Modern legal entity management has finally transcended its traditional confines in the general counsel’s office, and not a moment too soon. In fact, we see this happening more frequently, with legal departments increasingly involving compliance (48%), governance (38%), finance (35%) and tax (25%) business units in entity management activities.

By no longer limiting itself to a small team of legal colleagues, the corporate record can finally be used for strategic decision-making. However, even with more business units participating in entity management, is there room to make this an even more powerful partnership? The answer lies with your colleagues in Finance & Tax.

Finance: Follow the money

Formally engaging the finance department can help more senior executives beyond the general counsel’s office understand entity management as an important business priority. Finance departments are often profit centers (as opposed to the legal department, which is often viewed as a cost center).

And for finance teams, entity data is increasingly important to their strategic planning processes. This year, the volatile markets and increased financing costs have pushed companies and funds to act more cautiously than in years past, with a higher priority on entity restructuring (and spinoffs), smaller M&A deals, and looking at past opportunities with fresh eyes. However, these short-term activities are only setting up for a bigger potential play in 2023; with high rates of undeployed capital — or dry powder — in the capital markets, 80% of Deloitte’s survey respondents believed that may be an opportunity to catch the wave and invest their cash as targets rise in value.

These opportunities, both short and long term, require a comprehensive understanding of entity data and a strong compliance track record to be competitive. Yet, 49% of companies still report using Excel to manage their entity data and a quarter reported at least one entity out of good standing in the last 24 months.

It is in the finance department’s best interest to find and invest in solutions that ensure the meticulous execution of entity management processes and empowers them to stay competitive for whatever opportunity arises.

Tax: Fighting complexity with collaboration

The Head of Tax seeks out opportunities that minimize costs and drive efficiency. Yet global complexity has hampered their agility in a trend that only seems to increase: in 2023, 45% of TMF Group’s accounting and tax experts anticipated compliance to grow over the next five years, which demonstrates the operational strain these business units are increasingly facing.

However, there’s acute awareness that with access to the right data at the right time, these heads of tax can ward off complexity. Focusing on global tax provisioning and integrating tax data company-wide are the top two priority for tax professionals in 2023, of which entity data is interlinked. By using technology to create a holistic view of the organization’s tax burden, this alignment with the legal team breeds efficiency, reduces redundancies and maximizes the potential for growth.

Entity technology: The path to partnership

In a world where collaboration reigns supreme, technology’s importance in connecting disparate business units cannot be underestimated. By creating a single source of truth for your entity data stored in a self-service database, tax, finance and legal teams can finally strategize from a collective playbook. This playbook can unlock the potential for growth, risk mitigation, and efficient decision-making. The era of entity management as a cross-functional responsibility has arrived, transforming it from an individual effort into the team sport it was always meant to be.

Diligent

Diligent Entities is the world’s leading purpose-driven entity management technology solution.  With solutions across governance, risk, compliance, audit and ESG, Diligent empowers more than 1 million users and 700,000 board members and leaders to make better decisions, faster. No matter the challenge.

Now that you know the value of partnering with tax and finance teams, take a closer look at how entity management technology can help you solidify that partnership and practice more efficient entity management.

If you ask your legal team what one of their biggest challenges is, the phrase “contract management” will undoubtedly come up. Improving the contract management process, increasing efficiency and finding the right legal tech stack is a top priority for legal operation teams year after year. Yet, many organizations still struggle with years of disorganized contracts and outdated processes. In many cases, contracts live in multiple locations and it’s anyone’s guess as to which one is the most recent version.

As a legal ops professional, “contract chaos” may not directly impact your day-to-day, but it’s a huge barrier to your legal team’s productivity. It costs the company money, whether from spending time inefficiently or paying for unnecessary outsourced legal hours. And it creates risks: the risk of no centralized visibility to contract terms and requests, the risk of missed opportunities to accelerate deals or remove unfavorable terms at renewal – just to name a few.

Even if everyone is resigned to using the current system, regardless of these costs and risks, legal operations should never be satisfied to let bad processes go unquestioned.

Generative AI can be the “assistant” your legal team needs

Another blog about generative AI? Before you tune out, we’re not here to tell you that AI is going to replace your legal team.

