A legal operations team is the heart of an organization, which makes working with other departments and business functions a high priority. To help guide in-house legal departments, we brought together industry experts and our customers to open a dialogue around collaboration in our latest whitepaper, Legal Operations 101: A Blueprint for Modern Legal Departments. This blog post is the first in a four-part series (check out part 2, part 3, and part 4) on best practices for legal departments when working cross-functionally within your company.
Poor contract management costs companies an average of 9% of their annual revenue
According to the International Association for Contract & Commercial Management (IACCA), many companies are missing a tremendous opportunity to boost their bottom line. Optimizing internal processes and accelerating the sales lifecycle should be a top priority for both sales departments and legal operations. These departments share common goals, and can greatly benefit from working together from the early stages of a deal.
Easier said than done, right? Sales departments may look at legal as a bottleneck, and legal departments are often wary of promises being made in the contract negotiation phase by their eager colleagues. However, without ongoing diligence on behalf of a company’s legal department, contracts are often vulnerable to weakness which decreases their value and exposes the organizations. Consider the following:
- Disputes over contract scope
- Wasted time negotiating contract redlines
- Refunds or payment reductions due to failures based on over-commitments
- Disagreements over pricing
- Mismanagement of subcontractors
These scenarios are all too common, and unfortunately cost businesses real money, directly and indirectly. 26% of IACCM organizations surveyed experienced losses and delays from contract cancellation, with a similar percentage facing revenue leakage from liquidated damages.
The good news is, you can avoid being one of these statistics.
There are two areas that are critical to address if you want to avoid the scenarios mentioned above: technology and process.
- Technology. Decisions on technology should be approached with a team mindset. It’s important to integrate any tools that will be used by both teams. Implementing and connecting platforms like contract management and e-signature software provides additional process efficiencies that reduce the duration of the sales lifecycle, while streamlining important processes to make things simple and efficient for both departments.
- Process. Equally important is defining a process. The two groups should work together to develop a collaborative process for how the two functions will support each other in an efficient manner to meet common goals. When legal operations works with sales, the groups can ensure that everything about a new business deal is included in the contract without introducing unnecessary risk or limiting the scope of negotiation. Early involvement in the process by legal operations and close alignment between departments helps uncover the quickest route to executing the agreement, thus saving time for both teams.
Positively Impact Your Bottom Line
The relationship between sales and legal operations can be a tenuous one – but it doesn’t have to be. There’s a significant risk in not encouraging these two departments to collaborate – and serious opportunities for the bottom line when they do. To learn more about working cross-functionally, read our whitepaper: Legal Operations 101: A Blueprint for Modern Legal Departments.
We’ll be exploring this topic more in the coming weeks, so be sure to subscribe our legal ops blog for our latest insights and best practices.