make business efficiencies and magic happen together in the kingdom.”

To hear more about how and why legal ops leaders are transforming the contract process at their own organizations, watch the full webinar here.

Hiring and retention issues continue to challenge managers in the legal field. Key personnel have been quitting their jobs voluntarily, and in record numbers since the spring of 2021.

Many employees remain confident about their prospects in the current hiring market, which means that hiring managers must continue to be on the lookout for the possibility of their top performers leaving. So, what can employers do to reduce attrition? Managers must be aware of the latest trends in compensation to better address job candidates’ salary expectations and professional concerns, such as wellness benefits and workplace culture. Free resources like the 2023 Robert Half Salary Guide can be helpful tools that offer the latest employment insights.

Here are some important hiring trends that managers in the legal field need to know.

Legal specialists seeing sizable salary increases

The need for specialized expertise is driving hiring in the legal field but nearly 9 in 10 managers (88%) are challenged to find skilled talent. To navigate the competitive candidate market and open new verticals or specialty areas, law firms are hiring associates from adjacent practice areas and corporate legal departments.

On the flip side, corporate legal departments also are expanding internal teams. Many are hiring corporate counsel, paralegals, contract managers, and other specialists to support rising workloads. Many candidates for these roles are seeing sizable pay increases. In addition, corporate legal departments are providing current staff with raises to compete with law firms that try to recruit their employees.

In-demand practice areas include litigation, healthcare and labor and employment, among others. Top candidates for midlevel corporate counsel, paralegal, contract manager and litigation support/eDiscovery director roles are seeing sizable increases in compensation.

Here are several examples of average starting salaries at the national level from Robert Half’s 2023 Salary Guide, which contains salary ranges for nearly 50 positions in the legal field.

The salaries are listed by percentile: 50^th percentile for candidates with average experience and most of the necessary skills; and 75^th percentile for candidates with above-average experience and all the needed skills. Bonuses, benefits and other forms of compensation as well as practice area expertise, special skills and certifications are reflected in the salary ranges and should be taken into account separately. 

When weighing a raise, consider both an employee’s value to the firm and the costs of replacing them. To help benchmark compensation packages, the Salary Guide offers average starting salaries for numerous roles in the legal field. Go to the “Find your local salaries” section of the guide and select the city nearest to you to get local salaries, which reflect regional living costs, talent availability and other factors. Some examples of local starting salaries in San Francisco and Washington, D.C., are below:

Location flexibility can assist recruitment and retention

Over the past couple of years, high attrition rates have left many teams stretched thin, facing inflated workloads. Many employees are experiencing burnout and companies are reporting increased turnover rates.

Employers in the legal field can’t eliminate turnover, nor should they desire to do so because every business benefits from an occasional infusion of new talent. But a consistent exodus of professionals with in-demand skills and experience is unhealthy, particularly when these top performers are difficult to replace in the current, candidate-driven market. Flexible work arrangements that support employees in maintaining their work-life balance can be the cornerstone of a successful hiring and retention strategy. Contract managers, corporate counsel and litigation support/eDiscovery specialists are among the legal roles that are expected to remain remote long-term.

Contract talent is changing the game

Contract employees with strong legal backgrounds, who can jump right in and be added to or removed from teams based on changing needs, are being used by more and more companies and law firms.

This approach not only gives law firms and companies more financial flexibility and the ability to diversify their legal services, it also can boost the morale and motivation of permanent staff, who may take on new projects without being concerned or overwhelmed as their workloads increase. That might be one of the reasons 44% of hiring managers plan to increase their reliance on contract professionals in the upcoming year.

Employees’ expectations have changed

Since the start of the pandemic, employees’ expectations have changed and the demand for flexibility is here to stay. Our research reveals that 46% of legal hiring managers have had a strong candidate turn down a job that doesn’t offer remote work options. Law firms and companies that are offering more flexibility and remote or hybrid roles are attracting higher numbers of skilled applicants, and these businesses are also retaining key employees.

Employees also want a clear career path within their company. Offering training (upskilling and reskilling) can help keep them engaged while addressing skills gaps and strengthening teams.

Perks and benefits in demand

More than 4 in 10 legal hiring managers (44%) surveyed for our research said inflated workloads and burnout are the primary reasons for their retention struggles. And although money still talks, work-life balance is an important part of the conversation.

When given at least some control over their work arrangements, employees frequently increase their productivity and reduce their stress levels. Flexible schedules, remote work options and condensed work weeks are some of the perks and advantages that are most in demand since they directly support work-life balance.