The truth is, generative AI has huge potential to transform the way legal teams work, but not because it’ll do real, thoughtful, legal work for them. Instead, generative AI will be the assistant your lawyers always wished they had. A tool that can effortlessly read and summarize large document sets in seconds, or instantly pinpoint parts of a contract that aren’t in line with your company’s playbook. Amplifying each legal team’s capabilities by removing admin work is where generative AI really shines.

While we can’t cover everything in one short article, we’ll touch on three of the ways incorporating generative AI into your contract management process can solve many of the traditional CLM shortfalls.

The Challenges of Traditional CLM

Even with a CLM in place, managing contracts can still be a complex and time-consuming endeavor. Traditional CLMs, even when they incorporate some degree of AI, often suffer from these common limitations:

• Without a central (and clean) repository, the system is trying to pull contract data from fragmented sources, or missing some sources entirely.
• The system isn’t able to effectively analyze contract data in real-time, as each new contract is added.
• The system’s functionality is based on rules, which even with the help of AI, fails to capture the full meaning that lives within contracts.
• Rigid templates and workflows can’t possibly work for the large variety of contracts most organizations deal with.
• The system doesn’t have the ability to understand relationships and hierarchies between different contracts within the same document family, nor does it know how to organize these document families on its own.
• The system focuses on individual documents and not the entire library of contracts or the relationship between different documents.

As you might guess, traditional CLMs with these limitations might be a step in the right direction but they’re hardly a full solution to your legal team’s needs. Moreover, any tasks performed by, or information gleaned from, this type of system still needs a thorough review by a highly trained (and highly paid) legal professional. In some cases, investing in a traditional CLM can create more work than it relieves, which doesn’t delight your legal team or anyone else around the company who feels the ripple effect of difficult contract management.

Generative AI is changing the game

Enter generative AI. And forget, for a moment, the publicly available large language models (LLMs) like Google’s Bard or Microsoft’s Bing, which are impressive but not platforms you should trust with the entirety of your company’s contract data.

Instead, we’re talking about generative AI that exists within your CLM platform and only draws from the contracts and documents you provide it. In this way, the AI lives inside a closed environment, known in technical terms as a sandbox.

How is generative AI different?   

Generative AI has the potential to provide unprecedented levels of accuracy and speed for anyone looking to unlock the data within hundreds or thousands of documents. With the right data set and prompts, generative AI can perform a wide variety of detailed contract analyzes that traditional approaches cannot.

Unlike traditional methods, generative AI takes a more flexible approach that centers around learning and simulating human-like language capabilities. This means the models don’t need strict templates and standardized workflows, but rather acquire language skills in an unstructured manner, similar to humans. This revolutionary ability allows legal teams to automate more aspects of their document review process than ever before, all without having to manually create or update templates.

Generative AI can also provide invaluable insights into the risk factors that might otherwise be hidden deep within contracts. It does this by quickly summarizing documents, identifying discrepancies, and analyzing risks from a variety of angles.

By leveraging this technology for your legal team’s needs you can reduce costs while improving accuracy and efficiency across multiple areas of your business. And here’s how!

3 ways generative AI empowers legal teams

All of this sounds great, but you want to know how generative AI will make a concrete difference in your legal team, sales team, procurement team, or others’ processes. Here are just three of the ways generative AI + CLM, when done correctly, can reduce the burden on your legal team and empower them to serve the entire business better.

1. Quickly summarize contracts 

Generative AI can be used to quickly review large numbers of documents and pull out key terms, themes, changes over time, etc. This dramatically reduces the time a highly-trained human needs to spend doing the same. With the right prompt, “Summarize the changes across the master and all amendments,” for example, and the right data set, generative AI can provide an accurate answer that would have taken a person hours of reading to obtain.

2. Instantly analyze risk 

When provided with your compliance and playbook requirements (in plain English, no less!) generative AI can identify terms and conditions in your contracts that present risk or are entirely noncompliant. Having these risks pinpointed removes the most time-consuming step and allows your legal team to address the risks in order of priority.

3. Assist in contract authoring 

Sure, there are plenty of cases when you need an attorney to draft a custom portion of a contract. But there are many more instances when standard language will do the job, as long as it’s compliant with your best practices, industry standards, and your contract playbook. Generative AI can be used to speed up contract drafting by suggesting language based on past agreements and current business objectives. It can also detect discrepancies between existing contracts and your standards, and alert attorneys of potential risks that arise based on contract language.

