Managing Change with Contract Change Management

Published on: 3/17/21

 

 

 

CHANGE MANAGEMENT IN CLM

In this episode of The Contract Lens Podcast, Matt Patel, COO and Co-founder at Malbek, chats with Lauryn Haake, Founder and President of Qualitas Consulting Group, about contract change management. Lauryn begins by pointing out that there are risks inherent whether changing or not changing, and success relies on careful analysis of the impacts either of those choices may have. She then shares that the biggest risk with change is leaving others behind, and organizations need to manage their change in a way that fits the style of the organization. Lauryn explains the importance of engaging and empowering employees throughout times of change and illustrates how the human factor, not just the capabilities of the technology being introduced, is what determines if the change will be successful. So grab a glass of wine, and let's talk contracts!

Intro:
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. Today's episode is all about change management when choosing and implementing a CLM solution. We are joined by Lauryn Haake, founder and president of Qualitas Consulting Group, a full service consulting firm focused on business process, contract life cycle management, and enterprise legal solutions. Lauren is a self-described enthusiast for simply making stuff work better. She is an expert in legal department change management, business process automation, and legal strategy and operations. So now it's time to relax, grab a glass of wine and let's talk contracts.

Matt:
Hello Lauryn. How are you?

Lauryn:
I'm great. How are you today, Matt?

Matt:
Doing well. Doing well. So today we will talk about change. It's inevitable. It's all around us, at home, in our personal life, as well as in the office environment, but many people as you know are afraid of change. It's hard, the status quote or what you're currently comfortable with is your comfort zone. But sometimes, if you take the plunge and take the risk, change can actually make a huge difference for the coming future. So when it comes to organizations, and of course we're talking about process and technology around contract management and legal operations, organizations often find themselves struggling to see if they should change what they have today, Take a risk with a new process or a new solution. What I wanted to ask you is, as you work with many of your customers, and having so much experience from your past history, can you share a few things that you would say are risk of making a change and risk if you did not make a change?

Lauryn:
Well, I think there's a lot of different ways to answer that question, Matt. So number one, I want to just acknowledge what you said. Change is very hard, especially in the world of knowledge workers. Because change is always something that we're doing to what we do in front of the computer all day and how we work with one another to get one thing from point A to point B. So that impetus for change might be something that benefits one person, but maybe it's not clear how it benefits another. Other times change can be something that is demanded upon based upon the environment or a regulation. There's all kinds of reasons that change starts. And no matter if it's something that is thrust upon you or something that you just feel in your gut you need to do, it's very to make that change. And it's hard for us as humans, but it's very hard in the knowledge working environment.

Lauryn:
When we think about CLM and the change and engagement of people as they are looking to make changes in their contracting process, there's some risks to making this change if you don't know all of the pieces that need to be modified. So contract management is a certain as death and taxes. Every company has contracts. But the way that companies handle contracts is very diverse. And so when they're evaluating if they need to change something, it may be they want to change to make an improvement or in order to become more efficient. All right. So what's the risk in becoming more efficient? Not leaving anyone behind or missing out on some of the many components of a very intricate process. There's so many moving parts to contracts. So people often need to feel that they're being very comprehensive in their analysis before instituting a new change.

Lauryn:
The risk to not making that change is often found in either a gut feel of inefficiency or something as significant as a legal sanction, because perhaps you're not meeting all of the requirements of obligations that you have in your contracts or not meeting a minimum requirement from your audit committee. So sometimes it's very apparent to companies that they need to change. And I think that regardless of the impetus for the change, the way that a company needs to start is to analyze and be comprehensive in their evaluation of all the things that could be impacted by that change.

Matt:
And these are, yeah, as we work with customers, as a solution vendor, we're often brought in towards the later part of the cycle where they've already decided to make a change with their technology. Malbek is a CLM technology so we get involved when the company has made a decision to make a change in their technology. But before they get to that point, I'm sure before they started looking for CLM solutions and even reached out to Malbek, there was a lot of weeks or months of internal exercise of what should we do? Should we issue an RFP? Should we look at what a new process would look like? If your legal team is currently involved in reviewing every single contract, is that okay? Or do you want to change that to making it a little bit more self-service and only involve legal if there are key changes to the terms of the agreement? All of this needs to be looked at, and some organizations may need help. They may not know what works and what doesn't.

Matt:
So to that end, there are experts out there that can help, correct? I mean, they should be not trying this on their own. They shouldn't feel like they have to figure this out independently. There are services and experts out there that they can reach out to. Can you talk about a little bit about how that works?

Lauryn:
Yes. And that is something that I spend a lot of time on with my customers. So, we focus on how to get everyone started out on the right foot. So, we do kick starters to help a company focus on what change are they contemplating? What's their appetite for change? And what's their appetite for risk related to the impact of that change? We help them evaluate who can be involved and what level of engagement and what level of empowerment they are going to have.

Lauryn:
There's no right or wrong way to do this, Matt, but what companies need to know is they need to know themselves. So they need to know if they're in an organization that is very much driven through edict, meaning the general counsel or the CPO says, "We're going to do something different and we need to work towards more self service contracts." Or if they're in a more engaging type of organization where the different groups working get to decide their level of adoption of a new technology, or get to decide how much they push contracts to legal review versus where they don't.

Lauryn:
And depending upon where the company is in those behaviors it's going to influence how they go about their change management and how they communicate to people. In a more edict driven organization you're going to have really heavy stakeholder engagement, and you're going to have a team of sponsors that designate champions to convey the wishes of those leaders. In a engaging type of organization you're going to have a lot of lunch and learns and ways to communicate and do soft selling of the thing that you're trying to achieve. And the communication patterns are different based upon the different ways the companies are organized.

