Digital transformation initiatives have skyrocketed since the start of the COVID-19 pandemic, and legal teams are no exception. According to research from World Commerce & Contracting and KPMG, over 76% of organizations say that digitization of the contracting process is now a priority. Contracts are the backbone of every modern organization, and how to manage and digitally transform the contract process is now part of the senior leadership conversation, along with a number of other trends including:
- Data security and privacy is no longer just an IT problem. Legal teams can and must take a leadership role when it comes to protecting contract data.
As legal digitally transforms, there are big security implications for contracts as everything becomes digitized. Enterprise data security has traditionally been managed and controlled by an organization’s Chief Security Officer or security operations and IT. Campaigns by organizations like the National Cybersecurity Alliance urge everyone to play a role in cybersecurity, and Legal teams can step up by protecting their organizations’ most sensitive data. The data that exists within contracts is a treasure trove of confidential information including client and supplier names with personal contact information, legal details, financial data, bank account information and more.
To protect contract data, teams can move from insecure shared drives and spreadsheets to purpose-built contract lifecycle management (CLM) software that gives legal administrators the ability to apply security rules in an easy way. For example, without help from IT or software developers, legal teams can use software with robust automation and security features that address key privacy needs by ensuring compliance with internal business and IT processes as well as external regulatory requirements. Robust user authentication capabilities can be easily set up to align with password policies, single sign-on, multi-factor authentication, and more. And, role-based and feature-based permissions ensure that contracts can be locked down and securely accessible by the appropriate personnel, helping Legal do its part to keep the organization protected. - The contract negotiation UX has become a competitive edge.
Legal teams can help organizations close business faster.
The average cost of processing and reviewing a negotiated contract continues to rise and can range from $6,900 for a simple contract to more than $49,000USD for complex agreements. This expense is due to the sheer number of people needed to complete the process, inefficiencies in tracking changes, and the lack of visibility into who is involved in the negotiations or what stages have been completed. The model of attaching contracts to emails that get sent back and forth for internal collaboration and external negotiation is obsolete, and a source of friction. Have you had to sign a contract with a pen lately, and then scan it and email it back ? How’d that make you feel? In an era where people expect digital experiences that are mobile friendly and simple to execute, a user experience filled with complex and inefficient processes is inexcusable and costly.
Legal teams can help their organizations finalize business faster by reducing buy-side and sell-side friction and by making the negotiation experience as transparent as possible. Invest in technologies that help create negotiation-ready contracts and then accelerate all the phases of negotiation, review, approval, signature and storage. Users want and love real-time collaboration tools, electronic signatures, automated version control and document comparison, and the ability to review, edit, and execute a contract from a phone or iPad. Legal teams that can deliver a modern digital negotiation experience to their internal and external stakeholders will be praised for creating a competitive advantage. - Contract data is the executive team’s new best friend. Legal teams that simplify their processes and reporting can show exactly how they influence and support key strategic business objectives.
Contract reporting dashboards in CLM software are one way Legal teams can help guide decision making around spend and priorities, and give leaders the opportunity to investigate and solve issues that get identified. For example, when the executive team has a holistic view of every contract detail – with stage, status, and progress reporting, they can benchmark and track meaningful KPIs like the average number of days in a contract lifecycle, the amount of time it takes to achieve contract milestones, total value of active contracts, and the number of contracts by risk level, among others. Through a single, graphical view, executives can make faster and more informed decisions by considering all relevant data. Simplified contract data allows the Legal team to help the business track important strategic, financial and compliance-related information and act on it.
Legal teams can capitalize on these trends and take a lead role in their organization’s broader digital transformation strategies.
Published February 18, 2022.
