Long contract cycles and constant revisions are major roadblocks in legal operations. These inefficiencies waste time and resources, slowing down your entire workflow.

So how do you fix them?

You need contract analytics—data on your contract processes, data on where things slow down. 

As Carly Fiorina, former CEO of Hewlett Packard, said, “The core advantage of data is that it tells you something about the world that you didn’t know before.” With contract analytics, you can uncover hidden inefficiencies and make informed decisions to enhance your legal processes.

Then again, where do you start? Many legal teams struggle with making data-driven decisions because they don't know what to track or how to use the data they collect. In this post, we’ll address this exact challenge, covering everything from what contract analytics is and how you can use it to optimize your legal operations and drive efficiency.

What is Contract Analytics?

Contract analytics provides detailed insights into contract creation, review, and execution. Use these metrics to improve your contract workflows, accelerate business outcomes, and showcase the value of your legal team.

Why Should you care about Legal Process Optimization?

Optimizing your legal processes can lead to significant benefits for your team and your organization. Here’s why you should pay attention:

#1 Saving costs with streamlined processes is easier than you think

When you streamline your legal processes, you cut costs in several ways. With workflows that are more efficient, you reduce the time and resources needed for each task. For instance, automation and improved processes mean you spend less on manual labor. Better oversight and error detection also help you avoid costly compliance issues. 

#2 Faster-moving processes mean you can close deals quicker

Speeding up your legal processes means faster contract turnaround times. This efficiency not only helps you close deals quicker but also moves your business forward. Streamlined workflows and automation reduce delays, allowing you to finalize agreements sooner. 

#3 Increasing deal-velocity accelerates your business growth

Quicker processes help you accelerate business deals, leading to higher revenue and improved client satisfaction. When you handle contracts efficiently, you realize revenue faster and keep your clients happy with timely contract handling. 

Also read: How to Use Contract Analytics Software to Uncover Insights 

Role of Contract Analytics in Optimizing Legal Processes

Contract analytics can transform how you handle legal processes. Here’s how

#1 Find out where your contracts get stuck

Ever wondered where your contracts slow down? Contract analytics shows you exactly where delays happen so you can fix them.

• Track approval times to find bottlenecks
• Address these issues to speed up your workflow
• Enjoy faster contract cycles

#2 Make your work faster and more efficient

Contract analytics makes everything move quicker. Set up automated reminders and standardized templates to cut down on approval and revision times.

• Handle more contracts in less time
• Boost productivity and get more done

#3 Catch errors before they become problems

Use contract analytics to find errors and inconsistencies early. This helps you stay compliant and avoid legal risks.

• Improve accuracy and compliance
• Reduce legal risks and mistakes

#4 Balance your team's workload with ease

Contract analytics helps you see how tasks are distributed across your team. This allows you to balance workloads, prevent burnout, and justify the need for more resources.

• Track task assignments to ensure fairness
• Prevent burnout with balanced workloads
• Justify additional resource needs when necessary

#5 Make smarter decisions with real-time data

Make informed decisions based on real-time data. Predict future trends and align your legal strategies with business goals.

Also read: Top Contract Analysis Software

Types of Contract Data to Extract

Extracting the right data from your contracts is key to understanding and improving your legal processes. Here’s a look at the types of contract data you should focus on:

#1 Process data shows you what's happening during contract creation and approval

Process data includes all the information collected during the creation and approval stages of a contract. This type of data helps you see where things might be slowing down and where improvements can be made. Key metrics to track include:

• Time to approve: Measure the duration from when a contract is created until it receives final approval. This helps identify any delays in the contract approval process
• Redlining stages: Track the number of revisions a contract goes through and the time spent at each stage. This data shows how often and for how long contracts are being revised
• Negotiation duration: Monitor the length of time spent in negotiations. This helps you understand how long it takes to reach an agreement
• Approval workflow stages: Identify each step a contract goes through for approval and track the time taken at each step
• Feedback and revision cycles: Count how many times a contract is sent back for revisions and track the reasons for these revisions

Also read: Contract Workflow: A Step-By-Step Guide

Analyze this contract data to pinpoint inefficiencies and implement changes to streamline your workflow. For example, if contracts are frequently getting stuck in a particular approval stage, you can investigate the cause and take steps to address it. This might involve clarifying responsibilities, adjusting approval thresholds, or improving communication channels. The goal is to make your contract creation and approval process as smooth and efficient as possible.

