Department Heads Can Extend Influence with the Power of Data

In the digital age, data is power, and in the executive push to harness meaningful data in corporate decision-making, CEOs are seeking opportunity across the enterprise. CEOs know harnessing the power of data yields proven insights and actionable content that translates to measurable ROI. Lawyers in corporate legal departments also know, more than most, about the power of information. But how can data ultimately help lawyers add additional value?

Resource allocation

One of the primary roles of the legal team is to protect the company from disputes. Most commercial lawyers will tell you that litigation revolves around one or more of the following:

– Overpromising what will be delivered;
– Underdelivering against what was promised;
– Overly complex contracts that lead to gaps in expectation;
– Customers departing from what the contract envisaged, without the proper change management; and
– Lack of teamwork between contracting parties once a contract requires revision

What is clearly missing from this list are the main contract terms and conditions. Not only is it rare for main provisions to be the subject of litigation, but also relatively unusual for them to be invoked in a dispute.

So why is so much time devoted to negotiating these fairly standard provisions, with much less time spent aligning parties on what will be delivered both before and after contract signature? One critical reason is the lack of available data that links time—seemingly endless human hours spent reviewing and negotiating contracts—with the corresponding impact on corporate risk. And even when such data becomes available, established norms can be difficult to overcome. Corporate legal teams often operate on precedent, with long-established processes to manage time and allocate resources.

What if a General Counsel could be empowered with new data in the context of the legal department to further reduce risk, to spend less time discussing liability caps for example, and more time engaging with the business to ensure terms are implemented as promised?

Up until recently, the legal profession has had limited opportunity to exploit the power of data in its contribution to the business. Legal departments or functions that “become digital” harness meaningful, objective data to inform decision-making, with a view towards driving concrete business outcomes, rather than simply relying on conventional practice. This digital transformation offers the potential to reimagine how the legal function operates.

Contract Intelligence

Negotiating and aligning contract provisions with internal policies is a time-consuming and arduous aspect of the contracting process. And with the diversity of contract forms needing review, lack of standardisation can increase the odds of inconsistent handling of commercial risk.

This may sound like a familiar scenario: A business development team has landed a great new opportunity with a key customer, and it is time sensitive. The sales lead knows there is a proliferation of legacy contracts with the customer. The company’s in-house legal adviser cannot readily identify all contracts in place with the customer. With the amendment of several contracts over the years, and the absence of an intelligent analytics tool, the pathway to contract execution is labour intensive.

As the legal team looks to identify a starting point for the contract, the customer wants to revisit the contract on new terms. The contract is not only a departure from the last agreement but differs from any known, standard company contract. The legal team works to align client and customer requirements, but the continued delay puts the sales opportunity in jeopardy. Days and weeks are spent escalating the customer’s demands until management grants special approval rather than risk losing the business.

This scenario is far too common for businesses both large and small. Deploying an intelligent, fully-digitised contract repository with search and analytics capabilities allows for portfolio-wide insights on contracting activity—insights that positively drive revenue, cashflow, and margin. By reducing workload and accelerating transaction times, the legal team can become more responsive while maintaining key corporate risk standards. One recent example: A Fortune 500 global technology organisation, after deploying an intelligent repository to their contract review process, realised a 25 percent reduction in the time and cost associated with manual review.

As companies and legal departments continue to manage the above demands, it is incumbent for leaders to leverage advances in technology to find a new way forward.