Let’s be honest. Most non-legal executives do not care how beautifully crafted the indemnity or limitation of liability clause is. Me and your fellow contract nerds appreciate it, but your artful drafting will likely go unnoticed by the C-suite.
Here’s what they do care about – speed. (I’m resisting the urge to make a Top Gun joke).
In-house legal teams have a difficult job. We’re asked to do our work as fast as possible and with few resources. A unifying goal is no one desires a slow or inefficient contracting process that keeps a business from meeting its growth targets. The challenge is in identifying where the inefficiencies are.
Due to lack of visibility and data, the in-house legal team is often perceived as slowing down the contracting process. I’ve experienced this first-hand. In past in-house legal roles, my team scrambled at quarter-end to manually populate a spreadsheet with deal statuses to share with leaders of other departments. To no one’s surprise, it would show that most deals were stuck with the counterparty’s legal department or another internal department’s sign-off.
How was that data going to help us close contracts faster? It probably wasn’t. Did it communicate much about the status of the contract or help set expectations? Not really. Today, there are myriads of contract data points that can be collected and reported on to help accelerate your contracting processes.
Follow these three steps and you will soon be viewed as a strategic partner that helps the business accelerate the contracting process by coming to the table with the right metrics (data is the language of business), processes, and tools in place.
Step One: Know What to Measure
The first step to accelerating the contracting process is to know where in the process you have opportunities to improve. Ten metrics focused on the contracting process include:
- Number of deals touched by legal, broken down by type of contract or segment
- Number of deals legal works on that are third-party paper vs. your own template
- How long it takes to complete the contract review from start to finish
- Average annual contract value of a contract negotiated by legal
- How long it takes to complete the negotiation of third-party paper vs. your own template
- How long a contract is in counterparty review, if on third-party vs. your own template
- How long a contract is in internal legal review, if on third-party vs. your own template
- Average time under legal review stage for a particular contract review type
- Average time under internal business review stage for a particular contract review type
- Average time under counterparty review stage for a particular contract review type
If you haven’t been tracking and measuring this data, now is a great time to start. You can do this manually by creating a spreadsheet tracker. Though this method works, it’s still incredibly time-consuming and definitely not the best use of your time.
A better way would be to use a Contract Lifecycle Management (CLM) solution like Lexion that automates and tracks the steps of the process for you, saving you hundreds of hours and thousands of dollars every year (or more). It even automates reporting on these metrics.
I use our own product to track these metrics and enjoy Lexion’s out-of-the box charts like these ones and being empowered to export custom reports into an Excel sheet.
Step Two: Analyze the Data
Once you have a few months’ worth of data points, you’ll have a great baseline of information to start your analysis.
You may not have control over how long counterparties take to review redlines, but you can at least give the rest of the company realistic expectations of how long things do take, improve accuracy of forecasting revenue, and offer suggestions for areas of process improvement.
Typical inefficiencies I’ve experienced (and so have our customers) occur during the handoff of contracts between a submitter of a request and legal. These include the back and forth flow of email or Slack messaging, the lack of visibility of tracking, and no deal status or stage reporting at a more granular level than “under review” or the like (which leads to the deal status spreadsheet scramble). When the business sees “under review,” it’s automatically assumed the ball is in the court of their in-house legal team.
Step Three: Use Data Insights to Improve and Accelerate Processes
The metrics will highlight the areas of slow down, such as counterparty review periods and the extended review time when negotiating on third-party paper. This will be an opportunity for you to collaborate with other departments to strategize on ways to create urgency with the counterparty’s legal department or increase usage of your own contract templates.
You can also adopt tools to streamline and automate some of your contracting processes, metrics capturing, and reporting. The key to successful adoption is “minimal change management” and meeting the rest of the business where they are without requiring them to learn another tool.
Minimal change management is a pillar of Lexion. I’d be thrilled to show you a demo of all the Lexion features that will help you accelerate the contracting process. In the meantime, here’s a glimpse of two key features:
- Centralized Dashboard: All tasks (contract or other legal questions) and their respective stages are instantly viewable on a central dashboard so you have a home for all of your tasks, can quickly jump to actionable items, and don’t have to waste time sifting through a patchwork of emails to find deal status or the current draft of a contract.
- Email-Based Task Submission and Approvals: From email (e.g., firstname.lastname@example.org), the rest of the business can kickstart a contract review request and engage with legal solely from email. Lexion also sends the approver an email and captures their emailed approval or rejection so they never have to leave email.