3 Contract Management Performance Metrics All Legal Teams Should Track

Published on: 2/10/21

 

 

On today's episode of The Contract Lens Podcast Becky Holloway, VP of Marketing at Malbek, chats with Lucy Bassli, Founder and Principal at InnoLaw Group, about the contract management performance metrics every legal department should be tracking.

Lucy begins by pointing out that when it comes to contracts, domain expertise is essential. However, many lawyers tend to be cautious about legal tech and this is equally problematic. She gives her best tips for helping legal professionals overcome that fear and keep from being left behind. At the same time, she urges Legal Ops to realize that tech is not always the answer. With her infectious good humor and energy, Lucy dispels some of the biggest legal tech hype out there (no, robo lawyers are not coming for your jobs!) and shares very practical advice on what top 3 contract management metrics every legal department needs to know like the back of their hand. Hint: the ultimate goal for legal departments is to use contract data to inform substantive decision-making. So grab a glass of wine, and let's talk contracts!

 

 

Welcome to the Contract Lens Podcast, brought to you by Malbek. In this podcast, we have conversations with contract management thought leaders and practitioners about everything contracts and its ecosystem. In today's episode, we discuss the contract management metrics that every legal department should be tracking. Leading the discussion is Becky Holloway, VP of marketing at Malbek, and she is joined by Lucy Bassli, founder and principal at InnoLaw Group, a modern legal service provider, combining sound legal advice and practice of law with operations best practices. Lucy is an attorney, the author of The Simple Guide to Legal Innovation, and a former assistant General Counsel of Legal Operations and contracting at Microsoft. So now it's time to relax, grab a glass of wine and let's talk contracts.

Becky:
Hi everyone. This is Becky Holloway with the Contract Lens Podcast. Thanks for joining us again today. I am joined by Lucy Bassli, it's very nice to have you Lucy. Thanks for joining us.

Lucy:
Thanks for having me. My pleasure.

Becky:
Absolutely. Lucy, so you are an author, you are a commercial contracting expert. You're a Legal Ops consultant. You do a ton of different things. You're both a founder and principal of InnoLaw Group, and you have a really interesting perspective on bridging the gap between the practice of law and Legal Ops. Can you talk to us a little bit about that perspective?

Lucy:
Absolutely. It's interesting, I've certainly learned over my career that professionals like to put each other in boxes, and Legal is really good at that. As we know there are practicing lawyers and then there seems to be everybody else. And lawyers have done a really good job of being very crisp about you're either are one of us, or you aren't, with that comes the dreaded awful term, non-lawyer, that, of course, if anybody has stayed connected with me, they know that's just such a hot button, soap box topic for me, I can't stand it, big pet peeve. And I think Legal Ops has really brought that conversation to the forefront. Legal Operations is certainly an evolving and growing, maturing profession, or a function let's say, and it has so many different capabilities that comprise it. You can come with a background in lots of different areas and become a legal operations pro. Truly an expert in Legal Ops, but you might come from a tech or solutioning background, you might come from a finance background, certainly you can come from a legal background.

Lucy:
And what happens is if you were a practicing attorney and moved into the Legal Ops role, oftentimes then you are no longer an attorney in people's eyes. And especially for those attorneys who have maintained their license, who really enjoy the practice of law and want to apply that experience into an operations role, it's frustrating, right? It's frustrating that you have to be one or the other. Specifically in contracts, I find, it is more critical than perhaps other functions that come under the umbrella of legal operations, contracting really does require domain experience, domain in contracts, that's what I'm talking about when I say domain. Contracts have, there's a big legal aspect to it, right? There's that experience of negotiating, drafting, reviewing contracts, the commercial transactions lawyers have is so critical and valuable in order to apply to a contracts operation, right? A Legal Ops type of function.

Lucy:
So I've been really discovering and it's become blatantly clear to me that area of contracting is one of the best examples where really Legal Ops is truly Legal Ops. Many other cases, Legal Ops is applying business operations functions into a law department. And the only thing that makes it Legal is that it's the law department, otherwise it's just standard operations that we should have been doing for years anyway, but in contracts it's truly legal operations. It's that combination between Legal and Ops that I find truly interesting. So yeah, I straddle both. I'm a licensed practicing lawyer and an operations consultant, and I love making sure that people really are getting the value of two different professions mashed into one, so to speak.