Limitations of generative AI for legal teams

No discussion of generative AI for legal teams would be complete without touching on the limitations of this groundbreaking technology.

While it can provide a powerful tool for quickly reviewing and summarizing documents, identifying discrepancies, and analyzing risks, it’s also subject to the same biases as humans, particularly when trained on biased or incorrect information. Additionally, generative AI can suffer from “hallucinations” where it produces seemingly factual information that simply isn’t.

Most of the major pitfalls of using generative AI in the legal context can be mitigated by high quality, clean data on the input side and skilled prompt engineering, along with an expert human’s review, on the output side.

A new world of AI-powered contract management

These three capabilities are just scratching the surface of how generative AI can aid legal teams (and, as a result, the rest of the company) work faster, smarter, safer, and for less cost. For a deeper dive into the game-changing ways AI can power a new way of managing contracts, check out The Ultimate GenAI Playbook for Contract Management by Pramata.

We’re excited to announce that CLOC (Corporate Legal Operations Consortium) is a supporting organization for the prestigious ALITA Awards 2023. Organized by the Asia Pacific Legal Innovation & Technology Association (ALITA), this year’s awards ceremony will take place live at TechLaw.Fest in Singapore on September 21-22. Our very own President, Mike Haven, will serve as a judge for the awards, solidifying CLOC’s commitment to promoting innovation in the legal space.

About the ALITA Awards

ALITA Awards have been designed to give voice and recognition to the trailblazers in the legal technology and innovation ecosystem across the Asia-Pacific region. This is the 3rd edition of ALITA’s flagship awards and promises to be an eventful ceremony, held in conjunction with TechLaw.Fest 2023 at the Suntec Singapore Convention & Exhibition Centre.

Award Categories

The ALITA Awards 2023 will recognize outstanding achievements in various facets of legal innovation with six award categories:

1. Outstanding Legal Innovator (Law Firm) Award
2. Outstanding Legal Innovator (Individual) Award
3. Outstanding Legal Innovator (In-House & Operations) Award
4. Outstanding Legal Innovator (Solution Provider) Award
5. Outstanding Legal Entrant Award
6. Outstanding Legal Innovation / Legal Tech For Good Award

Additionally, there will be a People’s Choice Award, making it a grand total of seven accolades to be won.

CLOC’s Role

CLOC, as a global community committed to transforming the business and practice of law, is proud to support the ALITA Awards. Our President, Mike Haven, brings a wealth of experience and insight as a judge for these awards.

“We are committed to fostering innovation and collaboration in legal operations across the globe. The ALITA Awards are a fantastic platform to recognize and celebrate the people and organizations that are changing the face of legal practice in the Asia-Pacific region,” says Mike Haven.

How to Participate

If you believe that you are (or know) a deserving nominee, please consider nominating yourself or share details of the ALITA Awards 2023. The deadline for nominations is September 8, 2023. Finalists and winners will be showcased at TechLaw.Fest, providing an excellent opportunity to network and learn from the best in the industry.

Final Thoughts

The ALITA Awards are more than just trophies; they are a testament to the collective efforts to innovate and improve the legal industry. As a supporting organization, we are thrilled to be a part of this journey towards a more efficient, transparent, and equitable legal system.

We encourage all our members and partners to engage with the awards, either by nominating deserving candidates or by attending the TechLaw.Fest event. Let’s celebrate the incredible work being done in legal innovation and technology.

This blog post is part of CLOC’s ongoing commitment to supporting initiatives that foster innovation and improve the financial management of legal departments worldwide.

Legal transformation is no longer a goal or a looming trend – it is a commercial imperative. Legal departments must embrace change, formulate a plan, and action it, fast, in order to control their future.

In May 2023, the global legal community gathered in Las Vegas for CLOC’s annual meeting. Unlike its physical location, CLOC is a fertile place where ideas are developed, strategies shared, and potential solutions are unpacked. Industry leaders collaborate. Curiosity is rife, plans are ignited.

But when the lights go down and we return to the office, what can be done to effect real legal transformation? Some ideas generated at CLOC have been consolidated here, along with insights and market trends. Here are four key pillars for you to embrace and help create change.

