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When legal review slows everything down and relies heavily on manual contract management, the phrase "time is money" hits different.
While it’s absolutely necessary to ensure your online agreements meet compliance needs, many legal teams include far too many people throughout the process. Every hand that touches your transaction leads to lost time and a higher price tag.
First, the cost to write complex contracts and pay lawyers with varying expertise to review it is costly enough, but that number increases significantly when in-house resources aren't enough and you have to engage outside counsel.
Linear, manual contract management (like some CLM tools) also slows down all deals. In the world of instant gratification your customers currently live in, a long wait could be disastrous. At the very least, it kills your momentum and is likely to leave revenue on the table when buyers find a faster competitor instead.
But that’s not the only consequence. Because a lost deal also wastes any investment you made into finding and acquiring that potential shopper in the first place. If you use CLM tools, don't distinguish between personalized and standardized contracts, and spend all your time on legal review, there are probably too many hands on your contracts.
And you definitely aren’t spending your money and time as efficiently as you could be.
Did you know that the average contract costs 38% more than it did six years ago? For the average non-standardized deal, that equates to almost $7,000. So, it’s easy to understand how tedious legal review and overly manual contract management can make costs add up fast.
As a member of the legal team, your primary responsibility is protecting the company. But you also need to prioritize working with other departments to make your deals as quick and easy to execute as possible. While it’s probably impossible to eliminate every potential friction point a contract process causes, that doesn’t mean you shouldn’t work to minimize it wherever possible.
WATCH: The Economics of Contract Design
There are several reasons why manual contract management is expensive – but most of your unnecessary costs can be attributed to two scenarios: linear contracting and lengthy negotiations.
Years ago, Contract Lifecycle Management (CLM) tools were all the rage in legal. Teams implemented these innovative solutions to reduce legal review turnarounds and make life easier for everybody involved. But it’s 2021 – and today, these tools often cause more problems than they solve.
In CLM, every contract you use follows the same linear path: creation, delivery, negotiation, review, approval, and storage. For these tools to work, one step needs to be completed before the next can occur. As a result, a manual contract management process that adds extra time to one step ends up delaying the rest of the deal. Assuming it doesn’t jeopardize it altogether, or course.
If your organization operates like most, the chances are a majority of your contracts aren’t unique. Your online terms and conditions, for example, likely aren’t changing from one transaction to the next. So, if you’re not using standardization to take a few hands off your deals and reduce legal review, you’re missing out. Not to mention spending way too much time and money, too.
As much as 70% of the time spent on an average contract execution is dedicated to negotiation, review, and approval of terms – so why give low-value, high-volume buyers that option if their purchase isn’t worth the investment? You could be using your legal resources on a million other more important things instead.
Imagine a world where your terms and conditions come standard. After legal approves the language, most of your contracts don’t need any further involvement. You can get back to what you truly love to do. Your salespeople can spend their time finding new opportunities instead of going back and forth with your team all day. And, best of all, shoppers enjoy a quick, convenient purchase experience that’s completed with the click of a button.
Believe it or not, this dream can be a reality. When you reduce legal review potential and minimize manual contract management, a variety of benefits become possible.
The average B2B deal takes between six and nine months to complete. But there’s another truth to keep in mind. The longer your contracting process takes, the more likely it is that deal fatigue takes place – causing your potential customer to abandon the deal altogether.
Unless, of course, you take precautions now to prevent this from happening. And the best way to do so? Shortening your sales cycle by reducing legal review and the number of people involved.
Easier said than done? Definitely. Impossible? No, not at all.
You just can’t rely on manual contract management if you want to make it happen. There are three major steps you can take now to help your business reduce legal review and eliminate deal fatigue going forward:
eBook Download: How to Make Contracts the Key to Unlocking Revenue Recovery
Every legal team does things differently. Regardless of how you handle contracts, though, everyone on your team needs to know the specifics of your legal review process. Where are they responsible for a portion of a deal? And – more importantly – where are the opportunities to remove friction and reduce legal review by eliminating involvement?
Otherwise, if everyone’s not on the same page it creates an unclear, inefficient process that drags down sales velocity.
You can prevent this problem, however, by making sure your legal review process is fully mapped out. Who is responsible for each stage of contract creation? What does a terms and conditions update look like? Which agreements should be standardized? Where can automation make the most impact?
Your legal review process should be defined down to the last detail. Because – when the information is universally understood by every hand involved – legal will know exactly where your deals stand at any point. And your sales team will be able to close deals faster than ever before.
In every possible instance, you should be looking for ways to make legal’s contract process more efficient. Whether that means building customizable templates or putting your terms in a one-click acceptance format, time and money saved is a massive advantage that you can deliver to your business.
Beyond reducing your workload, a departure from manual contract management also means less waiting around for your sales team. They’re empowered to send and receive contracts faster, and you’re certain what they’re sending has been approved by your team – even if you weren’t directly involved in the deal.
Most importantly, eliminating manual contract management gives your customers a more nimble, streamlined transaction. And, hopefully, that means less fatigue and faster time-to-close for everybody.
How you present your terms to prospects can significantly impact the time it takes for them to sign. By presenting an agreement as a Word document or PDF, for example, you’re tacitly encouraging an individual to redline and negotiate. And no business wants to wait when it comes to revenue.
By moving to a digitally native contract presentation, you take away most of your organization’s potential for time-consuming delays that scare buyers away. An acceptance method such as clickwrap can make terms presentation and acceptance as easy as one click or check of a box – and it’s flexible enough to typically be embedded directly into the online solutions most legal teams already use.
No expensive setup or lengthy system build periods needed!
In our eBook, Making Contracts the Key to Unlocking Revenue Recovery, we give a run down of why contracts are expensive and how to understand the economics of contract design.