The COVID-19 pandemic has fundamentally changed many aspects of how we live our lives and operate our businesses. For example, in the past year, legal departments have set their sights on resource management and spending reduction.
Partially due to the fact that COVID-19 restrictions have led to profit losses, legal departments have been forced to enact changes in order to prioritize savings.
Legal departments are affected by practically every other business function within a company, and as such, COVID-19 affecting one aspect of a business will eventually affect legal teams. As a result, these teams have become more proactive to respond to large-scale pandemic-related changes in businesses.
COVID-19 restrictions continue to impact the function of legal teams across a variety of industries. According to an HBR report on a study that took place between last April and November, 18% of businesses noted their intention to reduce legal departments.
However, the same study shows that plenty of legal departments are still hiring lawyers in-house. Of the 175 organizations included in the report, 44% of businesses stated that they intend to add more attorneys to their legal departments.
The suddenness of the restrictions brought on by COVID-19 have made it to where businesses are interested in finding and keeping the right legal resources. This way, they can not only weather the current storm but prepare ways to manage cost control long-term.
Demand VS Cost Constraints
Despite the cost constraints brought on by the recent pandemic, nearly 84% of legal departments have stated that they’re continuing to see an increase in demand for legal services. This means that despite whether organizations and departments can afford to add resources, the need is not decreasing for the foreseeable future.
The desire to manage spending more closely paired with the need to arm companies with the best resources possible has forced legal teams to carefully evaluate work processes and inter-department relationships.
In order to fully meet the growing needs of organizations, cost savings have to come from somewhere that does not involve the further cutting of necessary resources.
For many businesses (as much as 91% of those surveyed), the solution for savings lies in reducing spending on outside counsel. Some of this reduction comes from implementing tighter guidelines on outside counsel billing.
Not only do these new guidelines keep more work in-house, but legal teams are taking the necessary steps to ensure that the right individuals and firms are handling the right tasks.
An example of enacting tighter restrictions may include automating contract management procedures. This means that low-priority, low-negotiations tasks can be filled, processed, and stored automatically. Keeping less significant contracts from clogging a legal team’s task list can be paired with other savings measures. An entire system can help generate significant savings for the entire department.
Technology can very well play a big role in cost savings for legal departments. In fact, 61% of organizations surveyed have already started utilizing contract management technology. A further 46% have reported relying more on existing technology in order to manage legal tasks more effectively.
COVID-19 and CLM
COVID-19 has changed the way that legal departments are approaching contracts. Because the pandemic was largely out of the hands of individuals and businesses, organizations have sought fast solutions to manage and modify contracts without increasing costs.
Fortunately, contract management systems can help simplify the process of navigating such a complicated ordeal. These systems are helping legal departments to evaluate contracts and determine whether the conditions listed are still valid or need some form of modification.
Being that budgets are already tight, contract automation has the potential to be a profit lifesaver. Because contract automation is completed automatically, legal teams can stay on top of the already high demands brought on by the pandemic. In addition, legal teams aren’t forced to bypass their cost-savings plans in order to keep up with the demands of active contracts.
Much of the country is still reeling from the lasting impact of COVID-19. The pandemic has forced changes to take place with little to no guidance behind them. The availability of contract lifecycle management programs can help to mitigate some of the post-pandemic challenges that legal teams and organizations alike are facing. They’re a critical tool when it comes to growing accustomed to the new normal.