Legal Operations may be one of the fastest growing and most important departments in enterprises worldwide. But where has that growth come from, and why?
Agiloft CEO Eric Laughlin sat down with Marc Doucette and Pepe Toriello of the podcast “Contract Heroes” to discuss the rise of Legal Ops and how contract lifecycle management (CLM) software can help organizations improve their processes and procedures. In the chat, Eric reflects on CLM’s past and future and offers his advice for companies just starting to automate their contracts and business processes.
Below is a brief Q&A with four key questions from their conversation.
1. Contract Heroes: Why do you think the Legal Ops role has exploded in growth at the enterprise level?
“You’ve seen the momentum building on Legal Ops for a decade now, but I agree with you that it’s really exploded, both in terms of how many Legal Operations folks are out there, but also in terms of the amount of influence that they have has dramatically expanded,” Laughlin said.
Laughlin reflected on earlier days of his career, back in 2010 while he was working in e-billing. He recalled how his e-billing colleagues gathered massive amounts of data in their software. Nobody was calling themselves Legal Ops yet, but they were “building an amazing arsenal of data.”
“That ability to generate data about legal processes and legal outcomes is something that was becoming very empowering to that group,” he said. “Not only to express the value that the Legal department was having… but also to have that data that allows them to say: ‘we can do better. Here’s the baseline, here’s the data that shows the improvement.’”
Just a few years ago, it wasn’t uncommon to answer “basic” questions about CLM, Laughlin said. People would ask him what CLM was, or what first step their organization should take. Fast forward a decade. With the emergence of the Corporate Legal Operations Consortium (CLOC), a group that gave a voice and sense of community to legal professionals everywhere, businesses now have much more data-driven, process-driven Legal departments.
And that only became more true after the pandemic hit.
“[The pandemic] was a real accelerator for digital transformation and a real accelerator for process-driven thinking and alignment of processes across legal departments. Legal Ops were ready,” he explained. “They were ready to make a difference, they were ready to jump into action.”
“So I think of it as a story of a lot of momentum through a decade and then the moment hitting where that group was ready to do something and they did,” he said.
Lastly, Laughlin noted that the rise of Legal Ops in enterprises is also due to just how useful contract data can be.
“Yeah, sure, it’s a piece of paper, it’s a document, but you can easily rip it into its component data parts, and there’s so many steps that can be well-documented using a good software platform,” he said. “Another thing that makes it easy to understand is that it’s business oriented. We’re talking about everyday business—we’re talking about money. All of a sudden, data is way more interesting when there are dollar signs attached to it.”
2. Contract Heroes: How do you think Legal Ops can enable all departments to leverage the software inside their Legal department?
The first step? “Get in alignment” with various stakeholders, Laughlin said. “One of the beauties of taking a software approach is in the alignment of it. Instead of trying to get alignment in a discussion or a PowerPoint slide, you can really make a process come alive. You can think of software as a canvas, really, to paint this process through the software. Let’s all get aligned…and then let’s try it,” he said.
Software helps stakeholders see what is—and isn’t—working, Laughlin said. When it’s just people passing emails or talking to each other in the halls, it’s much harder to figure out what steps in a business process aren’t working. And before software, it felt like calling out issues meant calling out employees— specific people that aren’t working—not a process that isn’t working.
“Now you can all point at the software and paint together instead of throwing each other under the bus when it comes to process improvement,” Laughlin said. Instead of feeling like you have a difference of opinions with your colleagues, “we actually have data that shows this process works.”
3. Contract Heroes: Let’s think about companies that are just discovering CLM tools exist and they have no idea what kinds of processes they can automate. In your experience, how could a company with no good cultural management process implemented take the first step?
The first step, Laughlin said, is to take a look at a business’ current processes and see if you can understand them. Are they scattered, or are they aligned already? “I always encourage organizations to do a little introspection before they dive 100% into a software approach,” Laughlin said. “What is it, of all the things you’ve read about CLM, what are the one or two things you find to be your biggest problem right now?”
He said the key is making sure a business has done enough homework to know where their problems truly are, not just the problems of the industry as a whole.
“The amazing thing about Agiloft is that it was born as a no-code, workflow platform, so it’s all about business process. Any data model you have, any security model you have, Agiloft is flexible to the extreme to meet the needs of your contracts, and that allows you to start where you want to start with the right processes.”
Step two, he said, is to set up a system for feedback and to be responsive to complaints. “A continuous improvement mindset is just required,” he said.
4. Contract Heroes: There are multiple ways to calculate ROI. What are some of the processes or hard numbers when it comes to ROI for a CLM tool?
First and foremost, Laughlin said, is level 1 ROI: revenue leakage, contract deadline expense leakage, and so on. Those, he said, are very easy to measure.
“It gets more interesting when you talk about speed to contract,” Laughlin said. For example, he pointed to the old sales adage: “time kills deals.” Decreased time from sale to contract is a real, tangible benefit for the Sales team.
Another set of metrics surrounding ROI has to do with a company’s net promotor score, Laughlin said. “How good am I to do business with? Do my customers give me good marks on wanting to do business with me?” Anytime a company is measuring their net promotor score, contracting is something they should be thinking about, he said. “That’s hard to put a dollar sign to, but it’s a core metric for any company and one that contracting should be thinking a lot about.”
Click here to listen to the Contract Heroes podcast with Eric Laughlin in its entirety.
To learn more about how CLM can help you improve your legal operations and realize real ROI in your contract processes, schedule a call with our CLM experts today.