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This blog isn’t about to ask you to pour additional money into legal...necessarily.
Instead, think of this as a guide for re-allocating existing spend to be more efficient, reliably scoped, and empowering.
The reality is, many legal departments already have a pretty robust budget: their time in and of itself is expensive and solving legal centric problems is an expensive proposition. The way that budget is allocated, however, is not necessarily the most efficient.
Legal’s core responsibilities include protecting the business, aligning with regulations and enforcing agreements. As such, legal is impacted by and impacts just about every key revenue-driving arm of your business.
Depending on the size and nature of your business, your legal team may include in-house counsel, outside counsel, legal operations, paralegals, etc. The structure of your legal team will likely dictate budget and how your spend is allocated. Due to the nature of the issues that come across legal’s desk, the department can quickly become a cost center. Maintaining outside counsel, dealing with unplanned iterative costs from litigation, declining throughput levels from overtaxed ops teams can all impact the bottom line.
Enabling legal with the software that allows them to accomplish business critical tasks in a more efficient way empowers other arms of your business. It also transforms the way legal can operate from a planned costing perspective. The right software can help limit your organizational risk that can account for much of the “unplanned” spend in legal, while simultaneously creating operational efficiency and the ROI associated with that efficiency.
Software can better enable the lawyers to be the highly educated, specialized individuals they are, while automating and placing digital processes around the more standard and repeatable tasks that plague them. One major source of those tasks? Contracts.
According to an IACCM Research Report, the average cost of the basic contract review and processing is $6,900. If it becomes a high-touch, negotiated contract, that number can go as high as almost $43,000.
Carrying this idea into SaaS companies, specifically, some of the most important metrics for the company’s finances are LTV (Lifetime Value of Customer) and CAC (Customer Acquisition Cost). Having a contract or sale slip even a week can cause your CAC to increase, while decreasing the LTV. These metrics drive the value of the contracting process in a more tangible way. The longer the signing process is drawn out, the worse the margin is between CAC and LTV, ultimately impacting your bottom line.
Software solutions can transform the signing process, allowing your team to benefit from greater operational efficiency. Integrating with CRM systems, creating dynamic contracts, pre-approving negotiated clauses of agreements, and sending agreements in unique ways that prompt simple, click-to-accept signing all impact your time to sign. Gaining greater control over your internal efficiency can help you establish a more predictable cost structure.
Operational efficiency can extend to time consuming tasks like terms updates. For companies that maintain a global presence or have location specific conditions that need to be accepted by users, updating terms to ensure compliance can dominate your legal team’s time and attention. This means less time spent on revenue generation activity (contract reviews, negotiations, redlines, etc.), and more time spent on risk mitigation.
Beyond the costs associated with the contracting process, the cost of enforcing contracts or defending them can result in enormous “unplanned” spend. The cost of defending a class action suit, for example, can run anywhere from tens of thousands of dollars to hundreds of thousands. Litigation assistance is regularly retained in addition to any in-house resources, making this an expensive and time consuming process. That is before we even get into the cost of producing the documentation required by your legal team, pulling key employees into testify, etc.
Instead of living with the looming threat of lawsuit costs, use legal software to better protect your business in an automated fashion. The right software solution can offer many court friendly, immutability boosting features, but perhaps the greatest feature is the use of a third-party, verified system in and of itself which has been proven favorable in the courts.
Not only will the right legal software serve as a centralized source of truth for logging automated acceptance records for all digital agreements, it serves as a verified third party that stores your data. Less appearance of bias, less time spent by valuable employees on these tasks, less risk to the business. What’s the downside?
Carrying this into the terms management example, simplifying the process for your legal team is as simple as implementing a tool meant to handle legal content management. Many companies require their legal teams to work with basic web content management tools that simply are not built to handle the workflows best suited for legal content.
Giving legal a budget specifically for software can result in a more efficient department, reduced risk profiles, and lower your unplanned spending. Instead of forcing legal to work within the constraints of software that was not designed to suit their specific needs, give them control over their work.
For more on giving legal budget for software, check out or eBook, The Definitive Guide to Buying Software for Legal.