Becky:
Yeah. Yeah. So at Malbek we obviously love our Legal Ops professionals. We work with a lot of them, but it's great to also have that legal domain expertise as well. So very interested to hear your perspective today. So part of your mission at InnoLaw Group, is to help law firms modernize their practice of law. You've actually written the book, right? The Simple Guide to Legal Innovation. So this is definitely your area. And it's a cliche, or a byword, that many lawyers are cautious by nature, they tend to lag when it comes to tech, and they're unlikely to embrace the latest trends. What have you found works best to get lawyers and general counsel to overcome that aversion to modernization?

Lucy:
Yep. It's a great question because what I think is happening right now with the boom in legal tech is that the actual practicing lawyers are often being left behind. As systems are being implemented, as processes are being changed, they're being led by Legal Ops functions oftentimes, and maybe one or two of the attorneys is on board with it, but really that consumption and adoption broadly amongst the practicing lawyers is still very, very low. So what I found works the best is if you bring the legal tech, or the tech, into where and how the lawyers work today, I think there's a lot of great technologies out there that require a change and a move towards something else. And that gap between their current experience, which frankly still made up largely of good old Outlook email and Word.

Lucy:
And again, yes, of course I come from Microsoft, it's flowing in my veins, but I don't work there anymore. And I say Outlook because that is the reality as much as Gmail is out there, certainly in the younger companies, but lawyers love their Outlook and thy love their Word. And so the technologies that are integrating frankly with those apps for now are still going to be the ones that are going to have an easier time to get that adoption. So my biggest and top tip is as good as the tech can be, it has to be connected seamlessly. I don't use the word integrated, it really needs to feel natural to where the lawyers are living today as much as possible. And I'd love to over time then get them hooked and bought in, and then you can move them out perhaps into other parts of their laptops so to speak. That's my biggest tip, is just bring it to them, bring it to where they are today, as much as you can.

Becky:
That makes a lot of sense. Do you think that some of the hesitation is a generational thing? And do you think as there's a new generation of lawyers coming in that the comfort level with tech will change?

Lucy:
Oh, gosh, I feel like I flip flop on that all the time. It's an easy answer to say, well, yes, of course, the millennial generation today were born in apps, they live in apps, they communicate in ways that they don't even use email really. So, it's an easy answer to say, yes, but I have seen some amazing examples of the prior generation lawyers who are genuinely curious. They're curious, they're interested, they want to keep up with the latest. So yeah. And in large grand schemes, there is a generational gap for sure. The ramp up time for even those that are curious is just naturally going to be longer, right? It's just not as intuitive to them to learn a new app as it would be to a younger generation.

Lucy:
So there is definitely that gap, there is, I'm not going to pretend there isn't, but I think we're not doing a good enough job of bringing along the former, the existing generations for those who are interested. I think there's enough curiosity there, and those are the leaders at firms and in corporate law departments, we need to find those curious ones, the ones who just need a little extra time, right? Or need a little special attention. So, it's a yes, no answer. I won't say it depends, because that's the worst lawyerly answer. And I'll say yes, no.

Becky:
Yes, no, I like it. So let's talk a little bit more about legal tech. So from where you sit, what should legal departments be paying attention to right now, and what is overhyped?

Lucy:
Oh my goodness. You're just throwing these at me that are too EASY. I will bite, I will bite... I'm the first one to try to dispel hype about legal tech, because I grew up in a tech company and I love tech, and I embrace it fully. It's also easier for me to be able to very honestly and authentically say tech is not always the answer. And if it is the answer, it's not the first place to start. So the hype right now is just that tech is the answer, right? The hype is if you're not using the latest and greatest, then you're a failure, right? There's no hope for you. You're so far behind. That hype, I think, is doing a disservice to adoption in legal tech. It's certainly doing a disservice to the perception of the legal profession as well. So that's the one general hype, I think specifically within the various areas of technology, certainly AI, the threats of AI, the fear of AI taking over lawyer jobs. That's definitely hype. There's a lot of how “robot lawyers are coming for your jobs” nonsense, frankly. It's frankly just nonsense.

