3 Ways Contract Data Can Optimize Legal Operations

For corporate legal departments, today’s top business challenges are consistently driven by the need for better data. 

The industry faces a widespread data hurdle, caused by the inability to access and use the wealth of untapped information in departmental silos, Microsoft Word documents, disconnected electronic “file cabinet” systems and more. This inaccessible data renders legal departments the “black hole” of contract analysis. 

However, it’s more than just a lack of data visibility that plagues legal teams. It’s a lack of understanding of what to do with that data once it’s collected. The need for stronger data reporting leads to a host of business-critical concerns—including weakened risk management and dips in quality and consistency of team outputs. 

As demands on legal departments grow but budgets remain constrained, organizations seek access to data that can help define and deliver the most optimized department possible, starting with the data found in agreements. 

Tackling the data problem with tech

Across industries and business functions, the solution has been clear: leading-edge Artificial Intelligence (AI) solutions—specifically ones integrated into cloud-based contract management and intake platforms—are the next step forward for organizational visibility, strategy and success.

To discuss this topic, Jim Wagner (vice president, agreement cloud strategy at Docusign), Rebecca Yoder (associate partner, agreement cloud practice at Spaulding Ridge) and Caroline O’Connor (deputy general counsel at GoCardless) sat down for a virtual LegalWeek webinar, How Legal Can Leverage Agreement Data to Drive Organizational Strategy. Below are three ways legal departments can use data to their advantage, along with firsthand examples of how accessing data about and from your contracts can benefit the organization at large.   

1. Taking legal team management to the next level

Team management is a top-tier concern for law departments. By harnessing data from agreement processes, leaders can better optimize staff, time and resources, making better-informed decisions and driving smarter team management. Analyzing contract data, such as time between request and completion, unlocks insights to improve decisions about team workload, increase performance consistency, reduce portfolio risk and identify trends across agreement types—all benefits experienced by Caroline’s legal team at GoCardless. 

“At GoCardless, we made the decision to put in place a legal ticketing system,” said Caroline. “When somebody in the business needs legal advice, they submit a ticket and it’s routed to the relevant members of the legal group. That system generates a ton of data, so the legal operations team does a monthly report on the trends. We monitor response times, how many tickets are coming in, who’s handling the tickets, the types of tickets, how many touches they get and more—and all of that drives smarter decision making.”

These decisions can span team-specific staffing to greater work allocation strategies. The data can be used to demonstrate the need for more resources and higher budgets, putting data behind problems that plague legal teams every day.

“The best way to articulate the power of this [intake and response time] data is to say it’s a tool to the benefit of the legal team, not a stick to beat them with,” said Caroline. “To help prioritize their work, get more budget and resources when needed, increase their ratio of high-value to low-value work and function as a channel into the legal team—not a replacement of it.” 

The benefits quickly extend across the organization. “Companies are keen to understand what types of agreements cause long lead times or more complex negotiations. With better data, they can take this analysis down to the clause level, identifying patterns across contracts at scale, leading to better, more efficient results,” said Jim.

2. Enabling self-service with guardrails

Legal departments know that reviews and negotiations for different types of contracts require varying amounts of involvement. Identifying those differences—and filling in the gaps where less legal input is needed—is key to optimizing efficiency. 

Self-service models can alleviate bottlenecks in areas where legal delays are doing more harm than good, but they require clear guardrails in order to work. Creating guidelines around which contract types need legal approval and limiting what the business can agree to or change in the absence of legal review is essential. The key to determining these guidelines is better data.

By seeing and synthesizing data about agreement content and processes, organizations can understand where the bottlenecks are in contract generation, approval and negotiation lifecycles. That data can also identify the sticking points or fall-back provisions that arise most frequently, identifying terms where changing standards or automation could help achieve better, more proactive outcomes. 

“Self-service doesn’t mean that legal departments are declining to support a certain service or agreement type, nor that they are abandoning their internal clients,” said Jim. “Rather, they are evaluating what types of agreements it makes sense for the department to support at an individual level, and finding ways to enable their business partners to complete other contract work at scale.” 

The technology is the delivery mechanism for the guardrails that the legal team puts in place. It’s an underlying tool that ensures risk isn’t becoming overly burdensome, provides checks and balances that agreement terms are appropriate and tolerable, sets up the rules for sales teams to follow and enables legal to focus on higher-value goals overall.

3. Strengthening organizational decisions

Ultimately, the data transformation journey has one endgame: enabling legal departments to leverage better contract data and deeper, more accurate analysis to make more impactful organization-wide decisions.

It’s clear that contextualized legal data can do more than transform just legal, it can magnify the department’s value and influence corporate strategy—eliminating the fiction of “legal as only a cost center” once and for all. But how exactly does it do that?

“Legal teams have a particular vernacular that they use to talk about their work in a way the rest of the company doesn’t, and that chasm in analytics can make it challenging to understand the value and contribution made by legal—or even the relevance or impact of their work to the larger company,” said Rebecca. “Docusign believes that by connecting those two worlds together—legal work and the corporate view—you can really shed light and see the real data on legal’s impact and influence.”

Digital CLM solutions offer companies a bridge between how legal teams think about their work and how the rest of the company does. Integrations with ERP, CRM and other systems provide a lens into real-time progress that’s more aligned with the way the business considers its output. This smooths internal team-to-team collaboration, articulates the value of the legal team and opens up access to data and analytics that allow legal to be recognized as value creators. 

On a more detailed level, this data enables legal to look at their contract templates, examine what’s being accepted and what versions of language—down to the clause—get negotiated more than others. That’s the starting point of leveraging data for strategy: knowing where to use standard language, where to modify language or where to use nonstandard language altogether. This helps organizations increase efficiency, measure risk profiles and ultimately be a market-leading team that supports their corporate strategy.

“Whether your company’s growth vision includes an expanded team, a new line of business, a new office location or anything else, it’s likely legal was already supporting the company’s efforts, but the data was siloed and untapped,” said Jim. “Connecting legal to the rest of the organization, integrating these systems together and bridging that decision gap can help legal become more interconnected to the company as a whole.”

In the end, smarter digitized agreement strategies feed into each other, making legal data more structured and accessible to the rest of the organization—and there are multiple places where one can start. By addressing the needs most urgent to your organization, you can begin a virtuous cycle, one that evolves, improves and brings technology and process refinement to every corner of your operations. 

“I hate to use a cliche,” said Caroline. “But this transformation is short-term pain for long-term gain. It was a lot of work to get our new legal and sales process in place, but the long-term benefits and value I think it’s going to add to the legal team, the sales team and the wider business will ultimately be very much worth it.”

For deeper, more detailed insights into how technology and data transformation can illuminate the value of legal and drive corporate strategy, watch the full webinar. 

For more information on how GoCardless benefited from their Docusign CLM implementation, check out their success story here.

Lastly, see why Docusign was recently named Disruptive Technology of the Year at LegalWeek’s 2021 Legal Innovation Awards for leading innovation in other important areas to legal professionals like land registry signature and witnessing process.