If you were to ask your legal team how much of their day is spent on actual legal work — the kind of tasks that would represent billable hours in a law firm — how do you think they would respond? Maybe 75 percent of each day? 50 percent on a bad day? Less than 50 percent when things go horribly wrong?
You might be surprised that, on average, the typical attorney spends less than three hours per day on actual, substantive legal work. That’s right: Less than three hours. Now, before you rush up to legal demanding to know how your team is spending their time (and no, it’s not catching up on “Game of Thrones”), let’s take a look at what they are doing. In most cases, the majority of your legal experts’ time is spent on administrative tasks, including dealing with contract management.
Consider how many times a typical attorney might be interrupted each day: They must field requests for new contracts, answer questions about contracts, track down information — including clauses that are used every single day — and chase people down for approvals and signatures. Meanwhile, the sales team is breathing down their necks looking for the contracts they requested last week, the finance team would like some guidance on some new terms that they are considering, and a slew of other tasks that have nothing to do with contracting at all.
Considering that on average, a corporate counsel earns close to $150,000 per year, you could be paying someone $70 per hour or more to essentially work as a contract administrator. Not only is this expensive and inefficient, but if you don’t have a streamlined system for managing contracts in place, it’s likely that your legal team is not only frustrated and unhappy, but there are issues throughout the organization as well. After all, there is nothing more frustrating to salespeople than not being able to finalize a deal because they have to wait for a contract from legal.
The solution isn’t to hire more legal experts at great expense. The solution is to implement a solution that allows you to automate various stages of contract management, not only streamlining and organizing the contracting process for maximum efficiency, but also freeing up your legal team to focus on your organization's most important strategic priorities.
Before we can discuss the benefits of automation for all the stages of contract management, it’s useful to explain exactly what that entails. At the risk of oversimplification, automating contract lifecycle management means taking many of the processes that have traditionally been handled manually, including drafting, redlining, signing, and analyzing, and using a contract management platform to digitize and manage those tasks.
For example, automation would allow your sales team to access a library of templates for commonly used contracts. The contract creator answers a series of intuitive questions to add relevant information and clauses to the contract — all of which have been pre-approved by your legal counsel. Assuming that there are no points to be negotiated or revised, the contract can be digitally executed and stored automatically. The entire process, which might have taken weeks before, now takes minutes, allowing your teams to be more efficient by producing pre-approved contracts. And should there be an issue, such as an incorrect clause or unmet conditions, the contract can be automatically flagged and sent to legal for review.
Clearly, then, the major benefit of contract automation is improved efficiency. Your legal team can expect to see the amount of time that they spend on contracting to be significantly reduced when others can simply develop their own ironclad contracts using a self-service tool. In fact, it’s possible that certain contracts, such as nondisclosure agreements or employment contracts, could be drafted and executed without involving the legal department at all.
However, the benefits of automated contract lifecycle management go beyond just improved drafting efficiency and time management. Organization is a significant benefit of automation as well. A contract management platform like Exari Contracts automatically stores all your contracts in a central, searchable repository, grouped in a way that keeps all deal-related documents in one place to maintain a clear audit trail and the most up-to-date prevailing terms. There’s no need to worry about creating a complex taxonomy or organizational system for contracts, because you can easily find what you are looking for with a quick search. Since research indicates that the average employee spends 20 percent of his or her time looking for lost documents — and that more than 7 percent of documents are never found — you can increase productivity across the board, and reduce the amount of time that your legal team spends on these administrative tasks.
Finally, automation allows your legal team to be more strategic. Rather than spend weeks analyzing and compiling data from contracts to determine risk or assess specific contract types, your counsel can gather the information they need in minutes, via automatically generated reports complete with AI-based insights that can help drive strategic decision-making.
Automating your contract lifecycle management can go a long way toward improving efficiency and productivity, while also improving communication and reducing risk. Not only will you close your deals more quickly, but you’ll also give your legal team hours back in their days — hours they can spend doing the work that will help grow your business.
To learn more about how Exari can help you automate the stages of contract management, contact us today.