#2 Post-execution metadata keeps track of your contracts after they're signed

Once a contract is signed, post-execution contract metadata becomes crucial. This data helps you manage the contract throughout its lifecycle and ensure contract compliance with all terms and conditions. Important metadata to track includes:

• Renewal dates: Keep track of when contracts need to be renewed to avoid lapses
• Compliance requirements: Monitor obligations and deadlines to ensure all terms are being met
• Performance metrics: Track key performance indicators (KPIs) related to the contract’s execution and delivery
• Payment schedules: Record when payments are due and ensure they are made on time
• Amendments and changes: Document any modifications to the original contract and their impact

Managing this post-execution metadata effectively helps you avoid potential issues and keeps your contracts running smoothly. It ensures that you meet all obligations, renew contracts on time, and measure performance accurately.

Also read: How to Track Contract Obligations

Steps to Optimize Legal Processes Using Contract Data

Optimizing your legal processes using contract data can significantly improve efficiency and effectiveness. Follow these steps to achieve better results:

#1 Collect important contract lifecycle data

Start by tracking the time and activities at each stage of your contract process. This includes measuring how long approvals take, counting the number of times contracts are revised, and recording the duration of negotiations. Ensure you gather all relevant details accurately. The more detailed your data, the better your analysis will be. 

Key data points to collect are:

• Time to approve
• Number of revisions
• Negotiation duration
• Approval workflow stages
• Feedback and revision cycles

#2 Analyze trends in your contract data

Analyzing your contract data helps you spot patterns and make informed improvements. Here’s how to do it effectively:

1. Use dashboards and visualization tools to make complex data understandable. They help you:

• Visualize data easily: Charts and graphs simplify the data
• Monitor key metrics: Focus on approval times, negotiation durations, and revisions
• Compare periods: Identify trends over different periods (e.g., monthly, quarterly)

For example, if negotiation times spike at the end of each quarter, you can investigate why.

2. Look for frequent delays in stages like:

• Initial review: Determine if reviewers are overloaded or criteria are unclear
• Approval stages: Check if approvers have the necessary tools and clarity
• Negotiation: Understand why terms are often disputed to streamline this stage
  

3. Analyze frequent revisions that indicate drafting issues. To address this:

• Identify common reasons: Spot patterns in revision reasons
• Standardize templates: Use templates to reduce revisions
• Improve clarity: Ensure contracts are clear from the start
  

4. Track performance over time by:

• Setting benchmarks: Use historical data to set performance benchmarks
• Measuring improvements: Compare current performance against benchmarks
• Predicting future performance: Use trends to forecast and prepare

Also read: 4 Crucial Contract Management KPIs to Track for Legal Success

#3 Identify bottlenecks in your contract process

Here’s how you can effectively spot and address bottlenecks

1. Compare performance against targets

Start by comparing your actual performance against your targets or Service Level Agreements (SLAs). This comparison helps you understand if you're meeting your goals or if there are areas that need improvement. Look at key metrics like approval times, revision cycles, and negotiation durations.

2. Spot delays and resource constraints

Look for delays and resource constraints in your workflow. Common issues include:

• Approval hold-ups: Determine if approvals are consistently delayed. This could be due to unclear responsibilities, lack of tools, or overloaded approvers
• Too many revisions: Frequent revisions may indicate problems with initial contract drafting or misunderstandings about terms. Identify why these revisions are happening and where
• Communication breakdowns: Poor communication can cause delays and errors. Check if miscommunications are causing bottlenecks
  

3. Pinpoint problem stages

Identify the specific stages where contracts consistently get stuck. For example:

• Approval stage: If approvals take twice as long as your SLA, it indicates a bottleneck. Investigate the reasons, such as waiting for feedback from multiple approvers or lack of clarity in the approval process
• Negotiation stage: If negotiations drag on, find out if certain terms are frequently disputed. Address these issues by clarifying terms upfront or providing negotiation guidelines