Lucy:
So I'm an advisor to two different legal tech companies. Both of whom are in, certainly in the AI space, both, of course, are in the contract space, that's my sweet spot. And I can say that, first of all, I select companies to associate with very carefully. I think the hype comes from a lack of leadership. I think the hype comes from probably a disingenuine interest in the domain, right? If it's just another piece of tech, another serial startup want to just do it for the sake of doing it, that creates some hype that isn't helpful. And then there's others that are really trying to influence and change how things are done. I'd say, let's try to listen to those companies. Let's try to listen to those who have the domain, who have background, who have experience, who have the right advisors, who have the right people helping them define that tech roadmap.

Lucy:
Right now there's just a lot of confusion in the market, frankly. There's just a lot, right? There's been a ton of investment even in a crazy year like last year. And legal tech is this woken, sleeping giant that will naturally cause hype.

Becky:
Sure.

Lucy:
So some of it's a matter of time, I think, right? And it's just right now we're squarely in the middle of it.

Becky:
So it's really less about whether the tech itself is over-hyped, or the go-to, and really more about the perception and the understanding of what it really is, and then the leadership and domain expertise at those companies.

Lucy:
I think so. I've seen very few tech products that suck. Pardon my language.

Becky:
Sure. Yeah. Yeah.

Lucy:
... I don't see stuff that I'm like, that it's awful, they'll never make it, right? I just don't, it's all pretty good. It all does pretty much what it's intended to do. It's all about really the adoption, the use cases, the value, the benefit, and that comes with strong leadership, the right people behind the product, right? It's not the tech, it's usually not about the tech, it's really not about the tech.

Becky:
Sure.

Lucy:
Its about change management of the client, or the customer. And it's the people leading and driving the tech development on the product side.

Becky:
So I liked what you really said, "Tech is not always the answer." And that actually leads perfectly into something else I wanted to ask you about. So on one of our recent podcast episodes, we spoke with Stephanie Cory, who I know you know, about the one thing she wishes every Legal Ops professional understood about contract management. And unhesitatingly she said, "The process is more important than technology." I think I know whether you're going to agree or disagree, but I'd love for you to respond to what she said.

Lucy:
Oh yeah. A hundred percent. Obviously, yeah, Steph and I work very closely together, and we see it over and over and over again. Somebody is down the path of implementing a contract management system and they have not looked at their own templates. They don't have templates, so they didn't realize they should have templates. They don't have playbooks. They don't even have a documented policy for the law department to really stand behind why they review the contracts they review, when they should go to Legal, when they should not, and they're jumping to a platform solution. Oftentimes they don't even know what problem they're trying to solve first.

Lucy:
So they're trying to implement a contract management system, and the broad spectrum of problems could be anything from, we can't find our contracts, which by the way, is problem zero at every company. So let's start there, repository, but then at the same time they're tackling intake, workflow management, automated escalations, and routing. And that's, it's complicated. Contracting is a complicated set of tasks and functions. And so we see it all the time that they just haven't done that homework to understand how things are working today. Why are they even working this way today? Nevermind the tech, the tech is an enabler. So, of course, I will always blame the people and process first, drum always, people, process then tools.

Becky:
Yeah. So we were interviewing someone else for another episode that hasn't actually aired yet. And this person, an expert over at Deloitte was saying, "It's like going to a restaurant and saying, I want food."

Lucy:
Oh, yeah.

Becky:
"I want liquid. I want food." Well, you're going to need to get more specific than that.

Lucy:
Right. That's exactly that. And I love that. And I've used the same with walking into a pharmacy. Right? And the worst thing in the pharmacy is, "Give me the Tylenol." And you're like, "What do you mean?" And you're like, "Oh, my fingernail cracked." "What? What do you think Tylenol is going to do for that?" Right? Or worse. You're having a heart attack lying on the floor going, "Tylenol now, now?" And you're like... Yeah, there's so many analogies we've all started to use in our little community of contract.

