Study Finds General Counsel Lack Visibility into Contract Risk
Recent survey conducted by Exari exposes compliance and revenue challenges due to sluggish or inadequate contract creation, tracking and storage processes
Boston, MA – December 1, 2015 – Nearly two in five General Counsel (GC) lack any or sufficient insight into the key contract terms and information necessary to properly assess risk, according to newly released data from Exari, the leading provider of cloud-based contract lifecycle management solutions.
The report, Low Tech/High Risk: How Weak Contract Management Prevents General Counsel from Answering CEOs’ Toughest Questions, reveals how legal departments in major enterprises still rely on costly manual processes. These include drafting and organizing contracts numbering in the thousands, including sales, procurement, confidentiality and reseller agreements. As a result, companies have a limited comprehension of their risk profile, making them more likely to struggle during major contract milestones or a business crisis.
Drafting, Storage Processes come with Paper Trails
Just 11 percent of GC’s rate their contract management system above a seven on a 10 point scale. More than 75 percent report their contracts are usually created in Microsoft Word, using some form of “cut & paste” template, proving to be a contributing factor to inefficiencies in contract drafting. Currently, only one out of 10 are utilizing a document generation software in order to streamline their process.
Outdated storage practices also heavily impact risk and revenue growth. While network drives rank as the most popular storage solution (64%), nearly half of respondents (47%) report they rely on paper filing systems to house corporate contracts. Whether analog or digital, storing massive volumes of sensitive agreements without a centralized archival system in place paints an incomplete picture of a company’s risk and revenue portfolio.
Contracting Pain Points Highlight Gaps in Compliance, Efficacy
Exari’s findings also reveal that disparities in contracting processes impact General Counsel’s ability to comply with obligations, address milestones as they arrive and ensure accuracy, opening the door to increased liability and decreased productivity.
Along with slow contract approval processes (59%) and little or non-existent insight into risk (39%), top pain points in respondents’ current contract management operations include:
– Missing key milestones (27%)
– Ensuring compliance with client (27%) and regulatory (13%) obligations
– Difficulty with internal collaboration (25%)
– Risk of error (23%)
“Missing pieces in a contract management strategy leave GC’s unable to advise their CEOs and adequately perform their role during a crucial company moment such as an acquisition” said Exari’s CEO, Bill Hewitt. “Contracts are the foundation of every business. These survey results reinforce how ill-prepared many major enterprise-level organizations are when it comes to contract risk.”
During the spring of 2015, Exari surveyed 92 Corporate Counsel and compliance professionals about their habits and challenges surrounding contract creation, storage and legal technology. The findings shed light on current trends in contract management, as well as the intersection of contracts and risk management, primarily amongst businesses handling more than 100 contracts annually. Survey responses were collected on-site at the Corporate Counsel & Compliance Exchange conference in April and the General Counsel and Compliance Strategy Forum in May.
Exari is a market-leading Contract Lifecycle Management platform that unifies the processes of generating, managing and analyzing expansive document and contract portfolios. Exari solutions are used by hundreds of thousands of users worldwide.
Exari is headquartered in Boston with offices in London, Melbourne and Munich. Learn more at www.exari.com.