Lauryn:
And what we do is we help companies figure that out, figure out which type of organization they are, and sometimes they have a mixture depending upon the different groups that are dealing with contracts. We also help them with best practices and how to start at a crawl, walk, run type of cadence with adopting a change in how they use the technology or how they do CLM processes. I was talking with a client yesterday about clause libraries, and they had heard that another consultant told them that the best run legal departments do all of their contracts from clause libraries. And while that's certainly true in some aspects, it doesn't work if you have a majority of your work on third party paper, and it doesn't work if you have different people that aren't prepared with even what their default position is on clauses. So they're not able to take advantage of everything and they need to put a project together in order to do that.

Lauryn:
So I think when companies are looking to adopt technology, the success of the adoption is almost always related to the commitment of the executives, the efforts that employees must take and the capabilities of the project team, in addition to the capabilities of the technology.

Matt:
And all of this revolves around the ever popular phrase is you need to look at the people that you have, what roles they're in, whether you need to make a change in the people, and the process, and technology, all combined. Sometimes change in one doesn't necessarily mean benefits immediately. One change could actually adversely impact you if you didn't look at the other two things.

Lauryn:
That is absolutely correct. And sometimes you have to look at the entire ecosystem of the impact of change. So I remember when I first ran legal operations for a company, we had one administrative person that was still taking dictation and it wasn't until we threw out the dictation machines and sat down and figured out a way to get her process more streamlined that we were able to get the lawyer she was supporting to be okay without that dictation machine. And the reason they hadn't broken that habit was because they thought that it would take more time for the admin and the lawyer to get the update done than if they just did it the way they had always done it.

Lauryn:
And we had to challenge that to the point that I visibly took the dictation machine and threw it in the trash in front of the lawyer to demonstrate that we weren't going to stay the way we were. We were going to move forward with doing something new and gave him the ability to see that we could be more efficient in the entire ecosystem, meaning both he could be more efficient and the admin person could be more efficient, and I, as running legal operations could be more efficient by making changes to the way we were doing things.

Matt:
And the results are clear, but let's share some examples for the listeners about what we have seen together, between your customers and ours, of some of the positive and negative impact of change. Based on our experience, let's just take last year, for example. Many customers who implemented our solution, some that made a change in not only are the technology to implement our CLM product, but they also aligned some of their processes to make contracting more high velocity. They saw immediate benefits, to a point where the legal team was what used to be involved in 70, 80% of the new requests, were now only looking at and approving 20 to 30% of those contracts requests. That means over 50% of the contracts did not need legal approval with their process changes. It made the business team, whether it's sales or procurement or whoever it is requesting new agreements, so much more capable of getting that document out to the external party and executing on it without the bottlenecks. Because we all know the legal teams are, you may have 5 person legal team for a 1000 or a 2000 employee company. So one legal person is supporting a pretty large volume of contracts in that company.

Matt:
And then we've also seen some organizations struggle with the change because it's just not as easy as drafting in Microsoft Word and emailing it out of Outlook. It requires some steps and the process and it has to follow certain rules. Well, yes, absolutely. That is a negative impact of change. However, for the overall good of the company and longer-term impact the benefits come later when there's an audit or there's a risky clause that made it through and it negatively impacted the contract. Lots of bad things could happen if you don't make those changes. So any such examples from your side of what you have seen?

Lauryn:
Yes. I think that some of the best executed change management has occurred in the space of contract management implementations for technology. Everything from having a direct, measurable, impact, such as being able to cut down your offsite storage costs by 80% through a digitalization effort, to being able to increase revenue because the speed to revenue has been increased as it relates to eliminating four cycle days out of the sales contracting process. There's been studies that have been done that say bad contract management or poor contract management can lead to almost 10% of revenue loss each year. And that is related to the fact that you couldn't get the contract done in time, or you didn't meet a specific attainment level on a tier discount, or you had some kind of penalty because you didn't fulfill an obligation in your contract.

Lauryn:
And when you know that you're managing those things in an organized way in your CLM system, you can have certainty that you're not losing those things, and you can start to react better to data and react better to the trends that you're seeing. So one of the best things about CLM systems like Malbek is the ability to see where things are and see where your obligations are being met and monitor your dates. And knowing that there are ways that you can get the beginning part of the process done more expediently and more uniformly means that you have more time to react to what the data is telling you, and more time to develop insights into that data and action plans from it.

Matt:
100%. And that reminds me of there's such examples. I can count so many where you had a contract that had product or services that you no longer want to use or need to use and you're going to plan to cancel it, but oops, you missed that cancellation notice period, and now it auto renewed, and now you're stuck with that deal, paying the annual fees, or whatever the costs are for another year or whatever the new term is. I mean, that one instance of that, if that happened to one of your contracts, depending on what the cost of that contract was, could easily pay for a change, whether it's in your process or technology investment.

Matt:
So lots of great examples. Thank you, Lauryn, for the insight. Always a pleasure talking to you about contracts, and for the listening audience, it would be great to know where they can find more about your services and Qualitas and any of the social media presence that you have, if you can share.

Lauryn:
Well, everyone is always welcome to connect with me on LinkedIn, and visit our website, qualitascg.com, where we have information about kick starters, and kick starters are often a great place to start when you know that you need to adopt technology, but you want to make sure that you're fortifying everything around the technology with your people and processes to make sure it's ultimately very, very successful.

Matt:
Excellent. Thank you, Lauryn.

Lauryn:
Sure.

Matt:
And have a great day ahead.

Lauryn:
You too. Thank you, Matt.