Becky:
Yeah. Yeah. Good stuff. So you're very passionate about metrics for measuring legal department efficiencies. So for those who are struggling to figure out where to start, what do you suggest?

Lucy:
Oh, my goodness, I love, I'm going to make it super simple. So first let's talk about contracts since that's our hot topic of the day, and then we can go broader. But every law department should be able to answer these couple of questions about their contracts. How many have they done in a certain period of time? What types of contracts have they done? And how long do they generally take? If you can answer those three questions to the C-suite today, the C-suite will be delighted beyond belief. It is sad how low the bar is for data and metrics for law departments. Sad, yes, of course, I'm adding my judgment, but this is normal, this is the current state and we're trying to change that, of course, and most law departments are starting to go down their own journey to get some metrics, but certainly in the contract space, everybody should be at least striving to get to that place where they're able to answer those most basic three questions.

Becky:
And we see that as well from the Malbek side, how many companies struggle with identifying how many contracts they have, where are they located? That's another one.

Lucy:
Oh, always, that one is less interesting to you at the C-suite because they're assuming somebody is managing that. So you never want to go back to C-suite and go, by the way, yeah, we don't know where the contracts are. They don't like that, unless you're, of course, asking for funding to help improve that. Then you have to explain the dire situation.

Becky:
Right. But often knowing how many contracts is also being able to locate them so they frequently go hand in hand.


Lucy:
A hundred percent. You go it.

Becky:
So sometimes when it comes to data, it's hard to know if your numbers are normal, because you don't really have a frame of reference. We tend to live in company silos almost. So what are some benchmarks that can help Legal Ops in identifying where process improvements are needed, or are actually already really positive?

Lucy:
What's interesting is, you're right, and we do all live in silos when we're in-house, and I've spent the bulk of my career in-house. It does feel like a little bubble. You're like, how does everybody else do it? Is this bad, is this good? You have no frame of reference. I think with the evolution of Legal Ops, as a function, as a profession really, there's more and more data now available to benchmark against. So I would say without giving a particular specific benchmarks to point to, there is benchmarking information out there that you can at least start to deduce from, right? And it may not be completely on point, but you can drive some conclusions from the data that's available.

Lucy:
So much surveying is being done over the last several years by so many different entities, whether it's tech providers themselves doing it, big industry legal, like the Wolters Kluwers of the world, the Thomson Reuters, right? There have tons and tons of research and surveying out there. So I think there's enough out there. Like I said, you need to be creative to make it draw, tell the story that you're interested in understanding, but I think there's enough out there now, unlike five years ago where you really had no clue.

Becky:
So let's talk about efficiencies when it comes to contracting. What are some practical recommendations you can make to the listener for ways that they can get their contracts done faster?

Lucy:
Yeah. I'm going to start with going right to the core of the lawyer's day job and ask, why are you doing everything that lands on your desk? Why? Why? Why? It's like a train wreck, I get it. I get it. A really ugly red line nasty NDA lands in your inbox. You can't say, I don't care. Sign it. Right? You just can't, because now you've seen it. If you step back and create a really clear policy for the department, or for the team that handles whatever particular type of contracts you're starting with. And that's important, start with a scope, what are the types of contracts that are causing pain and that are too slow? Is it your revenue generating agreements? Is it just NDAs? Whatever it is, pick what it is and ask yourself, what does the law department need to review really?

Lucy:
And then ask yourself, why? Three times, because that'll help you get to the real answer, because like, well, we want to see everything. We don't trust the business, and I've heard it all. I'm not being flippant, these aren't my comments. It's truly like, "Well, there are businesses out there doing all these things and we need to," we need to, we need to, right? It's this legal department is playing parent to the company in many cases and overfunctioning. And sometimes because the C-suite likes that, they're like, "Okay, good, legal will take care of these things." Well, it becomes unscalable really quickly. So, that's the first question. Ask yourself, ask the department, which contracts really need to be reviewed, because the first step in cleaning up a process is also reducing your volume, right?

