Aaron Pierce is vice president of product management at LexisNexis/CounselLink. Views are the author’s own.
From decisions that span a breadth of strategic growth and scalability goals to delivering on customer-facing service and alignment initiatives, the role of the chief legal officer (CLO) is increasingly more complex.
CLOs and their legal teams now oversee myriad critical business functions. According to the 2022 ACC Chief Legal Officers Survey: “80 percent oversee compliance, practically half oversee ethics and privacy, and four in ten handle business risk. Out of 21 different business functions, more CLOs have direct oversight over 18 of these functions than they had in 2020.”
Added to that, legal operations teams are more frequently asked to manage risks, handle contract management, determine strategy, and conduct data analysis. This unprecedented demand makes streamlining legal processes an urgent priority. Legal teams are being forced to consider more advanced technologies that also offer potential to reduce risk and improve outcomes.
To achieve this objective, CLOs and legal ops professionals need to understand how an Enterprise Legal Management (ELM) solution directly integrated with Contract Lifecycle Management (CLM) software adds efficiencies to their department.
What drives the need to combine ELM and CLM?
It’s no secret that 2020 saw entire corporate legal departments shift to remote work.
In the process of externally accessing the systems and software they used in-house, remote workers found workflow tools to be generally less efficient and certainly overly complex.
The situation was exacerbated, as HBR Consulting reported, by nearly half of all legal departments bringing more legal work in-house and replacing outside legal counsel with internal employees.
More legal leaders are turning to technology to resolve efficiency issues and create a platform for future enhancements. ACC's report found that more than 70 percent of CLOs planning a technology investment were looking to upgrade their contract management capabilities.
Case in point: During 2021 and 2022 the volume of complex—and expensive—types of contracts swelled, with M&A making up more than 7 percent of legal billing in 2021, up from roughly 4 percent the year prior. This equated to additional time, workflow, and resources to execute.
Using ELM & CLM software in modern legal operations
While ELM software and CLM software are two essential components of modern legal operations, traditionally they have been used independently of each other.
ELM products typically support multiple aspects of legal departments’ operations workflows for one or more of the following: legal matter management; legal document management; legal e-billing control; IP management; e-discovery; contract management; legal entity management; risk management; and, compliance and oversight capabilities.
CLM products tend to be cross-enterprise solutions focusing primarily on one thing: contracts. CLM software manages contracts from the initiation stage through the award, compliance and renewal stages. Its core capabilities enable the user to request a contract; create a contract; manage the negotiation and approval workflow; store and search contracts; track obligations; and, update a contract.
Using two disparate systems to handle intertwined matters and contracts leads to wasted time and resources. Users find it frustrating and inefficient to constantly switch between platforms to complete processes and view analytics.
Piling on top of this is the greater volume of contracts and swell in additional company-wide responsibilities being placed in the hands of CLOs and their law departments. The need to combine ELM and CLM solutions has never been greater. Legal leaders need to leverage new functionality more effectively to enhance department and business outcomes.
Why it's time to combine ELM and CLM
Integrating the capabilities of ELM and CLM brings significant benefits to organizations, including:
Improved visibility and control: Integrating ELM and CLM provides greater visibility and control over the entire legal process. By consolidating data and workflows into a single platform, legal departments can gain greater insights into contract performance and legal spend. This helps companies identify opportunities for cost savings and make more informed business decisions.
Streamlined processes: Keeping users within one application throughout the entire contracts process prevents information from being lost. Efficiency is enhanced with greater ease of use when searching, sharing, and redlining documents and contracts.
Single Sign-On: Just as consumer technology products provide a single sign-on for a frictionless user-experience, lawyers also prefer the legal tools they access most to be frictionless, as well. Integrating ELM and CLM provides a single sign-on for users to seamlessly switch between programs without logging into multiple applications.
Reduced risk: By automating tasks such as contract creation, review, and approval, companies minimize the risk of errors and inconsistencies. Keeping data centralized also makes it easier to work with, is more secure, and helps meet compliance requirements. Risk of legal disputes is also reduced.
Increased efficiency and productivity: Integrating ELM and CLM is notably effective in reducing contract cycle times. By reducing the need for manual processes, legal departments free up resources to focus on more strategic work, such as managing legal risk and supporting business objectives. This ultimately reduces legal spend and improves overall performance.
Collaboration: One, easy-to-use combined system paves the way for enhanced collaboration among internal stakeholders and provides a platform for more efficient management of, and collaboration with, outside vendor partners.
In an age where we all have more demands on our time, using the right resources is critical. Connecting those resources together is essential.
Respondents to the ACC survey said contract management is the top technology area where they plan to invest.
A notable trend in legal technology is the adoption of more holistic, multi-function solutions as opposed to single-purpose software. The most valuable solutions will be those offering new capabilities while minimizing any complexity and integration challenges.
Following this evolutionary pattern, integrated ELM and CLM software is the next logical step for corporate legal departments in order to optimize their time, better manage legal spend, and prioritize strategic planning.