Data has become an inescapable aspect of business today, and no team has been spared. In-house legal teams, which were in the past often excused from having to report on set KPIs and track performance quantitatively, are increasingly having to adapt to a more data-driven model.
While some lawyers remain apprehensive, many are looking at this shift as an opportunity to transform the perception and impact of Legal within business. Commercial counsels are using contract analytics and data reporting to gather critical insights that allow them to reimagine the contract lifecycle, free up bandwidth for strategic work, and showcase their value to the organization.
We spoke with a number of GCs, in-house counsels, and experts to understand how modern legal teams can use the power of contract analytics to their advantage. Read on to know what we found.
What is contract analytics?
Contract analytics is the review of an organization’s entire contract database to extract data and uncover insights into the contract lifecycle. These insights may be derived manually for creating ad-hoc reports or automated through contract analytics software.
The role and benefits of contract analytics for in-house legal teams
“GCs need to earn the credibility of the business leaders so that the business stays close to legal, stays compliant, and so Legal doesn’t get dismissed as ‘the department of no.’”
— Gitanjali Pinto Faleiro
General Counsel, Company Secretary & CCO at Greenhill & Co.
The biggest challenge for GCs and in-house legal teams today is ensuring Legal has a seat at the table and is seen as a strategic partner, not a cost center. Contract analytics are a valuable tool in helping you achieve this, providing valuable insights to inform key business decisions, showcase your impact to the business, and position Legal as a valuable contributor to the organization's success.
Here are a few ways contract analytics and insights enable in-house legal counsels:
#1 Influencing business strategy and key decisions
Analyzing contracts and related data can provide unique insights into how business is performing and help identify trends. Insights like which types of contracts are most profitable, which regions are most promising for growth, where does the average contract value for deals stand against contract term, etc., can help inform business decisions. Legal teams can extract this data from contracts to provide strategic advice to the leadership and teams like sales and marketing to influence business strategy and decision-making.
#2 Solidifying legal's brand and position within the organization
“It is vital for a GC to position and exhibit the team's work in terms of value or ROI. It is the language that your non-legal peers are used to. That usually comes down to numbers, charts, and graphs. You have to learn to speak their language.”
— Sterling Miller
CEO & Senior Counsel, Hilgers Graben PLLC
By using a data-driven approach and backing up advice as well as business cases with evidence, legal teams are better positioned to demonstrate their value to the business and garner trust within the organization. For example, contract analytics can help quantify business risk due to certain clauses or contracts based on historical data, which legal counsels can then use to inform their recommendations and advice.
#3 Reducing friction between legal and cross-functional teams
“Try to glean as much info about what causes friction as possible. Your biggest wins will come from addressing these knowledge gaps or hesitancies that are blocking/slowing deals.”
— Sue So
Head of Legal, Hopin
The legal department is often viewed as the ‘department of no’ within organizations. However, for in-house counsels, stakeholder management is incredibly important to ensure smooth collaboration between cross-functional teams and prevent tension with other departments. Contract analytics can help identify bottlenecks and streamline processes to ensure legal is able to provide efficient support to teams like sales and marketing, while also helping free up legal bandwidth.
#4 Bringing greater productivity and process efficiency
Using data to identify bottlenecks, discover opportunities for workflow automation and templatization, and streamline contract processes, legal teams can become more efficient and focus their efforts on more strategic work rather than dull repetitive work. This helps not only reduce turnaround times and enable business teams to work independently, but also speed up deals and improve the bottom line.
#5 Enabling contract performance tracking
Tracking and analyzing the contract portfolio and lifecycle over time, from contract creation to renewals, can uncover important insights on the performance of different types of contracts and clauses for the organization. For instance, measuring risk of a business’ contracts can help the legal team understand which clauses are heavily negotiated, which can be standardized, etc.
#6 Identifying growth and revenue opportunities
Contracts contain valuable information when it comes to opportunities for growth. By analyzing contract data and trends, and keeping track of renewals and expiration dates, organizations can derive insights into new or popular markets, missed opportunities for contract renegotiations, or pricing structures.
#7 Mitigating risks and preventing loss
”You can either be part of the cleanup crew or do stuff to avoid that cleanup situation altogether."
— Gitanjali Pinto Faleiro
General Counsel, Company Secretary & CCO at Greenhill & Co.
Finally, one of the most important ways contract analytics can contribute to legal success is by helping them mitigate risks and monitor compliance. The legal team can use data to identify potential issues and breaches and track compliance, renewals, and expiration dates to prevent losses and protect the organization from legal and financial trouble.
Turning contract data into a gold mine of actionable insights
There is a contract involved in every transaction or exchange that happens within an organization. Yet, contracts remain an underutilized source of information — largely because this data is usually stored in an unorganized manner spread across various channels and platforms.
Contract data may come in the form of:
- Financial data,
- Contextual data,
- Business data,
- Performance data,
- Risk and compliance data, and more.
