Legal tech is booming and its growth shows no signs of slowing. For in-house legal teams, this has resulted in an ever-expanding range of software solutions that are intended to make your work more efficient.
Traditionally, managing contracts and legal spending have been two particularly tedious, inefficient legal department processes that required manual work and major time commitments. Today, tools exist to improve processes in both of these areas.
If you’re looking for ways to optimize the way your legal team operates, understanding the strengths of these two types of software - and how they can be used together - is an important first step.
What is contract management?
Contract management involves the ongoing handling and monitoring of contracts throughout their lifecycle. Legal teams have responsibilities at all stages of the contracting process, from negotiation and signing through to reporting and closeout. If you are in the position of managing those teams, finding a reliable way to improve control over the contracting process and reduce the inefficiencies of manual work is imperative.
Among the main benefits of contract management software are:
A single source of truth for all of your agreements. When you store your contracts in a central repository, you have one place to turn for answers to any contract-related questions. No need to search through shared drives or spend time waiting for responses from your colleagues - all of your agreements are stored and organized in a secure online repository that's accessible from almost anywhere.
Always stay ahead of important dates and deadlines. How many times have contract deadlines passed you by, leaving you scrambling to get back on track? With contract management software, teams can automatically set notifications to be delivered to any stakeholders, so you never miss another opt-out window or key deliverable deadline.
Report on what matters most to your business. Contract management software simplifies the contract reporting process, and provides the flexibility to run reports on any data points tagged within your corporate agreements. This is a great way to quickly see which contracts are coming up for renewal or how many agreements in your portfolio contain a specific high-risk clause.
What is legal spend management?
Legal spend management - as its name implies - is focused more on managing expenses and controlling and processing invoices, particularly any spending on outside counsel and other legal services. Legal spend management software facilitates greater insights into costs, data and expense reporting, and the sharing of invoices and other documents among departments.
Other benefits of using legal spend management software include:
Transparent billing practices. One in five associates "upbill" their time, a practice that can have a tremendous negative impact on a legal team's spending. For legal departments contracting with outside law firms, legal spend management software enables reporting of billable activities, helping to control costs and minimize overbilling.
Rapid financial approvals. A centralized place to manage financial documents means that payment approvals can be almost instantaneous, which is a welcome change to the old practices that involved long turn-around times and surprises when charges were delayed.
Simplified vendor comparisons and reviews. When you have software to help you quickly and easily see how your legal team is spending money on various outside firms, you have the information needed to compare rates and spending to determine if any of these relationships should be revisited based on a lack of value.
Using contract management and legal spend management software together
Legal departments operate in many different ways. Some businesses have dozens of people dedicated to legal operations, while others have a legal team of one. Because of the different arrangements from one legal department to the next, it’s not easy to pinpoint exactly how contract management software and legal spend management solutions should be used together across the board. That said, there are certain situations in which such a combination will not only enhance existing contract management and legal spend management practices, but also the team's operations overall.
Teams starting their transition to tech
It stands to reason that if you are going to improve one area of your operational management through technology, you should similarly seek to improve others. Combining contract management and legal spend management software enables you to cover a lot of ground in this regard, and the efficiencies gained in this approach can result in significant time and financial savings each year.
Teams that rely heavily on outsourced services
For teams that work with dozens of outside firms and vendors who provide a variety of services to your legal department, ensuring every agreement is closely monitored and every invoice is accurate is a crucial part of managing expenses. Any number of these outside spends may have an impact on an existing contract, so using both contract management software and legal spend management software enables the accurate tracking of data across business functions, which results in clearer, more reliable reporting at all levels.