Generative AI

Generative AI (GenAI) is expected to bring real transformation to the legal industry. You must face it head on, experiment with it, use it and adapt to its current form, while at the same time preparing for the iterations and exponential improvements that will likely follow.

As most assess the impact of GenAI, there is some hesitancy in the market for buying legal technology – a ‘wait and see’ approach.  A better strategy may be to focus on fixing internal processes and getting documents and organizational knowledge in order now, enhancing current processes and know-how while GenAI continues to improve and any pitfalls are addressed. New skills are vital; prompt engineering must be mastered. For GCs, questions surrounding privacy, security, ethics, and IP concerns should be top of mind.

Techstack: The market

The market is still growing, although is bordering on being overrun with CLM solutions. Any current digital solution will need to adapt to GenAI over time to survive. Assessing legal tech has become more challenging of late, and vendors can be vague on GenAI capability for only so long.

Legal departments should focus on leveraging their existing techstacks. Through a process of strategy and road-mapping, they should determine if existing and planned legal tech will become stranded by the recent developments in GenAI.

Techstack: People and process

Legal departments need clear guidance to decide between expert systems and GenAI. Outside counsel management tools still need better data and insights on spend (an easy win), while the savings from reducing this spend can be used to fund other investments. On pricing, as outside counsel begin to use GenAI in client delivery, the billable hours will become redundant and pricing models may shift to fixed fee or effective fee arrangements. System integration and UX should be front of mind for legal departments, together with a new form of change management that reflects the seismic impacts of GenAI.

Enterprise technology

Enterprise technology is rapidly merging with legal tech, transforming the financial, security, and integration discussions within organizations.

For legal departments which are open to repurposing enterprise tech, the immediate focus is how to better utilize what you already have. Begin with a strategy and a desired end state. Consider whether you have internal development teams to assist with pilot programs. If not, find out where you can bring in outside support.  Be realistic about the pros and cons of onboarding as opposed to upfront investment in design and build.

Where to begin?

Most legal departments are in the early stages of transformation and the use of legal tech. This results in transformation immaturity and a lack of insights and data, which are crucial for optimal decision-making. There are key questions to address: where should a legal department begin on the journey? How can a legal team imagine what good looks like, and how can it get there? The immediate focus for your legal department should be in seeking to understand where you are now, to facilitate mapping for the future.

Data

Data and metrics underpin legal transformation and are some of the keys to unlocking transformation. Data allows teams to make data-driven decisions and to create maturity frameworks which help teams assess where they are on the transformation journey. Data is critical to demonstrate the value of legal, workload, spend, and ROI on initiatives, and for building the business case for investment.

However, most legal departments struggle with incomplete or unreliable data, and there is discernible hesitancy in this area with teams overburdened by overreporting obligations or the collection of data that isn’t eventually used.

Simple data strategies can be created through identifying outcomes and strategic goals, and then mapping to the data required. There are possible quick wins, through leveraging existing tools and datasets and pre-configuring new tools to help capture the data wanted. Legal departments should become focused on developing a plan to gather data now, and to consider what data and metrics to capture later.

KPMG Law can help you with your transformation. KPMG Law professionals can walk with you through the key challenges, wherever you are currently placed on the maturity pathway. There is so much more to transformation than ideas and conversations. They can help you get there, together.

Legal services may not be offered to SEC registrant audit clients or where otherwise prohibited by law

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.

The CLOC Global Institute (CGI) 2023, held from May 16-18, became a pivotal moment in the corporate legal landscape. With months of meticulous preparation leading up to the event, we were determined to ensure that every attendee derived maximum value from their experience. In this blog post, we reflect on and highlight our participation and the insights gained from the conference.

From the moment the dates for CGI 2023 dates were announced, our team embarked on a six-month journey of detailed planning. As the conference drew closer, excitement grew, and we eagerly embraced every opportunity it presented. We actively participated in the sessions, attended various events, and thoroughly explored all that the conference had to offer.

CGI 2023 reaffirmed for us the dynamic nature of the legal operations function, with the professionals consistently striving to enhance their knowledge and skills. We were delighted to witness the overwhelming response to our panel discussion on “Building a World-Class Legal Ops Function.” The session attracted a full house and then some more, underlining the spirit of knowledge within the legal ops community. To complement the discussion, we launched our playbook, “Operating in Lean Times,” which resonated strongly with attendees seeking innovative strategies to do more with less.

