These days, electronic contract management systems are all but ubiquitous among companies with in-house legal teams, and with good reason. Electronic contract management systems facilitate contract storage and organization, and make it fast and easy to collect signatures from multiple parties.
But according to Nicolette Nowak, these features represent only a small fraction of what a good electronic contract management system can offer. Nicolette is the Associate Counsel at Collibra, a software company whose innovative enterprise data governance and data catalog solutions landed it on Forbes’ 2017 Cloud 100 list, an exclusive list of the top 100 private cloud companies in the world.
For Nicolette, the true power of electronic contract management systems lies in their ability to provide data about the company’s legal operations. She says that this data can provide performance metrics that the legal team can use to evaluate and improve their performance.
I had the chance to hear from Nicolette about how she uses the data she collects from the legal team’s electronic contract management system to identify opportunities for improvement, streamline collaboration with other business units, and ultimately, increase the company’s bottom line.
Electronic contract management systems collect a lot of data points. Which ones are most valuable for in-house legal teams?
“The key is adding insight and transparency into the legal team’s process.”
The key is adding insight and transparency into the legal team’s process.
How can this data help the legal team improve their operations?
One of our goals is to reduce contract lifecycle time, and we can use data to determine whether or not our legal team’s limited capacity is causing the holdup. If it is, we can use technology tools to eliminate those sticking points.
We can do this is by reducing the legal team’s role in contract management. You’ll be hard pressed to find any in-house attorney who doesn’t need more time, so we’re always looking for ways to use technology to empower the business teams to accomplish certain things without our input.
For example, we might give the sales team a list of three potential clauses to choose from so that they can generate documents themselves, rather than waiting on the legal team to do it. Or there might be certain parts of the process that we can automate.
I also get a lot of one-off questions: “Is this okay?” “Where can I find this?” “What’s our policy around that?”
Answering those questions over email takes a lot of time. But using an electronic contract management system takes care of those processes, saving me time and allowing me to handle contracts more quickly.
“Legal sometimes gets a bad reputation for being a ‘sales blocker,’ but that’s never our goal.”
How does shortening the contract lifecycle help the company as a whole?
We’re a SaaS company, so our goal is to sell as much software as we can. And Collibra, like every company, has a limited number of sales representatives, and each has a limited capacity. If they can focus less on legal and more on getting out there and talking to clients, that will grow the business’s revenue.
How does shortening the contract lifecycle improve the relationships between the legal team and the other business units?
Legal sometimes gets a bad reputation for being a “sales blocker,” but that’s never our goal. We want to help. We want to be a business enabler and find the most efficient way to move things forward.
Using technology to enable other business units to work independently means that legal is no longer a source of frustration. Additionally, these business units will understand and appreciate that legal trusts them and has full confidence in their ability to make the right decisions.
Lastly, relying on electronic contract management systems demonstrates to the rest of the business that the legal team is forward-thinking and open to doing things in a business-friendly way.
How else can in-house legal teams use the data they collect from electronic contract management systems to their advantage?
Electronic contract management systems help reduce the potential for human error. It’s a lot harder to lose or forget things when it’s all electronic.
Electronic contract management systems also help keep track of things like deadlines and other covenants you’ve made in an agreement so that you can be compliant.
“Legal teams should be encouraged to find data points in the work that they do every day.”
Most important, however, is that many companies are increasingly becoming data-driven organizations, so legal teams should be encouraged to find data points in the work that they do every day.
This is especially necessary because most other business units are able to provide data that paints a picture of their performance and allows them to demonstrate their value to the company. For instance, sales can talk about the amount of revenue they brought in, and marketing can point to the number of leads they generated.
Traditionally, legal teams have found it difficult to provide similar data points – they often don’t have metrics that they can use to prove their value other than the number of hours that they’re putting in.
The problem is that everyone at the company is putting in a lot of hours, so in-house attorneys need to find other metrics that indicate their worth to the company: how efficient they are, how quickly they turn around contracts, how much they’ve reduced spend on outside counsel, et cetera.
Collecting and presenting that kind of data to business executives allows the legal team to prove their value and feel proud of the work that they do to keep the company going.
Despite all the benefits that electronic contract management systems offer, some in-house attorneys have trouble convincing business executives to invest in them. Why is that?
A lot of people see legal as a cost center, not a revenue generator. Other business units can convince executives to buy them the tools the want by saying, “If we buy this, our sales will go faster,” or, “If we buy that, our marketing will reach 50% more leads.” But the nature of legal is different, and it’s much harder to tie the purchase of legal technology to a positive revenue impact.
How can in-house attorneys overcome this difficulty?
They have to make a business case for the tool and tie it to the company’s bottom line, because that’s what businesses care about at the end of the day.
In-house legal teams have limited capacity, and when you’re at capacity, you have to outsource some projects to outside counsel. Electronic contract management systems free up the in-house attorneys’ time so that they can handle more projects in-house. Turning to outside counsel is inevitably more expensive than relying on in-house resources.
“A good electronic contract management system will also help the sales team work more quickly.”
A good electronic contract management system will help the sales team work more quickly, which has a clear, positive impact on the bottom line as well.
Once a company has purchased a new contract management system, how should the legal team go about onboarding other business units?
Any change is really difficult to roll out because people are always going to default back to what they know, and everyone likes doing things their own way.
The one piece of advice that I have is to be patient with other business units, and encourage them to use the new products, even if they’re likely to use them incorrectly the first time. It’s easy for the legal team to say, “Don’t worry about it – I’ll take care of it.” But if you do that, other business units will never learn.
Instead, encourage them to use the product, fail, use it again, and fail again, until they get it right. As the old saying goes, “give a man a fish and you feed him for a day; teach a man to fish, you feed him for a lifetime.”