Lucy:
The process might be okay if it's a smaller volume, but if you just have that volume that's unscalable, no amount of process tweaking is going to help. Right? So sometimes it's just a volume issue. So get real crisp on what the legal department should be touching. Once you know what it should be touching, right? Then the next step is what can you do before it gets to your inbox, right? Before it lands on your doorstep, or however you want to think about it, before you're ready to do that legal work that you know you should be doing. And that's, I would tie that to that intake. We hear intake a lot in Legal Ops, and certainly in contracts, it's part of the life cycle. How does that intake look? Are you still getting stuff via email that's just forwarded to you? Five, six attachments in an email with no context, just an empty email.

Lucy:
Please take a look. I see, and then, again, these are all things I've experienced, or I talk to clients every day who experience this, right? So first two steps, I would say, are just priceless. And once you think about, gosh, I would love if every time somebody asked me for help with a contract, dot, dot, dot. Well, once you fill in the dot, dot, dot, you have an answer of what you would love, you, law department, would be so happy if every request for help came with something that these things list that out, that becomes your first step to creating an intake.

Becky:
I can imagine that in the process of relinquishing control, that there's some pain that goes on for those in the legal department. How do you help them get over that and realize that this is actually in the best interest of the business?

Lucy:
That is where the magical club of being a licensed practicing attorney comes in really, really handy. It's crazy, but lawyers want to hear it from another lawyer. They want to be able to be told that it's okay. I let go and I survived. I let go and my company didn't collapse. That helps. And I know that's a squishy answer, but it is true, and I hear it all the time, especially people trying to implement contract management systems, trying to make changes, the attorneys aren't always going to be keen to listening to somebody who hasn't lived in their world, right? Walked in their shoes of I'm accountable for this. How can I possibly not do a hundred percent job on each contract. I'm accountable, right? For getting these done? It's my, you know what, on the line.

Lucy:
So I think, first, trying to have a very real conversation about letting go, why are you worried? What is it? What's the worst thing that will happen? Where's the worst case scenario? Where's that pressure coming from? Is it because you're expected to over-function? Is it because that is actually part of the role that you took on knowing full well that you're going to be doing it this way? Or is it your nature, right? Some of us have full control issues that we're all pretty self-aware about. So I think that honest conversation about that root cause is important, but then on a more tactical, a more pragmatic path, is once you've had that conversation about some of the more therapy on the couch conversations, then you can move to, okay, well, how do we fix that?

Lucy:
And how you fix it is showing the attorneys that there's a way to enable and empower others so that some of their concerns from the legal department are actually cured by helping others do certain parts, helping others do certain things. You can teach, enable and empower others to do certain tasks, or parts of the function that normally the legal team was doing. It really helps the attorneys feel that, okay, I don't have to do all of this if I know that the sales team can tackle these aspects, whether it's part of the negotiation cycle, or part of really the quarterbacking of a negotiation in general, editing a document, whatever it is that you want to be able to empower somebody else, but you have to take those steps and do the homework of the empowering, of the teaching, of the enabling. And then I think they'll sleep much better at night.

Becky:
Sure. And once they are freed up from some of these things that can be taken off their plate and given to someone else and empowered to do that, then they can turn their attention to things where they really do have incredible expertise, and are quite frankly just don't have the time at the moment.

Lucy:
That's right. And that's what this all comes down to, why do efficiencies matter? Why is tech enablement important? Lawyer time is expensive time. Not because we bill by the hour in-house, but because we're an expensive internal corporate resource. And making those first few hires of lawyers, and every new lawyer that's brought on is an expensive proposition for the company. So of course we want that time to be used in the most effective way. And that's hopefully a higher value work, because it's the work where lawyers are using their time to do analysis, to do assessment, to advise, to predict, to really counsel the business, not to mourn tactical, repetitive tasks, not because they're unimportant, but because there's a better way to do them, a better resource. And probably technology is part of that resource toolbox.

