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Legal vs. Sales: Guide to Making Two Departments Work in Tandem
The sales contract management process is a touchpoint between sales and legal. But it can quickly turn into a bottleneck leading to tension and inefficient collaboration. The sales strive to close deals faster and generate income, whereas the legal ops slow them down with contract risk assessments and reviews.
With 80% of B2B sales teams executing over 500 contracts a month, poor legal-sales communication may cause friction, affect output, and increase the risks of contract disputes.
You can’t change the nature of your sales and legal teams. That’s the bad news. The good one is that you can create a safe space to smooth their collaboration. This guide will show you:
- The common touchpoints between sales and legal
- The issues and risks arising from poor collaboration
- The ways to empower your teams to work together
- The tools to help you foster their collaboration
But before turning to solutions, let’s see what causes friction between sales and legal folks.
How legal impacts sales processes
Table of Contents
- How legal impacts sales processes
- Typical issues between legal and sales teams
- How can legal add to the sales cycle efficiency?
- How to create synergy between legal and sales
- How to improve sales operations through contracting
- The role of CLM in sales operations
- How CLM solution can enhance sales workflows
- Data both sales and legal could benefit from
- How AXDRAFT can help shorten the sales cycle
Legals can accelerate sales cycles by supporting the sales team and the overall revenue acquisition process. According to Onit’s Enterprise Legal Reputation (ELR) Report, 74% of legal respondents believe they share positive collaborations with their sales team, and 68% are confident they help close deals effectively. Yet, do they?
Just a few lines down, the report says that sales feel frustrated working with legal. The respondents claim they only bring inefficiency and bureaucracy to the sales process. To get to the root cause of the friction, let’s look at the touchpoints these two departments have in their routine.
Common types of sales contracts and their specifics
A successful sales cycle ends with a deal. That’s a part where legal steps in to help sales draft, review, or amend the following types of agreements:
- General sales contracts: used for everyday sales transactions or exchanges on straightforward terms
- Conditional sales agreements: used in case of additional conditions, for example, transfer of rights after certain terms are met
- Sale of business contracts: include terms and conditions governing the transfer of business ownership
- Agreement for sale: used to buy or sell assets at a future date
- International sales contracts: covering terms unique to international trade
- Sales contract addendum (supplementary agreement): used to expand the terms of the original contract
These agreements safeguard your organization’s interests and help it avoid legal complications. Meanwhile, the original agreement may be amended many times throughout the deal cycle to match both parties’ interests. This is where issues of poor collaboration may arise.Back to top
Typical issues between legal and sales teams
Legal and sales are like ice and fire. While sales are burning to sign contracts ASAP, legal slow them down by carefully reviewing each line. Failure to understand each department’s specifics can only fuel the fire (pun intended) and delay the contract review and approval.
To figure out where the shoe pinches, let’s see how sales view legal, what they expect, and why the mismatch between their expectations is risky.
How sales view legal
Sales often perceive legal as a bottleneck—a department that only piles up roadblocks and lacks understanding of internal clients’ business operations and needs. ELR report shows that sales and marketing are most frustrated by their collaboration with legal.
One of the major reasons is legal response time, which may take days. 61% of respondents say legal is unresponsive, and nearly 40% claim that the global shift to remote work made legal communication even worse.
The ELR report also reveals that:
- 65% of respondents admittedly bypass legal’s policies and processes to get their work done (deliberately breaking corporate guidelines)
- 53% of US respondents ignore complying with legal policies and procedures
- 46% don’t view legal as a trusted partner, even though they see them as a business protector
- 31% complain that legal operations aren’t visible or transparent
- 19% claim legal doesn’t understand their specific business needs, contributing to inefficiency and bureaucracy
All these frictions fuel the conflict. They also downplay the contribution of the legal department to the company’s success. What’s worse, avoiding legal is a direct path toward lost revenue and lengthy litigation. Let’s take a closer look.
Risks sprouting from a poor collaboration between teams
The ERL report states that 40% of legal spend four to five hours reviewing and managing contracts. No wonder 22% of employees believe they just create roadblocks.
