ANALYSIS: How Legal Can Tame Contract Management Tools

The adoption of new contract management tools has been at the forefront of legal department initiatives for several years. Historical Bloomberg Law survey data show that contract management technology has been the top priority for tech investment for in-house teams since we started collecting this information in 2020.

The survey data also show that contract management tools consistently rank in the top five most-used technology tools by in-house teams. The use of these tools is likely to grow, and they will probably become an industry standard for legal departments in the near future—if they can overcome the implementation challenges that new tech tools often face.

The CLM Disenchantment

Despite their popularity with in-house teams, in-house attorneys report considerably higher levels of dissatisfaction with contract lifecycle management tools (CLM) compared to other widely adopted legal tech tools.

One way to help explain this discrepancy is to look at how legal departments use their technology.

According to Bloomberg Law’s Legal Ops & Tech 2023 survey, the top five reasons why in-house counsel and their organizations use legal tech are to:

• improve productivity (81%);
• improve workflows (69%);
• automate at least one process (61%);
• reduce costs (57%); and
• respond to client or organizational demands (55%).

But even for those CLMs capable of meeting legal departments’ requirements, getting to the point where these new tools are fully functional is easier said than done.

Not being able to use a CLM as it was intended to be used might be contributing to the reported dissatisfaction.

According to the same Bloomberg Law survey, in-house respondents cited the lack of integration with other technologies and their own technological incompetence as some of the top reasons for why they were unhappy with their contract management tools.

This information can help legal departments looking for a new contract management tool to focus on a tool’s potential use and its adoption barriers. But there’s another way for in-house teams to significantly increase satisfaction with contract management technology in their teams.

Going Back to Basics

Numerous departments are involved in the creation, execution, and renewal of a contract. Legal departments play a key role in this cycle, but aren’t involved in the majority of the steps.

In light of this, it makes sense to go back to the basics: Instead of trying to find a contract management tool that works for everyone, find one that works for legal. This might sound a bit counterintuitive, but the benefits of taking this approach might outweigh any concerns.

Limiting the tool’s use to only the legal department might help attorneys overcome usage barriers more easily and faster. For example, finding a contract management tool that integrates with the department’s most-used tech tools is likely easier than integrating it into your entire company’s tech stack.

A scaled-down approach might also help in-house teams to better target the expected use of the contract management tool. Legal departments primarily use legal technology to improve productivity, but improving contract productivity probably doesn’t mean the same thing to a sales manager as it does to an M&A attorney.

Taking a more targeted approach doesn’t mean that you can’t expand the scope of your contract management tool later on, but it might help legal departments deliver results faster now.

Bloomberg Law subscribers can find related content on our  Vendor Management Toolkit page, Legal Department Management & Optimization page, and Legal Technology page.

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