Maintaining high revenue and low costs is the basic goal for any business. This model applies to the individual departments within a company as well, including the legal team. However, this can be difficult to accomplish, especially during growth phases when you’re looking to add new members to the team. In this article, we’ll discuss the common challenges involved with keeping legal costs low while continuing to grow revenue, and how implementing contract management software can help.
Whether it’s a larger company trying to keep up with a high volume of contracts, a smaller company that only has a few employees to keep track of all their documents, or a business that handles a low volume of high-risk contracts, legal teams are always looking for the best ways to manage responsibilities. One potential solution to help manage growing amounts of work is the addition of a new legal employee, but it really comes down to the types of work you need done - and the available budget. Adding another team member often makes sense when you have the budget for it, but that isn’t the reality for many businesses, especially small and midsize businesses. Rather than spending a great deal of time and money finding and training the right employee, businesses should consider first implementing technology that can immediately improve efficiencies at a fraction of the cost, while at the same time can help to identify the holes and opportunities within your department, making you better prepared to hire your next employee.
Challenges of Hiring New Employees
As stated by Chris Price, CEO of EY Riverview Law, “Staff costs make up the largest single area where in-house functions are facing an uphill battle on cost reduction.” With salaries on the rise in many markets, legal teams may have a difficult time keeping up with expectations for compensation. And even in the cases where a company can afford to hire a new employee, many companies run into challenges recruiting and retaining qualified candidates. According to an EY survey of 1,058 senior legal practitioners, nearly 60% of businesses “reported facing challenges in attracting and retaining the appropriate talent needed in today’s legal function.”
Additionally, it doesn’t sound like legal department budgets will be increasing much in the near future. The same EY survey found that many companies are planning to cut legal spending in the next two years, with the average projected cuts falling around 11%. With these budget cuts on the horizon, legal departments will need to find ways to spend less while continuing to operate just as effectively, and doubling down on technology and innovation is one way to accomplish those goals. Luckily, there are certain situations where implementing software can help the existing team in place complete more work - and at a fraction of the cost of a legal employee's salary.
Making the Case for Contract Management Software
Contract management software is now more advanced than ever and can make a significant impact for many businesses, especially those dealing with budget limitations. This software typically costs a fraction of a legal employee’s salary, and can accomplish many of the same tasks an administrative employee would be responsible for in the contract management process. By implementing contract management software, companies can lower costs without losing sight of the repetitive, time-consuming tasks that need to be completed. Additionally, having the right software in place to improve efficiencies can help you identify your team’s strengths and weaknesses, so you know exactly what your next employee should specialize in to make the biggest impact on your department.
Contract management software provides a secure repository for your important legal documents, accompanied by helpful features like milestone alerts, custom reporting, esignature, and many others. Having this software in place eliminates the need for a legal employee to manually track every important contract milestone or the whereabouts of every business document. Contract management software accounts for these details and ensures that an employee’s time isn’t spent working on mundane tasks, instead freeing them up to work on higher value projects. This is an issue for most companies, and as stated in EY’s survey, 67% of respondents indicated that more than 20% of time is spent conducting routine compliance and low-value tasks.
Modern contract management software also now includes artificial intelligence features that can save businesses time and improve accuracy, since the software can process information in contracts faster than employees can without making errors. AI can be used to automatically tag contract fields such as agreement type, termination date, and renewal term, among others. All of these fields are tagged automatically with AI, but this process could take weeks for an employee to complete manually, especially if the volume of contracts is high.
Contract management is one facet of your business that can’t get lost when looking for ways to reduce spending. The next time your legal department is preparing to expand the team or looking for ways to work more efficiently without dramatically increasing costs, consider contract management software as a cost-effective place to start. With features that improve the contract management process, and at a significantly lower cost than bringing on a new employee, contract management software is often the logical next addition to a legal department.