This episode of Contract Heroes featured Dan Hendy, the Executive Vice President of Corporate and Commercial Solutions at UnitedLex. Dan has been working in legal operations since 2015, when he was first introduced to a legal ops role while employed at GE. Throughout our conversation, Dan shared his experiences with how the world of legal operations has evolved since its early days as well as some of the biggest mistakes and most valuable outcomes he has noticed during CLM implementations.
Evolution of Legal Operations
Since Dan has been hard at work in the legal ops world for 7 years now, we decided to start the show by picking his brain to find out more about how legal ops has evolved in his eyes and what it was like at its genesis. He explained he was interested in taking on his role at GE because he noticed a lot of moving parts in the legal department just were not working. The desire to fix these issues is a huge part of how legal ops began. As legal departments expanded, it became clear that they too would need a way to manage budgets, filter projects from other parts of the organization, and leverage spending on outside counsel. Back then, they were unable to collect operational data on the throughput and performance of the law department, making it difficult to meet today’s expectations of the legal team being governed the same way a CFO might run a finance department.
Currently, legal ops is headed in a direction that builds the legal team as a business enabler. The chief legal officer is expected to present more than just details about individual cases being handled by the legal department. Instead, they must quantitatively show the impact they are having on the business via the data collected from contracts. This elevates legal team leaders and senior lawyers to the status of business partners, making them more credible with their peers and garnering well-deserved respect from other departments.
In summary, legal ops has evolved from merely managing outside counsel and your stack of technology to now having the proper data to make strategic decisions about how to run and structure the legal department.
Building the Bridge Between Business and Legal
Dan then gave us an excellent analogy to illustrate how a CLM solution can help the legal team provide better and more satisfying interactions to other departments who may have previously been hesitant to approach in-house counsel with their contract issues. Bringing up a handful of different food apps, he mentioned the concept of real-time tracking and how much it does to improve customer experience. By simply viewing the app, you can see where your food is and how long it will be until it arrives. A CLM solution can provide similar information for requests submitted to the legal team.
For example, if another department needs an opinion on a contract from someone in the legal team, they can submit their request and then have the ability to check the status of that request as well as who is handling it. Providing that visibility in real time of how the task is being managed from within the legal department goes a long way in building the bridge between departments. It indicates the standard for different types of requests, allows lawyers to prioritize certain tasks, and gives others an idea of how long they can expect to wait before they hear back. In this way, the legal team clearly sets up and manages the expectations being placed on them.
The Biggest Mistakes During CLM Implementation
As we often discuss here on Contract Heroes, one of the biggest mistakes a company can make is to purchase a CLM tool without first fixing their contract processes, thus automating broken processes and wasting valuable time and resources. Dan provided us with an extremely helpful list of ways to avoid mistakes like this while implementing your own CLM solution.
- Start with your desired outcomes and work backwards. What does the system need to produce by the end of the implementation? Utilize the “5 Whys Rule.” Choose an outcome that you think is a necessity, such as “I need to track approvals.” Ask yourself why you need to track approvals. “I need to show an audit trail.” Why do you need to show an audit trail? Keep following the statement back until you illuminate the real purpose, eventually reaching a much simpler process.
- Engage stakeholders and encourage executive sponsorship. A senior stakeholder in the company must make the implementation a priority and push people to adopt it. Without that backup from important groups outside of just legal, it will be difficult to make people excited about the change.
- Understand your contract processes. Not every contract process is created equal, so they should not all be treated the same. One out of hundreds of business associate agreements will not require the same attention as an 80 page agreement that takes 6 months to negotiate and is the driving force of your revenue. Pay attention to the differences in the processes and build the discipline to manage them properly.
Finding the Value of CLM for Your Business
Dan explained that there are generally two goals when it comes to CLM implementation: improving the employee experience or creating value via the use of technology. Clients need to sit down and figure out their motivating force for utilizing a CLM solution and how their business values that force before they begin the implementation itself. He went on to provide 3 illustrations of how different types of organizations may find value in their tech solution.
- Growth organizations: The motivation for a company that is focused on growth is speed and efficiency. They need to be able to process contracts quickly in order to gain more revenue. The focus may be on quantifying the timeline of the contract process and finding ways to speed it up.
- Big organizations: Established companies are often overrun with legacy contracts and may have no idea what information is locked away inside them. Moving all these documents into a repository and focusing on tracking certain data points within those contracts may help to identify areas where value erosion is occurring. The focus here may be on counteracting the value erosion that comes when you lack transparency in your contract portfolio.
- Compliance organizations: Companies that work in a higher risk environment may need to prioritize the avoidance of litigation and commercial issues. Though this is harder to quantify than the other examples, CFOs are particularly understanding of the fact that not having a direct line of sight into your contract data can create unnecessary risks in the organization.
For more exclusive chats with expert guests in the contract lifecycle management sphere along with valuable legal-tech advice, check out past installments of Contract Heroes and be sure to subscribe so you don’t miss an episode! If you have any questions for our guest, Dan Hendy, you can easily reach him on LinkedIn.