When organized, measured, and analyzed effectively, this data can prove to be a gold mine of critical insights to help Legal become a strategic partner in business. An efficient system to organize and track this data is imperative for obtaining the insights hidden within contracts.
Fortunately, there are tools available to help with this task. Legal teams can create DIY contract tracking systems or implement a contract lifecycle management system to track and analyze contracts for them. CLM tools like SpotDraft use artificial intelligence to power contract management and analysis, automating the process of contract data management and analytics for the legal team.
Want to learn more? Check out this guide: How to Amplify Legal's Impact via Effective Contract Data Management
Also Download: SpotDraft’s Contract Tracking and Management Spreadsheet Template
How to use contract analytics software for analysis of the entire contract lifecycle
“You need to tell stakeholders what your team is up to. Leverage tools such as CLMs to showcase how your team has contributed to closing deals effectively.”
— Juliette Thirsk
Head of Legal at Peach Payments
Given how legal teams are usually buried under legal work, manually conducting contract analytics can be unsustainable. Instead, adopting a contract management system like SpotDraft is a more efficient way to conduct contract analytics and gather insights from your contracts. Here are a few contract analytics SpotDraft’s insights dashboard offers:
Also Read: Contract Management Dashboard: A Comprehensive Guide
#1 Turnaround times
How long does it take Legal to get back on requests for different contract types? A CLM can help you track turnaround times to help track performance of the legal team as well as individual team members against KPIs. Having this data on hand also helps in collaborating more effectively with cross-functional teams and setting timelines.
“For example, my average for marketing review is around 1.8 days. Whenever someone's worried about the process and says something like, ‘Do I have to submit all marketing to Legal?’ — I try to stress the partnership again. Here’s why I need to review everything, here’s my experience in why that matters when you want to go public or get acquired, and here’s what standards I’m willing to hold myself to so that you don’t have to worry about turnaround times. More often than not, they’re not upset that you need to be involved. They probably just worry it will be slow, or you’ll have non-legal feedback disguised as legal. So don't be scared of the process, be scared of a flawed process.”
— Ryan Nier
General Counsel, Pinwheel
#2 Contracts closed every month
“One of the revenue leaders I worked with told me, "Time kills all deals; you gotta close deals fast," and I keep this in mind every time I’m pulled into a sales deal.”
— Sue So
Head of Legal, Hopin
At the heart of a business are the number of contracts it is able to close every month. A CLM software can help you keep track and analyze contract closure, which is an essential metric in gauging the performance of the legal and sales teams as well as business as a whole.
#3 Contracts due for renewal or expiry
Contract renewals and expiry can lead to significant financial loss when left unchecked, especially for high-value deals. SpotDraft solves this by offering visibility into upcoming contract renewals and expiry, as well as providing a feature to set reminders to take action before that happens. This helps you get things going internally to cancel auto-renewals or renegotiate expiring contracts on time.
#4 Inefficiencies within the contract lifecycle process
“At Next Insurance, we wanted to avert risks before they turned critical. I figured the only viable solution was to use a CLM tool. Once your contracts are centralized, it becomes convenient to manage procurement processes, professional services, and NDAs.”
— Nadia Louis Hermez
Legal Ops Manager, Next Insurance, Inc.
The contract lifecycle is riddled with inefficiencies for most businesses. A CLM helps you both identify these inefficiencies and solve for them by automating contracting processes. For example, on SpotDraft, you can see insights like the average time spent on each stage for different contract types, from drafting to review and signature. This way, you can spot bottlenecks in your process and streamline it for greater efficiency.
Also Read: Why Contract Management KPIs Are Key to Legal Success
Reporting on contract analytics thoughtfully and strategically
While it’s essential to be data-driven in today’s business landscape, legal counsels must go about reporting on this data in a strategic manner. Instead of sharing all the metrics the legal team might be tracking or simply sharing numbers, in-house counsels should present this information in a way that:
- The context behind the metrics obtained is not lost. For instance, this may look like tracking the quality of work the legal team is doing alongside their turnaround times to point out why taking longer to review certain contracts might be more cost-effective in the long run.
- Stakeholders and executives have access to data that is relevant to them. Contracts contain a well of information, and not all the insights might be relevant for every stakeholder. For example, the sales team might only need to see data on the collaboration between Sales and Legal, and opportunities for improvement within the process. Meanwhile, the CFO or finance team might require insights on the financial aspects of contracts, such as contract value and net margin.
“Above all, be very cognizant of your environment, your audience, and the dynamics within your company and act accordingly.”
— Gitanjali Pinto Faleiro
General Counsel, Company Secretary & CCO at Greenhill & Co.
Choose SpotDraft as your contract analytics solution
Tracking contract data and analyzing it for insights can be incredibly valuable to modern legal teams. Besides enabling Legal to improve productivity and streamline contracting processes, these insights can help them become a key business partner and showcase its value within the organization.
SpotDraft can help you both streamline your contract lifecycle as well as gain critical insights into the process, all in one place. Get in touch to learn how we can help.