Employees also are looking to enhance their health and wellbeing, and these benefits go beyond just health insurance and subsidized gym memberships. Fitness, stress reduction, nutrition, mental health, increased vacation time, mindfulness and meditation classes, and financial wellness and retirement planning are a few issues and perks that employees are interested in.

Make professional development a priority

If legal professionals feel their careers are stagnating, they will make the rational decision to move elsewhere. To increase employee retention, launch professional development initiatives, make investments in their training, and assist them in identifying a career path.

Offer training in skills that are in demand in the current business environment. Upskilling in litigation software, online document management, and e-filing systems, for instance, will be welcomed by support personnel, while attorneys will value continuing legal education (CLE) that helps to expand their practice area knowledge.

Reward and recognize achievements

Don’t forget about additional compensation or benefits. Signing, year-end and performance-related bonuses can make employees feel appreciated. Expanding the availability of popular perks or adding new offerings also can help to move the needle.

And keep in mind that showing your appreciation for a job well done and explaining to your legal team how their efforts contribute to the overall success of your law firm or company can go a long way toward improving employee job satisfaction. It might also be a thoughtful gesture to give a token of appreciation, such as a gift card to a favorite shop, restaurant or meal delivery service. 

Reassess succession plans

While no law firm or legal department wants to lose senior leaders, a strong succession plan can help to mitigate the damage. Here are some tips to help identify and prepare emerging leaders to succeed:

• Expand your talent pool — Create a group of talented lawyers and managers who could one day take on leadership responsibilities rather than relying on a single leader. A group with leadership and law practice management skills will always be valuable, even if not everyone in it makes it to the top.
• Make advancement easier — Top prospects for leadership roles in the future are eager to advance. With these high achievers, time is of the essence because if they don’t have a clear career development plan, they’ll probably leave. Taking away any barriers that can hinder their development will help facilitate their growth. Where necessary, change their usual schedule to provide them time to manage a firm project or work pro bono for a deserving cause or nonprofit. Their ambition for more senior responsibilities may be piqued by the increased difficulty and change from routine. Inform them frequently of their progress and move them up the in-house ladder as rapidly as you can. If these employees invest their time in training but receive no results, they may become frustrated and take a legal job elsewhere.
• Provide mentoring — While free CLE and attendance at legal conferences are important benefits, nothing compares to the guidance and expertise of a master mentor. When veteran leaders take the time and effort to share their accumulated knowledge with the next generation, the organization moves one step closer to a smooth transition.

Employers in the legal field that offer work that is both remunerative and flexible stand to gain a competitive edge in these uncertain times. Employee attrition is lower when workers feel appreciated, encouraged, adequately compensated, and given opportunities to grow.

For more strategies to recruit, engage and retain legal professionals, listen to our podcast.

Jamy J. Sullivan is executive director of the legal practice at Robert Half, the world’s first and largest specialized talent solutions firm. Robert Half offers contract and permanent placement solutions, and is the parent company of Protiviti®, a global consulting firm. Visit RobertHalf.com.

* Data referenced is based on online surveys developed by Robert Half and conducted by independent research firms. Respondents included executives, senior managers and employees from small (20-249 employees), medium (250-499 employees) and large (500-plus employees) private, publicly listed and public sector organizations across the United States.

As part of your organization’s legal contracting team, contract details are your domain. During the drafting process you might include every possible clause and rider to cover all the eventualities that might be encountered throughout a business relationship. These lengthy blocks of text can be critical to the success of a contract and anticipating potential risk, but they can also be difficult to wade through to locate specific terms and language. And that’s assuming you’ve found the correct version of the contract in the first place. 

Contract search and analysis, powered by AI, reduces the manual tedium—along with the enormous number of hours and expense—required to find and comb through contractual agreements to pull out relevant language on demand.

As a global driver in contracting technology, DocuSign conducted a survey of 1,300 contracting professionals around the world. The results of this survey reveal how legal teams in today’s contracting ecosystem locate agreements, identify terms, and use analysis to enhance business value. The results show: there are compelling benefits to automating contract search and leveraging AI analysis.

Read on for the insightful findings. 

1. 68 percent of contract professionals search for completed contracts at least once a week

Imagine having to do the same search tasks week after week, all year long – sound familiar? That’s the case for more than two-thirds of contract professionals. Now what if the volume of your contracts is so extensive that the search for completed contracts is a time-consuming daily task? That’s the impasse confronting 23 percent of respondents. 

