Too often, we hear from our clients that legal operations isn’t involved in strategic corporate decisions. Contracting process changes are made without their input; new contract management tools are procured without including them in the vetting process—in countless ways, legal is kept out of the loop, unable to provide their full value.
This is frustrating for legal professionals, of course. But it’s also a strategic blunder for the companies they serve. By involving legal in strategy, whether that’s for M&A activity, changes to product direction, updates to services structure, or other organizational changes, legal needs to be included at the table. When legal professionals are not involved, they won’t be informed and they won’t understand the context for decisions being made, keeping them from providing valuable perspectives on the company’s decisions. Instead, we recommend companies allow their legal teams to join the conversation, shape the company’s direction, mitigate risks, and avoid incurring unnecessary costs. Here’s how to get started.
One of the most effective ways for the legal department to provide strategic value is through data. Through contract management tools and other methods of tracking, legal has access to some of the most important data points at the company, as well as insight into the impact of contracts on the business. Legal professionals can go beyond just being a source of information, though. They also have the potential to create or reinforce a positive data culture: a way of working through decisions with the aid of data.
Here’s an example of how legal can help. For many organizations, contract volume is the first data point they track. The legal team tracks not only the number of contracts but also how many people are assigned to each and the impact that has on company resources. The legal team can come prepared to strategy meeting discussions with this information and with recommendations. Questions like “Are we seeing an uptick in contracts of a given type?” and “Do we have enough resources to handle the current (or upcoming) contracting season?”, or “Where are we seeing the biggest slowdowns in our contracting processes” can all be addressed by legal to allow for more informed planning and decision-making.
To ensure effective use of data, it can help for the legal team to have a ready-to-use set of data points that correspond to their areas of responsibility. We recommend starting with these five fundamental data points:
By accurately tracking and understanding the impact of each of these metrics, legal can leverage this data to influence strategic decisions and support company growth.
As much as legal could be involved in every agreement, it’s also worth asking what they can deprioritize. Many legal teams provide a white glove approach to service that’s tough to give up, but to be strategic, they must prioritize efficiency instead. Consider whether legal can be given insight into their organization’s contracts through reporting instead of through direct involvement, allowing them to oversee their domain without the need for constant interactions.
From there, the logical next step is to measure against the percentage of contracts in which legal is involved. An enterprise organization may have a lot of contracts, but how many require legal involvement? How many will require legal involvement in a future state? How many of these agreements go beyond an NDA?
Of course, legal will have understandable concerns about involving other areas of the business in contract creation and data entry. As advanced as AI tools have become at data extraction, contract metadata must still come from somewhere, and human error in contract data entry can be a real risk. With the implementation of any contract management tool or method for contract initiation, organizations can significantly reduce human error through dropdown menus, limited options, lookup fields, and tool tips/help text. We suggest creating a matrix breakdown of what legal needs to be involved versus what is optional. This visual will help guide decisions about what is a priority for legal and identify areas for improvement. As legal empowers the rest of the organization to be more involved in the contracting process, they can spend more of their time on strategic efforts
As legal professionals adopt the approaches above, they’ll increasingly have the chance to shape organizational strategy, create value, and contribute to important decisions. Their perspective will have numerous benefits, stretching well beyond legal’s traditional areas of focus and affecting overall financial and operational performance.
Spaulding Ridge has helped enterprise companies across numerous industries leverage their legal teams more effectively, through processes, technology, and data. If you’re curious about how to help your legal team make a bigger impact at your organization, contact us.
