Contract Playbooks Make Teams More Effective

In-house legal teams are stretched thin, and it’s only going to get more challenging in the coming years. That’s a key finding from the recently published 2021 EY Law Survey, which reports that general counsel forecast workloads to increase by 25 percent over the next three years, with only a three percent increase in headcount expected to occur within that same period.

More work and fewer resources to get tasks completed—it’s familiar territory for many in-house lawyers. And because in-house teams are under pressure to keep costs down, simply outsourcing more work to outside law firms is not the solution. One thing that is often touted as the solution is legal technology.

While legal tech helps, it is more of an accelerator of results and not a silver bullet for every problem. To leverage legal tech effectively, corporate legal departments should focus, first, on getting the right people and processes in place. By laying a strong foundation with the right people and processes, legal tech can then be plugged in to accelerate problem-solving.

Legal departments struggle to keep up with is the steady drumbeat of commercial contracts that require attention. Legal tech solutions can be helpful to ease the burden of a commercial contract attorney. But again, the technology can only help if there’s groundwork in the form of processes and systems that enable it to optimally perform.

When it comes to commercial contracts, one of the most important systems to have in place is a contract “playbook.” In short, a playbook standardizes how contracts are reviewed and negotiated within an organization. With a playbook in place, which outlines the start-to-finish workflow for contracts, departments within an organization share an understanding of standard contract processes, leading to more efficient and effective results.

One of the most important benefits of a playbook is that it allows corporations to more effectively gather and analyze contract data and information—and therefore extract more value from their contract review processes. It’s the data and information that processes capture that allow the legal tech to be effective.

For example, over the coming years, the acceleration of artificial intelligence software into the review process will enable corporations to extract data and clarify the content of contracts more effectively. This will allow corporations to review contracts more rapidly, organize large amounts of data more efficiently, and increase the volume of contracts that can be reviewed, negotiated, and executed.

Those who realize the greatest benefits from AI in the future will be those who prepare for it today. Computers require data, and if there is no relevant, organized data to plug in, then even the strongest supercomputer paired with the smartest software won’t be able to add much value.

The challenge that many in-house legal departments face is that they lack the organization and technological know-how necessary to transform a traditional approach to contract review to a modern one that relies on systems and effective resource allocation. At Lexitas, we help clients make the transformation.

Corporate legal departments are busy. The 2021 EY Law Survey suggests they’re going to get even busier. Legal technology helps to lighten the load, particularly when it comes to commercial contracts, but that only happens if the proper foundation is established.

Get Commercial Contract Data in Order

Many businesses struggle to capture data across their commercial contracts portfolios. Layering software on top of a disorganized system won’t solve the problem. Rather than spending time and resources trying to integrate software to manage “dirty” data, a better investment would be to clean up existing data and implement more organized systems for data capture moving forward.

Once those systems are in place, legal tech is deployed to extract and analyze data and create efficiencies in the review, negotiation, and management of commercial contracts.

Define Rules and Create Structure

Before investing too heavily in technology, businesses should attempt to standardize terms, create templates, think through “if/then” scenarios and evaluate risks associated with their various forms of commercial contracts. We call this process developing a “contract playbook.” It’s impossible to standardize and create rules for 100 percent of contracts—there will always be outliers—but creating a playbook, which sets rules for software, can drive tremendous efficiencies for a corporate legal department.

Have Contract Review Work Properly Allocated

When contract review work is misallocated, it often means that lawyers—whether in-house or external—are doing work “below their pay grade.” Inefficient review work means that the expertise available to a business is not being underutilized. In other instances, individuals are tasked with contract work that falls outside of their wheelhouse, which leads to inefficiencies and costly errors.

Humans will still be involved in the process even if you use software to automate aspects of contract review. Therefore, before turning to legal tech, it’s important to designate and train the contract lawyers, and non-lawyer resources (such as the professionals at Lexitas) who will supplement the finite capacity of software. By doing so, you’ll ensure that your people are elevated to their highest and best use.