By DAVID HOLME – Chief Executive Officer / Founder
CEO, David Holme, talks about how in-house teams face growing demands, especially from their Boards to justify cost and demonstrate identifiable commercial value in their business obligations. This article helps CEOs look at the legal functions-handling contract management in a new light.
I spend much of my time working alongside our consultants and in-house legal teams to look at ways to deliver value to clients and principally the Board. For General Counsels (GCs), the theme of ‘value’ crops up constantly. I think GCs have every right to feel exasperated as many organizations have a pretty vague definition of value. However, when it comes to the legal function, value is at the very least about reduced external spend, coming under budget and avoiding litigation.
Invest for value
A further common frustration, for which I have total sympathy with, is that there’s a comparatively low appetite at Board level to invest in the tools such as contract management software that actually help deliver that value. Investment in legal technology is rarely a topic that gets the blood pumping in corporate ‘get-togethers’.
So, what would be the true requirements for non-lawyers – and especially board members – to evaluate the need of an efficient contract management solution? Not all solutions and their activities can be measured, but some can. To deliver on the promise of greater ‘value’ I think it makes sense to start with some facts and numbers and work back to the investment, process and thinking modifications required to make a step change.
Here is our infographic with are some ideas (and this is not exhaustive) from personal experience of a non lawyer’s assessment of contract management software:
Today we are already working with a client that makes 60 acquisitions a year. We have been able to streamline their processes and reduce costs by half. Another example is, another client of ours spent 35% of budget on litigation costs, which has been reduced by 20% using technology and outsourcing. Has the approach to litigation changed or are we still marching to the same drumbeat dictated to us by law firms? Has project management moved on? Sadly, from my experience, external advisors are still doing things in the same way as they were 20 years ago. This sometimes means there is a gap between what is being delivered and what can actually be provided.
Take steps
It’s time to make a strategic decision to deploy technology that brings efficiency; and if that calls for strategic partnership with external service providers in the field of contract management, then it’s worth investing and taking it to the Board – sooner rather than later.
As part of that process, my top three recommendations would be:
- Set out four or five KPIs that demonstrably add value to the business and that can be measured. Each team will have different challenges, but there isn’t an activity that cannot be measured.
- Consider what tools to deploy to achieve each objective. Enlist other stakeholders or outside help to scour the market for answers.
- Set this out as a business case for investment and enlist help in defining an ROI. The good news is that an ROI is a number not an argument!
Set up for success
All this must fit into the departmental and respective commercial strategies, but firstly we all need to look at what success looks like. As with any department, we must go through this process and define success and how value is defined and measured.
I believe success will revolve around delivering defined value, and value will be defined, in large part, by agreeing verifiable numerical outcomes. If it were related to me, I would want to be the one defining value rather than having it defined for me.