Why is there so much contract searching going on? Respondents indicate they’re: 

• Looking for contracts in anticipation of an upcoming renewal (61%)
• Using completed contracts as a basis for drafting new contracts (55%)
• Identifying deviations from terms and conditions (49%)
• Reviewing contractual obligations (45%) 

Along with looking at overall contracts, respondents also note they’re looking for specific information, such as:

• Payment terms and financial obligations (56%)
• Renewal terms (55%)
• Details of service level agreements (48%)
• Legal and regulatory requirements (29%)

Being able to locate completed contracts quickly enhances business performance. It’s a simple equation: when you spend less time finding and sorting through your contracts, you free up time for fulfilling complex obligations and ensuring compliance. AI analytics and search tools offer the power to search efficiently and effectively for contracts and language within them so that your teams can devote more time to strategic pursuits that protect the company and improve the bottom line.

2. Finding specific language in a contract takes more than two hours, on average

According to our survey, the majority of contract professionals spend between one and six hours tracking obligations in a contract over the course of its lifetime. One in four spend more than a full workday in total. Surely there are more productive ways of spending that time.

Typically, retrieving contracts breaks down into two stages:

• Locating a contract (45 minutes) 
• Finding the relevant section or language (84 minutes)

In total, that’s more than two hours spent just locating contracts and language, not even analyzing or applying the information. And that’s only for a single contract—if you consider on average companies generate over 500 contracts per month, or over 6,000 per year, the time cost is tremendous.

What’s more, despite these lengthy searches, in some cases, teams can’t find the right contract. 46 percent of the organizations we surveyed are sometimes unable to locate contracts, and less than half reported feeling very confident that the document they found was the most up-to-date version.

As a result, even with all the hours spent looking for contracts and pulling out language, it’s not always clear that teams manage to identify the final—and therefore actionable—version. By offering customizable, robust search options, AI-assisted tools help legal teams avoid this trap.

3. 65 percent of teams aren’t using integrated tools to manage agreements

Our survey shows why many companies spend so much time on contract retrieval: they’re still using siloed systems which slow them down. The average team uses three or more separate tools to perform analysis, and a majority aren’t using specialized technology: 65 percent still use spreadsheets and email to manage contracts.

The result is lost time. From an efficiency and accuracy standpoint, it’s better to have everything you need to manage agreements in one place, with integrated systems so you eliminate the need to switch between platforms or cut and paste information. Much of the time spent locating contracts and searching for specific language can be reduced by managing these processes from one system.

The absence of automated search and analysis capabilities has deleterious effects on the overall contracting process. According to our survey, the majority of problems are related to the inability to efficiently analyze contracts, which can result in missed payments, missed deadlines and missed opportunities. A more efficient system, making use of integrated technology and advanced AI, helps companies prevent misses caused by disparate workflows.

4. Around half of respondents expect AI to reduce human error and minimize risk in contract management.

Many companies and their legal teams are beginning to heed the call of new contract technology. They’re becoming aware of what AI-assisted tools can do to help their contract management lifecycle: 54 percent of survey respondents say they’ve heard of smart contracts, 37 percent of intelligent search and 35 percent of language flagging during negotiation. And around a third of respondents recognize the power of AI-powered process shortcuts like:

• Automatic data extraction 
• Clause-level text recommendations
• Predictive post-execution analytics

By harnessing the power of technology, legal teams can be part of their companies’ efforts to drive efficiency. The rewards for automation are substantial. 53 percent of respondents expect AI to support human decision making and reduce error in the contract management process and 48 percent expect AI to minimize risk.

The financial benefits of a digitized contract process

According to a Forrester study, a composite company saw a 356 percent return on investment in contract lifecycle management technology over the course of three years. The study found that, generally, a robust contract analysis process can reduce the costs associated with hiring outside counsel to analyze documents, as well as errors in agreements and the risk of exposure.

DocuSign helps your legal teams search smarter and analyze better

DocuSign is an innovator in AI-powered contract technology. DocuSign CLM leverages AI to uncover insights from existing contracts and the negotiation process. Beyond intelligent contract analysis, we’re continually developing new AI tools to help your team through every step of managing an agreement. 

As we continue to innovate, our priority is always ensuring that our customers have the tools they need to get work done as efficiently and smartly as possible.

To learn more about current trends in contract analytics, check out our ebook on smarter search.