Peer to Peer Magazine

69 WWW.ILTANET.ORG An Asset to the Enterprise: How Legal Departments Can Demonstrate More Value FEATURES How can legal be more proactive and effective, while maintaining its role as an objective control function? What are the most effective methods for budget, revenue and profit forecasting? Which performance metrics are likely to be most compelling to the board of directors? Here are a few key areas where general counsel and legal departments can create major efficiencies and demonstrate their value to the enterprise. Re-Evaluate the Management of Contracts and Obligations Contract negotiations is an area where the law department can have a significant influence on commercial efficiency. When baseline templates shi to a customer-centric or other-party perspective and redlines focus on legal issues that have a true probability of affecting the business, negotiations can be streamlined. Maintaining a balanced approach sets the stage for a strong business partnership. A key efficiency metric is the number of back- and-forth cycles your department engages in when negotiating contracts with vendors and customers. Nine or 10 cycles might not be unusual in some organizations, but if you can reduce your average to two or three by eliminating workflow redundancies and bolenecks — and if you establish a formal system for identifying and prioritizing high-value contracts that should be handled under specialized protocols — this will help your company increase its speed of business and speed to revenue. You will demonstrate to commercial leadership that the law department understands the importance of business objectives and is doing something about them. Contract management is also an area ripe for efficiency and where revenue leakage can be minimized. It's not unusual for a single corporate contract to contain 1,000 or more obligations — your own obligations to a vendor, customer or third party, As corporations continue their efforts to cut costs and improve profitability, traditional "cost centers" like legal departments are now expected to re-examine their operations and increase value by providing strategic leadership, enabling the speed of business, optimizing legal spend and sometimes generating revenue. and obligations these parties have to you. Many organizations have no program in place for managing and tracking these obligations. They are typically viewed as a business problem, not a legal problem. However, when the law department can help the business understand and effectively manage contracts, they contribute value. Some companies and law departments aempt to manage contract obligations in spreadsheets or simple calendar notifications, but the task can quickly become overwhelming in enterprises with significant numbers of complex contracts. Managed services and sophisticated soware designed specifically for this problem can be used to standardize contract taxonomy and metadata design based on careful analysis of legacy contracts. The soware should be able to abstract metadata fields to analyze contracts, quickly search for and identify obligations, and categorize and prioritize them by importance. It should also be configurable to issue alerts, reminders and escalations per user specifications. The common thread in legal departments seeking new ways to contribute value and achieve cost-savings is in collecting and compiling data, isolating key metrics and analyzing trends.

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