IACCM research “has found that in many organizations, bid and contract support can account for more than 40% of the legal budget.”
Accordingly, recent comments made by Colleen Gallagher of Huron Consulting should come as no surprise. At an IACCM meeting, Gallagher explained that current pressure on legal departments to increase efficiency has made contract management ‘top of mind’ for many in-house lawyers. She then outlined eight issues on the agendas of law departments that analyze their contracting processes. IACCM President, Tim Cummins has posted a summary of Gallagher's talk which is definitely worth reading.
Poor understanding of contracting costs
Of particular interest to me was the point that “few organizations have any consolidated understanding of the costs associated with the development and management of their contracts.”
Even though it’s entirely consistent with our experience at Exari, I never cease to be amazed by this. I just don't understand why companies seem so oblivious to the level of waste in their contracting processes. Yes, I know that the cross-functional nature of the process adds complexity. But isn't that what all those lean/six sigma/process improvement people are there for? If you knew that your contracting processes accounted for around 40% of your costs, would you want to look for potential efficiencies?
Have you already improved efficiencies in your contracts? If so, please tell us about it in the comments below.