Why High Volume Contracts don’t need to take up all your time
World Commerce and Contracting (WorldCC) estimated that the cost of reviewing everyday low-value contracts comes in at a whopping £5,000 to complete, and figures also show that the average time to review a contract is over 30 days.
Ultimately, higher-volume but lower-value contracts cost your legal team time and take them away from bigger, more interesting and more complex projects. It also costs the business a heck of a lot of money, too!
But what about risk?
‘Lower-value’ doesn’t always mean ‘lower-risk’, but there are a number of factors at play in deciding how to deal with contracts. We manage high volume contracts on your behalf, streamlining the entire process so it’s more efficient and cost-effective whilst also ensuring contracts are handled safely.
In this article, we will explore the challenges associated with high volume contracts and provide practical insights on how we can help you to maximise efficiency and minimise risk.
The Current Problem with High-volume Contracts for In-House Legal Teams
Contracts matter. Without contract management, businesses would have no revenue or access to services.
But the high-volume contracts that take up much of the time of in-house teams still need negotiation. They need to be handled efficiently, safely, and scalably, but putting in place standard processes and automation requires time and expertise that in-house teams often struggle to find.
In-house legal teams are already swamped. The time and effort that goes into lower-value contracts is probably a major factor in adding stress on your team while preventing them from focusing on strategic work. There are knock-on effects for the business too - not only the experience for sales and procurement team members as they wait for help, but also the broader business impact on revenue growth and business agility.
We can turn around contracts in just half a day, create a great experience for your business (our customer satisfaction is 4.6/5), and deliver automation and continuous improvement as part of the service. If you can’t square meeting these standards internally for high-volume contracts while also supporting strategic work, it’s time to consider using an external supplier (or contacting us). That way, your in-house team can focus on the important, more interesting stuff that can’t be outsourced, you can keep the cost at a predictable minimum, and you can demonstrate even more business value.
Managing risk in high-volume contracts
Risk is a major factor in contract negotiations. However, not all contracts are equally risky. You need solutions for the different categories of contracts that recognise their different value and risk, and handle them appropriately. You need any outsourced provider to be rigorous and follow your preferred positions, but before turning to outsourcing, it is worth considering whether some types of low-risk contracts need negotiation support at all.
Thresholds can be set through policies, and your team (or a managed legal service provider) can perform triage to ensure that each contract is being handled in the optimal way, which may be for the low-risk contracts, the business taking responsibility or non-negotiable standard terms being used.
This optimisation ensures that legal is not getting bogged down in reviewing contracts that will probably never cause you any trouble. Legal’s limited resources (whether internal or external) need to be directed to what matters, so heading off the lowest-risk contracts at the initiation stage is key.
We are often asked by clients to implement a risk-based triage as part of a managed intake process to ensure that the contract needs support, and if so, apply the client’s rules to who will support it internally or externally.
Triage can be supported by an approval process that ensures the relevant departments and managers sign off their part of the agreement and any material risks and a signing policy that ensures that the person with the appropriate seniority signs the agreement, based on the level of risk.
When triaging your contracts, aspects to consider might be:
- the value and committed term of the transaction,
- if the contract uses an unmodified standard form,
- if it is just renewing an existing approved deal,
- if there are any material information security or reputational risks,
- whether guarantees or security are being granted,
- if material personal data is being processed, or
- if material IP is being created or transferred.
Once you’ve ensured that legal is focussing on the right contracts, there will still be many that need to be negotiated. And this is where we can also add value by delivering streamlined support for contract management of higher-volume contracts, reducing your costs and allowing your team to focus on the critical deals.
Streamlining contract management
We wrote the book on streamlining contract management, which has a three stage methodology:
- Repeatability: standardise your contracting processes so you have the foundations for improvement
- Robots: Adding simple automation that gets rid of unnecessary work, while improving speed and reliability
- Refinement: ongoing continuous improvement to make your contracting fly.
The book has a comprehensive list of steps to follow to improve your contracting, but let’s be honest - it’s hard to find the time to do all these steps, especially if your team is swamped by urgent work. It’s also hard to change behaviours, and legal team members may be more inspired by doing strategic work rather than climbing a cultural change mountain.
Radiant exists to help teams solve this conundrum by implementing our methodology for your high-volume, lower value contracts, allowing your legal team to focus on what they do best: solving your organisation’s most important issues working closely with the business.
So how do we implement for you the three stage methodology to streamline your contract management?
1. Repeat, repeat, repeat
“If you can’t describe what you are doing as a process, you don’t know what you’re doing.” - W. Edwards Deming
Too often, companies’ contract processes are ad hoc rather than standardised, with everyone working in their own preferred way.
This causes multiple issues:
- without a standard, it’s hard to improve how work is done or share learning,
- not all ways of working are equal - chances are that members of your team are doing activities a harder and less efficient way,
- without standardisation, automation is difficult to apply and it becomes a larger change programme, and
- standardisation helps reduce variability, meaning that risks are more consistently handled and your portfolio of contracts is easier to manage with fewer surprises.
The first thing we do when we work with our clients is look to standardise the basics quickly:
- We adopt your templates, but over time we help simplify them and make sure they cover relevant risks.