Also read: Mastering the Art of Contract Negotiation: Strategies for Success

4. Use data to diagnose issues

Use the data you’ve collected to diagnose the root causes of bottlenecks. Look for patterns and trends that highlight where and why delays are occurring. This might involve:

• Analyzing approval times: See if certain approvers consistently take longer than others. Provide additional training or resources if needed
• Reviewing revision cycles: Determine if specific clauses or sections are frequently revised. Standardize these parts to reduce revisions
• Monitoring communication: Check if delays are due to slow responses or unclear instructions. Improve communication channels and protocols
  

5. Address and resolve bottlenecks

Once you’ve identified the bottlenecks, take steps to address them:

• Streamline approval processes: Simplify or automate the approval process to reduce delays. Ensure approvers have the necessary tools and clarity.
• Standardize contracts: Use templates to minimize revisions and ensure consistency.
• Enhance communication: Implement better communication tools and protocols to avoid misunderstandings and delays.

#4 Gain insights from your contract data

To truly optimize your legal processes, you need to dig deeper into the data you’ve collected. Analyzing data is just the first step; gaining actionable insights is where the real value lies. 

1. Pinpoint specific areas that need improvement

Once you've analyzed your data and identified trends and bottlenecks, it's time to delve deeper. Look closely at the data to pinpoint specific areas that need improvement. 

For example, if you notice that the approval process is consistently slow, investigate why this is happening. Is it due to too many approvers, unclear responsibilities, or lack of resources?

2. Investigate the reasons behind delays

To understand the root causes of delays and inefficiencies, ask questions like:

• Are approvals taking too long? If so, find out if the delay is due to a particular person or department, or if the approval process itself is too complex
• Are there frequent revisions? Determine if certain clauses are always contested or if there is confusion over contract terms
• Is communication an issue? Check if delays are caused by slow or unclear communication between parties

Also read: Poor Contract Management: Risks, Impacts, and Remedies

3. Consider targeted solutions

Based on your findings, consider targeted solutions to address the specific issues you've identified:

• Reallocate resources: If a particular stage is overloaded, redistribute tasks to balance the workload more evenly
• Simplify workflows: Streamline the approval process by reducing the number of approvers or clarifying responsibilities. Automation tools can help speed up repetitive tasks
• Provide additional training: Ensure that everyone involved in the contract process understands their role and has the necessary skills. Training can help improve efficiency and reduce errors
  

4. Implement changes and monitor results

After identifying the root causes and implementing targeted solutions, monitor the impact of these changes. Track the same metrics to see if the improvements are effective. Continuously collect and analyze data to ensure that the changes lead to the desired results and to identify any new issues that arise.

Also read: 4 Contract Management Performance Metrics to Measure Success

5. Keep refining your process

Optimization is an ongoing process. Regularly review the data, make necessary adjustments, and continue to look for ways to improve. 

The more you refine your processes based on detailed insights, the more efficient and effective your contract management will become.

How SpotDraft’s new Contract Analytics feature can help

SpotDraft’s new Contract Analytics feature gives you a clear view of your entire contract process, helping you identify inefficiencies and optimize workflows.

Here’s how:

• Identify bottlenecks with four dashboards covering Lifecycle, Approvals, Review, and Turnaround Time
• Visualize key metrics with pre-built charts to streamline processes and reduce cycle times
• Track adherence to approval timelines and spot any deviations
• See which team members are overloaded or underutilized to manage work distribution better
• Use filters for date ranges, contract types, users, and counterparties to find specific information quickly

“One instance was knowing that our Insertion Order templates were slowing down the team and they could not be asked to generate the contracts in the recommended way because it would slow down the team”

~ SpotDraft customer

Check it out now!

See the difference contract analytics can make

Using contract analytics can really change how you handle your legal processes. By getting clear insights into your workflow, you can find and fix bottlenecks, streamline your processes, and boost efficiency. This means saving money, speeding up deals, and making everything run smoother.

These improvements help you close deals faster and use your resources more effectively. Your legal operations become more agile and responsive, making your work life a lot easier.

But without automation, all the analysis can take a toll on you. That’s why, we invite you to try out SpotDraft with its latest contract analytics feature.

Request a demo!