Will Reynolds, CEO of ContractWorks, offers insights as to how to strategically implement technology to improve efficiencies and identify risks and opportunities within your department.
Almost every business has the same primary goal: Keep revenues high and expenses low. It’s no secret that this is easier said than done, especially during periods of growth when there is more to do and your team is in desperate need of additional help to stay on top of its tasks. So how do you keep legal costs low while continuing to grow revenue? While your first thought may be to hire another employee to help manage the workload, that isn’t always the best place to start, and it can quickly lead to your expenses skyrocketing. More often than not, strategically implementing technology can improve efficiencies, while also helping to identify where the holes and opportunities are within your department. Thanks to the new information it provides, you’ll be better prepared to pinpoint the exact role your next hire will need to fill.
Adding new people to your team makes sense in certain situations, but it comes down to what types of work you need done and what budget you have available to support those needs. The reality is that many businesses, particularly small and medium-sized ones, don’t always have the budget and resources available to hire additional employees. On top of that, even in situations where you do have the budget to support another employee, it can take weeks or months to recruit the right person for the job, a process that a small team may not be able to justify based on the time and energy it takes away from other work. Making a smaller investment in the right technology will make an impact right away, and it will give you more time to evaluate your greatest needs. The fact is, when you do decide to bring on a new employee, you need to be sure you’re paying someone who can address the areas of your business that need the most attention and will lead to revenue growth.
Luckily, if the work you need help with is mostly the tedious, repetitive tasks associated with the ongoing management of corporate agreements, including tagging, tracking and reporting on your contracts, software can likely get the job done, and at a fraction of the cost. No matter what the situation – a large company trying to keep up with a high volume of contracts, a small business that only has a few people to keep track of all of its documents, or a team responsible for a low volume of high-risk contracts – law departments should always be looking for new ways to get more work done as efficiently as possible. And while hiring a new employee might be the right answer in some cases, it’s also possible that cost-effective software could do much of that same work, only faster. You may end up learning that you don’t need to hire additional staff immediately and can instead focus on growing the business and your revenue. Or maybe you’ll learn that the software can help with your low-value tasks, allowing you to use the money you would have spent on a new hire to help fund another management-level employee down the road.
The Challenges Associated With Hiring
“Staff costs make up the largest single area where in-house functions are facing an uphill battle on cost reduction,” says Chris Price, CEO of EY Riverview Law, a legal operations firm. Beyond the high cost of an employee’s salary, the hiring process can also be burdensome for small businesses. According to an EY survey of 1,058 senior legal practitioners, nearly 60 percent of businesses “reported facing challenges in attracting and retaining the appropriate talent needed in today’s legal function.” And if the reports are accurate, law departments won’t be seeing their budgets increase anytime soon. According to the same EY survey, many companies are planning to cut legal spending in the next two years, with the average cuts projected at around 11 percent. Now, more than ever, legal teams will be forced to double down on technology and innovation to accomplish tasks that were once handled manually by administrative employees. This is where contract management software can be a tremendous help for legal teams – without demanding the salary of a new employee.
The Case for Contract Management Software
For legal teams that don’t have a bottomless budget, contract management software is often the preferred place to start when trying to improve efficiency at a reasonable price point. Today’s contract management software typically costs a fraction of an employee’s salary, and it is designed to take on many of the same tasks an administrative employee would be responsible for in the contract management process, including keeping track of contracts, tagging key information within those contracts, and reporting on contract milestones and performance.
More recent developments in contract management software, like the addition of artificial intelligence (AI), have made it even easier for businesses to save time and money on certain contract management tasks. AI can automatically tag contract fields, including agreement type, parties, effective date, termination date, initial term, renewal term and termination window, allowing users to take action on their agreements immediately. While it would take an employee weeks, if not months, to sort through hundreds or thousands of contracts to tag this information, the process can be done almost instantly with AI, and without human error or fatigue.
Having a secure repository for your important legal documents, along with the helpful contract management features that come with most software solutions, eliminates the need for a legal employee to manually track each important contract milestone or the whereabouts of every business document. Freeing up employees to focus on higher-value work is an important goal for the majority of legal teams, as evidenced by the EY survey. According to the survey, 67 percent of respondents indicated that more than 20 percent of their time is spent conducting routine compliance and low-value tasks, demonstrating that there is a huge opportunity for companies to improve in this area.
Contract management is too important to your business to lose sight of during budget cuts, and it can’t be one of the areas that takes a hit during the process. The good news is that powerful software that can greatly improve the way you manage your most important corporate agreements is available at a significantly lower cost than adding another employee to your team. For many businesses, contract management software is the best place to start when looking to help manage the legal department’s workload.