- We introduce an intake process (or use yours if you have one in place) to make sure the necessary data is captured upfront, improving the business experience and speed to get the first draft out.
- We create playbooks to help with consistency in risk management. We are able to do this far faster than in-house teams, using our proprietary tools to analyse existing deals to extract the issues that come up regularly and how they have been handled. We also bring our contracting knowledge base with hundreds of issues already identified. You get the benefit of speed to implement, reliable risk handling, and avoiding unnecessary escalations.
- We bring best practices in how each step of the contracting process is performed, but they are fully customisable to your needs, with checklists based on your unique processes and issues. By customising rather than starting from scratch, we can get going faster and make sure that everything is covered from the get go.
The result is you get the benefit of processes and tools that have been improved through our support of tens of thousands of contracts, we can get going quickly without adding even more work to your team, and your business users get a seamless transition that immediately starts to add value.
2. Robots: automation that helps
Technology is terrific, and there are lots of ways that we use legal tech to help our clients improve their contracting. But alas, there are no silver bullets that solve everything, including generative AI or contract lifecycle management.
So while we use and build legal tech where it can help, we provide tech-enabled services, rather than just technology. This means that you get the best of judgement calls and a human, friendly experience, along with the efficiency and accuracy that tech offers in the right contexts.
Once we have the repeatable process in place, we will provide a range of automations as part of our fixed-price service, with no need for you to find technology budgets or run complex integration projects.
Here are just some examples of what we bring within our fixed charges:
- Our new proprietary client portal not only gives you live data on what is happening with your contracts, but also an automated escalation process so your team can remain in control and not drown, along with contract management for your signed contracts.
- We automate the drafting of all of our clients’ templates, speeding up the process and ensuring rigour and accuracy.
- We have proprietary tools extending Word that halve the time it takes us to review contracts, while reducing errors, allowing us to keep turning your contracts in half a day safely.
And yes, we do use AI. But only where it helps, and only where it is safe. We made your contracting process fast and consistent in the Repeatable stage - this is not the time to introduce random word generators!
3. Refinement: CONTINUOUS improvement
We’ve done this quite a few times now for new clients, so the first two stages can be done in a couple of weeks as we get going with a managed legal service. The trick is the third stage: refinement.
Radiant is built around continuous improvement, meaning that every quarter we will deliver multiple improvement projects as part of the base cost of the service. It’s this refinement stage where the magic really happens. We meet with you each quarter to review what was completed and most importantly agree with you on the priorities for the next quarter, based on your business imperatives.
Through continuous improvement, we are able to deliver the most important business value: accelerated revenue or a more agile business, depending on whether we are supporting your sales or procurement contracts.
With many clients the focus becomes one of reducing time to close, while ensuring that your contracts handle the risks you care about.
Average time to signature reduced from months to days…
With all the tools and processes we put in place as part of the repeatability and robots stages, we will turn more and more of your contracts in half a day (as in drafting a contract, or handling a red-line).
But to get the real business value of accelerating sales and procurement, the goal needs to include removing the need for multiple turns of the contract - because however fast we are, the other side tends to take much longer.
Getting rid of the need to send drafts back and forth so many times is an art and science. Some of the approaches we bring are:
- Analysing negotiations and showing you “heat maps” of your contracts, that allow us together to pin down which clauses are being over-negotiated and would benefit from refinement.
- Optimising how to respond to issues raised by the other side, with flexibility where it is in line with your risk-tolerance and explanations of the positions that you need to hold.
- Getting ahead of predictable issues, with training and materials for sales and procurement teams on how to position the issues and head off debate.
Although speed is critical for the legal team to demonstrate that it is adding business value, we never lose sight of risk management.
Reducing risk while moving faster
The speed of the service will delight your business team (hence our 4.6/5 customer satisfaction scores) but our job is to protect your company and make sure that risks are also handled appropriately. The steps we take to make your contracting more efficient also improve risk handling, for example:
- Document automation reduces errors in drafting contracts, and ensures that the correct points are always included in your first drafts.
- Playbooks ensure that the positions taken in negotiations are consistent and you always feel in control.
- You can define when you want to be escalated to as part of the process definition, ensuring that the legal team is always involved in critical decisions around exceptions for particular deals.
Fundamentally, a standardised and optimised process delivers reliability as well as speed.
Time to outsource your high-volume contracts?
Outsourcing the management of high-volume contracts to a managed legal services provider, known for their extensive experience, dedication to efficiency, and focus on risk reduction, offers unparalleled benefits.
In-house legal teams face significant pressures, and the ad hoc approach to negotiating lower-value contracts adds to this. We have proven time and time again, via our data-driven approach, the significant time and cost savings that can be achieved using Radiant’s contracting methodology.
Our work in standardising processes, templates, playbooks and workflows increases efficiency, without increasing the risk. Plain language, simplification of terms and processes, and automation all play a part in improving outcomes. Meanwhile your junior team members can upskill, and more senior staff can be given the space and time to work on more interesting, strategic projects without the need for additional external law firm support. Our expertise is evidenced in a number of case studies, where organisations have successfully benefited from our continuous improvement approach.
If you’d like to see what we can do to free up your time by allowing us to manage your smaller contracts, please get in touch.