Poor collaboration between legal and procurement means poorly drafted contracts. It leads to delays in procurement processes, increased contract disputes, rising risks of non-compliance, and poor relationships with vendors. 

Legal and procurement teams must be aligned to conduct any procurement effectively. 

Stephan Stewart, Legal Director - Procurement at Addleshaw Goddard says, legal and procurement teams have a lot in common, and contracts are at the heart of everything they do.

Connection between legal and procurement | Source: LinkedIn

In that case, how do you bring legal and procurement to the same page? Short answer: Technology. In this post, we will discuss 7 actionable tips to boost collaboration between legal and procurement by using technology. 

1. Create templates 

The first thing you, as the legal team member, can do to align with procurement is build contract templates for standardized use cases. It improves the overall process and helps procurement teams in three ways:

• They have a solid base to create procurement contracts, reducing the risk of half-baked ones with missing terms. 
• They can create contracts without much back and forth with legal for every contract, lowering contract creation time. 
• They are not scrambling around old contracts with outdated clauses, ensuring contracts have the latest terms. 

“A problem we face in contract management is version control – different departments may be using old templates and rolling contracts out manually. We want to implement a CLM solution to have better visibility into our contract pipeline, especially when our business is scaling in different countries.”

— Juliette Thirsk, Head of Legal at Peach Payments.

Templates in SpotDraft

SpotDraft allows you to upload your existing contract templates or create new ones easily. You also have an option to use Draftmate, a Microsoft plugin for SpotDraft, to create templates directly from MS Word.

Draftmate plugin to create templates

The best part about SpotDraft is you can preset fields that have to be filled to create a contract from the template. So, the next time the procurement team has to create a contract, they can fill the form that comes with fields preset in the template and directly create the contract.

Fill the form to create a contract from templates easily in SpotDraft

2. Build a negotiation playbook

Another place where procurement teams often look for input from legal teams is to understand the clauses in contracts, especially when any vendor is negotiating with them. Legal teams can support procurement more by providing them with more explanations of clauses added to a centralized library. That way, the procurement team is armed with the right information when they enter those negotiation meetings with vendors to get the right deal and not head back to legal for every counter proposition made by the vendor. 

Clause library in SpotDraft

SpotDraft allows you to create a clause library as a centralized library of all commonly used clauses and fallback options. You can add a clause with an explanation in a note. Also, add tags to categorize clauses for specific purposes together for easy search.

3. Build contract review playbook 

Procurement teams, without a clear understanding of laws, may not have the right information to review contracts. Legal teams can equip the procurement team with more information on how to review contracts in the form of a contract review playbook. A contract review playbook is a general guide that outlines pointers to keep in mind for reviewing different types of contracts. 

Contract review playbook in SpotDraft

Firstly, SpotDraft has an AI-powered tool, VerifAI, that flags any potential risk areas within the contracts and suggests changes, along with the reason behind the suggested change. This tool acts as a first level of review. Further, legal teams can create contract review playbooks with detailed guidelines in SpotDraft. Procurement teams can use this playbook to find gaps in the contract without even reaching out to legal. 

Sample contract playbook created in SpotDraft

4. Design risk-assessment workflows

Not every contract can be reviewed by the procurement team alone. There would still be some contracts where they would need advice from the legal team to minimize risks. For such cases the legal team can build a system for reviews. 

Importance of review by legal team | Source : LinkedIn

Assessing high risk contracts in SpotDraft

Firstly, Spot Draft’s VerifAI highlights all the risk-prone clauses that require further review. Further, SpotDraft allows adding proper contract tags based on risk levels. The high-risk contracts can be internally reviewed by the legal team first before sending it out for signature. 

Contract risk tagging in SpotDraft

5. Setup approval workflows

Top internal challenges procurement teams are facing are:

• Dealing with complex systems/processes
• Ensuring compliance to spending policies.

Procurement teams need a solid (and simple) system in place for smoother internal reviews to ensure they are meeting all company policies and regulatory requirements.

A simplified way to do this is to build an automated contract workflow that triggers all necessary approvals based on contract conditions. Legal teams can identify the conditions in contracts that would need special attention and would need to review those conditions. 

Approval workflow in SpotDraft

SpotDraft supports creation of automated contract workflow. In Spotdraft you can set conditions for which any additional approvals are required and who would need to review those conditions. For instance, if the contract amount is above a certain value, it goes to the finance team for approval. 

Automated contract approval workflow in SpotDraft

Secondly, SpotDraft also supports creating a signing order. So, all the signing authorities get notifications to review and sign the documents in the suggested order. 

Setting signing order in Signeasy

6. Automate reminders

Another important change to make procurement systematic is to build reminders for contract renewals and termination. This way, the procurement team is aware of which vendor contracts are about to close so they can look for alternative vendors. And if contracts are up for renewal, they can think of a negotiation strategy again (if any changes are required in terms). Legal teams can bring in a contract lifecycle management (CLM) solution to build a system of automated reminders. 

Automatic reminders in SpotDraft

SpotDraft automates contract reminders and helps you receive automatic reminders on contract terminations to your emails. It helps to manage procurement contracts without manual monitoring. You can renew contracts right within the reminder email and completely let go of manual tracking. 

 Contract reminders in SpotDraft

7. Build automated reporting system

When procurement executives were asked about the major challenges they face, limited data and insights came across as the top concern. Procurement teams do not have enough data to make informed decisions on contract terms, suppliers, and risk management. Contracts are the center of everything procurement does. The legal team can bring in a CLM solution with reporting, and analytical features to equip the procurement team with the right insights from contracts to make informed decisions. 

Top challenges faced by procurement team | Source: KPMG Global Procurement Survey

Metrics tracking in SpotDraft

SpotDraft automatically tracks below metrics:

• Average draft time
• Average review time
• Average internal redlining time in contracts
• Average counterparty redlining time in contracts
• Average signature collection time
• Number of negotiations rounds in different types of contracts
• Contracts created per quarter
• Contract approval time by different teams
• Average turnaround time in different contract stages
• Contracts executed over time

Procurement can use this data to identify the bottlenecks in contracts, identify where they are getting stuck, and discuss solutions with legal teams. Some issues would require a revision in templates, and some issues would require a change in workflow. 

Bring legal and procurement together on same page with SpotDraft

“SpotDraft has helped the legal team seamlessly collaborate with other teams. It has helped us be on the same page and accelerate processes”, says Brend Yun Perez, Senior Legal Operations Manager at Apollo.io  

Get similar results for your team. Book a demo to get personalized suggestions for your business. 

“Before using SpotDraft, executing a contract would take up to weeks. Now, contracts are signed within minutes, with better data security and tracking. The whole process takes us less than a day!” Arti Singh, Founder’s Office, Growth, UrbanVault.

‍