The remarkable engagement we witnessed at our booth and the enthusiastic participation in our curated activities affirmed a crucial trend: companies now recognize the significance of Contract Lifecycle Management (CLM) more than ever before. The substantial footfall at our booth and the engaging conversations with attendees showcased a collective awareness of the value that effective CLM brings to businesses. It was truly heartening to witness this growing awareness throughout the conference.

While the conference was undoubtedly a platform for professional growth, we also recognized the importance of fostering connections and creating moments of enjoyment. To strike this balance, we organised a networking evening called “Sundowner with SpotDraft.” This memorable event allowed legal operations professionals to relax and forge meaningful connections in an informal setting.

As we bid farewell to CGI 2023, we carry forward the enthusiasm, lessons, and inspiration, eagerly awaiting future editions of this conference. Our team at SpotDraft is committed to continuing our contributions to the legal operations community, fostering innovation, and sharing valuable insights.

The 2023 CLOC Global Institute provided a great opportunity to connect with legal operations professionals and listen to them talk about what they are looking for in their legal ops solutions. We were also pleased to host a panel session called “Reaching the Summit on Legal Spend” featuring Ryan O’Leary, Research Director, Privacy and Legal Technology at ICD and Stacy Lettie Chief of Staff to the GC and Director of Strategic Planning at Organon, along with Jeff Solomon, our Vice President and Segment Leader for LegalVIEW® BillAnalyzer.

For those who were not able to join us, we’re summarizing a couple of highlights from the session. Among the topics our panelists covered, three of the most compelling for the audience were the discussions on billing guidelines, vendor management, and artificial intelligence.

Billing guideline enforcement

Billing guidelines are an important tool for legal departments seeking to control costs and maximize outside counsel value. When beginning the effort to improve enforcement, legal teams should consider benchmarking their guidelines against industry standards. This can help identify areas where the current guidelines may be lacking. Improving the guidelines themselves will help improved enforcement to deliver even more value.

Legal organizations should also carefully evaluate historical invoices to truly understand what outside counsel firms have been billing for and how well that conforms to the guidelines. This can be a time-consuming project, but it is very important to fully understand the starting point in order to measure the success of the improvement effort later on. The output of this analysis will also be helpful in opening a dialog with law firms about their level of guideline compliance and where they should focus in order to improve it.

Vendor management

An effective program of vendor management leads to positive law firm relationships and well-managed legal spend. Here are two of the keys to successful vendor management, emphasized by our speakers.

Law firm panels: Consolidating the legal department’s work with a select list of firms is essential because it allows the corporate legal team to leverage their spend and improve their buying power. Panel creation is the ideal opportunity to pre-negotiate rates and to ask for the billing discount you want and expect.

Vendor scorecards: Legal operations teams should use a scorecarding tool that facilitates law firm evaluations based on outcomes, as well as more nuanced traits such as billing practices, feedback from business partners, diversity trends, and budget performance. Legal professionals should use these scorecards in annual or biannual meetings with firms and should use them to conduct apples-to-apples comparisons of all the firms they engage.

AI in legal ops

Our speakers encourage the use of artificial intelligence but recommend a well-thought-out approach to the technology. For example, generative AI can be helpful to some legal professionals, but users should never enter sensitive data into large language models (such as ChatGPT) because there is no way to be certain that the service provider will keep it safe.

Also, their recommendation is to look for opportunities for AI to improve existing processes and programs, rather than assuming AI should be leveraged everywhere in the legal department. They suggest developing a gap analysis that can help flag those areas where the organization can get the greatest benefit for the most modest investment.

We are grateful to our guests Stacy Lettie and Ryan O’Leary for helping to make our time at the 2023 CLOC Global Institute such a success. Thanks to everyone who joined us!

About Wolters Kluwer ELM Solutions:

Wolters Kluwer ELM Solutions is the market-leading global provider of enterprise legal spend and matter management and legal analytics solutions. It provides a comprehensive suite of tools that address the growing needs of corporate legal operations departments to increase operational efficiency and reduce costs. Corporate legal and insurance claims departments trust its innovative technology and end-to-end customer experience to drive world-class business outcomes. The company’s LegalVIEW® Bill Analyzer leverages both artificial intelligence and human expertise to help increase legal billing guideline compliance.

“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.