Lawyers are known to be very old-fashioned and conventional. They can follow old school work patterns for ages, even if they stop functioning properly. That is why, once they do take a step further and actually embrace contract automation, they are more likely to stick to it, even if it no longer satisfies their needs or helps them move forward faster.
A recent Thomson Reuters report shows that 64% of law firm leaders cited ‘insufficient leveraging of technology’? as a medium-to-high risk factor for profitability. At the same time, 91% of leaders expect to optimize legal processes and use technology to cut costs.
64% of law firm leaders cited ‘insufficient leveraging of technology’? as a medium-to-high risk factor for profitability.
Yet, adequate contract automation software should not be just a means to reduce legal costs ‘? it should become a partner you can trust. And treating it as a partner means evaluating its efficiency the same way you would evaluate your team member’s performance. So how to be sure that your legal technology is doing the right job instead of overcomplicating things? And what are the tell-tale signs to consider another solution? Let’s find the answers together.
Vanity Metrics: False Friends of Lawyers
There is no fixed or ABA-approved list of KPIs to evaluate the performance of your document management software. But to be sure that your legal process optimization is stirred in the right direction and ramps up your team’s performance, tracking metrics is a must. At the same time, not all the metrics and KPIs can make a difference.
Some metrics can only confuse you, but not help you see the big picture. They are usually called ‘vanity metrics’? and give nothing but a falsely inflated view of a company’s growth or potential. Here are some of them:
- Number of generated documents
- Number of billable hours
- Percentage of renewed contracts
- Delays in approvals
It doesn’t mean that this data is useless. Definitely not. Yet, in most cases, it’s not 100% relevant to show the actual performance of the contract automation software. The easiest way to avoid vanity metrics is to clearly define what you’re measuring and why you do so. The right key performance indicators can help you keep track of how effective your contract automation software is and understand the value it brings to your company.
KPIs For Contract Automation Software: What, Why, and How to Track
Here we put together a list of key performance indicators to evaluate the performance of your contract automation software, which we hope will come in handy for both:
- those who already track them ‘? by expanding their horizons;
- those who don’t ‘? by helping them build a system of performance indicators.
1. Team sentiment score
Team happiness is among the critical assets of any company. To make sure your team is working to its full potential, we suggest keeping track of the sentiment score related to software usage. You can get it by periodically running a small assessment survey that can be translated into data. A few basic rating scale questions can suffice, but if you want to get a clearer picture, we suggest preparing a matrix for software sentiment.
Generally, on a scale from 1 to 10, the results you get could mean the following:
- 8+ signifies that your team is happy with the software used
- 6-7 means that some minor adjustments are needed
- =<5 implies that the team experiences significant problems with the tool stack
We recommend monitoring the results in dynamics. If the score goes down over time, it could signal the need to step in and take action, as the software:
- could have possibly gotten inconvenient
- no longer matches the team’s needs
- has gotten too complicated after a certain update
All of these things need to be tracked, communicated, and considered when extending the contract with the software vendor for another period of time.
2. Vendor team response time
It’s not a secret that each company’s document flow is unique. When working with contract management software, custom requests, changes or questions are only a matter of time. To evaluate the service your contract management vendor provides, you need to answer the following questions:
- How much time does a vendor team need to give you an initial reply?
- How long does it take them to solve the issue completely?
- How easy is it to find the right contacts for each of your team members?
High-quality customer service is important for the seamless usage of any contract automation software. Especially when your company is just at the outset of legal department automation. At AXDRAFT, we assign a Legal Engineer to each user. They usually reply within minutes whenever something comes up. This approach helps us guarantee that our clients are happy with the level of service we provide.
3. Frequency of software updates
The world of legal operations forges ahead, and so do clients’ and customers’ needs and expectations. To keep up with those, your software needs to be regularly updated. That’s why when your software vendor sporadically (every other month) releases minor updates ‘? chances are high that your contract automation software is lagging behind.
First, you should be able to track the changes in the software you are using. Second, these changes should ease your legal work and help you build a self-functioning document ecosystem. If this doesn’t happen, you may be better off with a different tool.
4. Contract-related risk score
Tracking the contract-related risk score is a must even if you don’t use contract automation software. One of its perks is that it also highlights the efficiency of the software you use.
To evaluate the contract-related risk regularly, you first need to define the list of things that threaten contract performance and can decrease contract value. Then you need to determine the role of contract automation software in each of these risks. You can do this by answering the following questions:
- Was the approval delayed because the counterparty was not notified automatically?
- Did your redlines get saved?
- Was the approval recorded in the workflow?
- Were some unauthorized changes made by someone who wasn’t supposed to have access at this stage?
To track this, you also need to come up with mitigation means that would help address the problem quickly. Once it’s done, you need to:
- List the number of occasions when you had to respond to any tech-related problems
- Assess the risk impact per client (come up with a rating scale that meets your needs)
- Assess the risk impact per all contracts (on the same scale)
- Assess the probability of the problem occurring in the future
- Define the acceptable and critical scores for your company
- Calculate each risk in the risk matrix
Following this approach, you can systematically track any software-related problem and see whether:
- it is acceptable in your legal operations
- you need to contact the vendor to solve it
- it might be best to abandon the software completely
5. A span of contract lifecycle stages
The entire contract lifecycle span doesn’t fully depict your contract automation software performance since the human factor plays a huge role there. So, we recommend:
- identifying the stages each of your contracts goes through
- determining the ones directly impacted by software performance
- calculating the time it takes for each of your contracts to pass through each stage
For example, the entire contract lifecycle span can be divided into document drafting time, document review time, and other stages. This approach will help you see whether:
- the software you use improves your team’s performance
- the usage of the software is clear to all your team members
- your contracts are generally met
- any changes in document automation are truly necessary
6. Time saved
One of the main goals of legal department automation is to reduce legal costs, eliminate routine tasks, and, of course, save your team’s time. So, it’s only logical to know exactly how much time you save by utilizing document automation.
For instance, AXDRAFT calculates this score for each document and adds it to daily, weekly, monthly, and annual scores. Tracking this metrics can help you understand:
- the value the document automation software brings you;
- the problem (if you see that you’re saving too little time).
What’s the Bottom Line?
Keeping track of your contract automation software performance is vital for a number of reasons. First, to understand precisely how it helps you: from simplifying processes and boosting your team performance, to saving time. Second, the software may be failing you – tracking metrics and KPIs can help you notice that.
AXDRAFT has some of the essential KPIs built into the system to ease the tracking process. We don’t just provide software ‘? we become a dedicated partner that helps you get rid of routine work.