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How the Right Contract Data Simplifies Your Quest to Reduce Legal Costs
Corporations are always looking to improve their P&L by reducing expenses, but not all cost-cutting measures are created equally. In fact, an Orgvue survey found 93% of 500 corporate leaders made snap cost-cutting decisions within the last year—and 38% regretted the outcome. So, what are costs that the legal department can safely cut?
- Unrestrained outside legal spend?
- Overlapping legal and/or operational platforms?
- Auto-renewing contracts?
- Wasteful expenses that are yet to be identified?
Rather than guessing, legal departments need a degree of certainty before they take action to reduce legal costs. Otherwise, they risk jeopardizing disrupting workflows, running afoul of regulatory compliance, or triggering any number of additional unforeseen outcomes. The good news is your business has most of the data you need to make smart adjustments to your budget.
Whether housed in a legacy home-grown system or an enterprise contract lifecycle management (CLM) system, your contracts contain insights that can help with your legal cost reduction—without causing any harmful downstream effects.
Using Data to Cut Legal Expenses
Actionable cost-saving data is tucked away in contracts. In fact, many key insights aren’t available in a format for corporate decision makers to immediately glean the solutions they need. In the past, attorneys would need to comb through contracts for answers to critical expenditure-related questions, diverting their attention from important legal work and turning them into high-paid (and vastly overqualified) administrators.
Even as the transition from legacy systems to CLM platforms occurs across corporations, cost-cutting insights do not automatically rise to the surface. Only through thorough contract review are corporations able to extract cost-cutting insights that can transform their businesses. The large volume of contracts paired with the often incomplete or inaccurate nature of the accompanying data require structure and an incisive review from trained legal professionals. That way, your business can maximize the efficiency of analysis and outcomes.
Outlined below are just a few of the instances where organizations can obtain rapid results in identifying where to reduce expenditures.
Reducing Outside Legal Expenses
While construction projects still begin with fundamental agreements, corporate counsel find that established approaches require significant adaptation. Design, development, and construction agreements now demand more sophisticated construction risk management provisions, particularly given the unpredictability of costs and project timelines.
Identifying Redundant Tools
Though organizations have worked to centralize and consolidate their data and cloud platforms, wasted spend still slips through the cracks. Estimates suggest 30% of cloud spending is misused, meaning that as much as $180 billion of the anticipated $600 billion organizations will spend on the cloud this year will be squandered.
Contract data can be used in a variety of ways to reduce software expenses:
- Are there multiple active agreements from the same counterparty? Are SOWs similar but across different functions?
- Are there contracts from vendors across similar functions?
- Is the original billing owner still with the company? If not, is the contract auto-renewing?
These are just some of the data points which can reveal opportunities for legal cost reduction. Packaging the data within a clear-cut and actionable report can unveil other signs of wasteful spending.
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Finding the Right Contract Analysis Solutions
When used right, contract data can fuel legal cost reduction, but the results aren’t guaranteed. Only when your contract analysis solution balances cost-effectiveness, accuracy, and results will you achieve your cost-cutting goals.
For example, 100% AI contract review can help to accelerate your review timelines, but the technology does not always translate to quality or accuracy of insights. The case of an attorney using ChatGPT in the Southern District of New York just shows how far these unsupervised solutions can lead you astray.
Going with offshore attorneys to cut costs while incorporating human review and scrutiny doesn’t always work either. If attorneys are not familiar with the nuances of the laws of the country (or even states) in which you operate, you might miss distinctions in contracts that might lead you into regulatory noncompliance in the pursuit of cost savings.
In our experience, the most cost-effective legal contract review services include a combination of timesaving AI-powered platforms with scalable teams of legal professionals to verify the results. That way, you can identify where to reduce your legal spend while maintaining the workflows, operations, and compliance your business needs to thrive.
Want to see how the right combination of AI and scalable teams of attorneys can produce impactful reporting? Read our eBook to see how our approach to Contract Analysis Services (CAS) can help reduce legal costs and overcome urgent challenges.