Becky:
You mentioned the three metrics that C-suite will love you if you can answer right. How many contracts, what type, and how long do they take? What are some other contract related metrics that you think after those three, that legal departments should be paying attention to, and should know the back of their hand?

Lucy:
Sure. So on the very, very, again, basic level of what every law department should be able to track is, of course, spend, and we see that all the time, how the council spend is one of the first places actually Legal Ops functions will start, to whether even create it many times. It's get our spending in order, right? That financial control is critical. So I think being able to break down some of the basics around how much you're spending, what are your top five firms? What kind of work are they doing, right? As a baseline, even really, because that next year you want to be able to look at those same numbers and say, now, by what percentage did you either reduce spending, and how? Or have to increase it, and why? That's important. So trends and forecasting around spend is a huge step forward for most law departments. Many don't even have a view today what they're spending on, not to mention trying to forecast for next year.

Lucy:
So, that's another core bucket I think of data points. And then going back to contracts for a minute on what other data points, what I first described were the basics, that is table stakes. If we want to get into a more mature view in where departments can be striving is using data to inform their actual substantive decisions. And by that I mean looking back into negotiations and understanding what are the most negotiated points and where was that final landing position? And how does it differ from the original negotiating starting position? What we see is over time, anecdotally law departments take positions on things like limits of liabilities, my favorite example, and that's very much by the way, a business point, but oftentimes legal teams and lawyers are left negotiating those on their own, just because it's a part of a contract, even though it's very much a business term, but there is very little guidance on what that magical number can or should be.

Lucy:
Very little is written down, very little is tracked. There's really no record of the past to go why have we landed with some of these limits on liability? So I think using data, data points that you can track over time and create a conclusion from, right? Draw conclusion, escalate that up the food chain, whatever that looks like in your company and say, look, nine times out of 10, we start here and we end up there. Can we please from now on just start there and we've just cut the cycle time drastically. Right? So to me, those are what I call the substantive operational points, right? They're really not operational, they're substantive data. And to be able to make truly data-driven decisions is this nirvana state of modern corporate law departments, I think.

Becky:
Sure. And I think this, that what you just described, is exactly what AI can be really good at. So providing that level of insight into, okay, where did you start? X percentage of your contracts started here, you ended up here, this was the outcome, and percolating that information to the surface, you can then make decisions moving forward.

Lucy:
Yeah. That's right. I think AI is playing a big role in creating the capabilities, definitely, around this, because oftentimes to be able to look back at lots of documents and draw these data points, right? Is very, very time-consuming. So using that kind of technology has been a real game changer in the last few years.

Becky:
Yeah, absolutely. So Lucy, as we're wrapping up here, I wanted to give you a chance to promote anything you have coming up, maybe anything you're offering, or events you're speaking at, where can people find you online?

Lucy:
Oh my goodness. I feel like I get this, you're everywhere, and I don't like that. I don't know if that's a positive thing, but I always have a lot to say on this topic and I can't help it. I happen to love my work, which I'm fortunate, very, very fortunate to feel that way. The one big project I have right now working, and if I say it out loud, then I have to do it, and that's a really good way to hold myself liable. I'm working on my next book. And this book will be also a practical, pragmatic approach to contracting.

Lucy:
I'm going to dive in pretty deep into contracting and talk through what I see as the steps that every legal department can take, and pick and choose what works for them and what they need, but really try to give people a hands-on practical guide to improving their contracting processes, and enable them for that great tech implementation that so many are trying and jumping to, and walk them through that journey. So I'm very, very excited about that. It's always an effort obviously, but I'm really hoping to create something that will be used as a guide for others. And then, of course, we'll use it and help our clients through a methodical approach to getting ready for tech and improving their processes in the meantime.

Becky:
Well, that's very exciting. We will definitely keep an eye out for that. Lucy, thank you so much for joining us. Really appreciate your insights and all the tips that you shared today.

Lucy:
Thank you so much for having me. It's a favorite topic, so always happy to chime in on contracts, et cetera. Thank you.

Becky:
Wonderful. Thank you so much.