Companies claiming that legal slows deal cycles usually have poor communication between departments. Inefficient collaboration can translate into costly consequences, including:
- Poor win-loss rates (particularly in competitive deals)
- High customer acquisition costs (CAC) for won deals
- Earnings, margin, and forecast misses
These may tempt sales to cut legal out entirely or take over their tasks. The outcomes may be:
- Incorrectly changed SLAs (to fit commercial conversations)
- Rough contract language and terms
- Incompatibility with regulations
- Breaches and penalties
Sounds terrifying, right? Hopefully, you can avoid these pitfalls. The first step is to figure out what kind of relations sales expect when they refer to legal.
What sales expect from legal
The contracting process is a major source of tension between sales and legal. But it doesn’t have to be. ELR confirms that sales respect the legal’s role and want to collaborate better.
Business protector ready to help and advise in a matter of hours
Collaborative, agile, and willing to explain things in simple language
Single source of legal truth
Adviser in negotiations and contracting
A partner who understands business and sales specifics
It might sound like a lot, but in fact, these expectations are realistic. One of the ways to meet them is to arm the ‘opponents’ with the right tools, not weapons. Only 10% of B2B companies feel they have the adequate tools to manage their contracts, which only intensifies the conflict between sales and legal.
Let’s run through the sales cycle to see where sales may need legal help and what are the easiest ways to get it.Back to top
How can legal add to the sales cycle efficiency?
A sales cycle is a repeatable and tactical process salespeople follow to turn a lead into a customer. It’s an area where sales work the hardest. But legal also impacts the process.
Onit’s ELR report shows that 48% of respondents feel legal is accelerating deal cycles. Yet, 18% of US and UK respondents blame legal for slowing it down.
So, who’s right? And how fast is an efficient sales cycle?
To answer these questions, let’s look at the seven basic sales cycle stages and determine the legal’s role in each of them.
Stage 1. Prospect
In this stage, sales identify qualified leads (SQLs). They fill their pipeline with prospects who fit the buyer persona and might be interested in the company’s product or service.
During prospecting, sales rarely need legal help.
Stage 2. Connect
This is where sales reach out or reply to their leads. They can earn the lead’s trust by:
- Sending resources that help them or their business succeed
- Answering questions
Some prospects may ask to sign an NDA before revealing any details. That’s where legal step in and draft an NDA to reflect the prospect’s needs.
Pro tip! With NDA templates, sales won’t have to refer to the legal department that often. This can speed up initial conversations with clients and free legal from repetitive work.
Stage 3. Research
During this stage, sales explore prospects’ needs and problems. They figure out how the company’s service/product can help solve them. Prospects may also request a contract at this point.
The role of legal here is to equip sales with a proper contract draft.
Pro tip! Using boilerplate terms, clause libraries, or templates can ease the legal burden and help your sales draft and share a contract’s demo version on their own.
Stage 4. Present
This one is crucial in the sales cycle. Sales ops do their best to demonstrate how the company’s goods or services can cure the customer’s pain points.
Here sales may need a legal consultation on possible contract options they can mention during the presentation.
Pro tip! Clause libraries and templates may speed up the sales cycle at this stage. Yet, some cases may require a more in-depth legal consultation to generate a relevant and targeted offer.
Stage 5. Handle objections
Objections are a normal part of the sales cycle in any business area. Pricing, process, contractual terms—all of it may raise questions.
Objections require sales and legal to work in tandem to quickly answer prospect’s queries about the contract.
Pro tip! A contract playbook outlining contracting terms, non-negotiable matters, and potential options can take the guesswork out of the process and give sales more freedom in the negotiations. With a playbook available, legal don’t get involved too deeply with each deal, and the sales cycle shortens.
Stage 6. Close
Sealing the deal is when legal and sales cooperate most. And that goes far beyond final contract preparation. According to the World Commerce & Contracting 2020 report, limitation of liability, price, and indemnification hit the charts of the most negotiated terms.
Legal play a key role in creating the final agreement that reflects all the discussed terms. They also ensure those terms are agreeable to both parties and won’t become a source of disputes.
Pro tip! Design a range of pre-approved terms to empower your sales to close deals without risking contract disputes. Legal involvement is still a must to finalize the deal.
Stage 7. Follow up and generate referrals
The sales cycle doesn’t end with sealing the deal. Now it’s high time to provide exemplary customer service and support. With visible obligations, sales and customer success managers and account executives can identify milestones and quickly reach out with upsell opportunities at the right time. But with poor contracting and decentralized storage, sales may miss out on opportunities to cross- or up-sell.
Apart from that, legal may help sales in signing supplementary agreements or resolving contract disputes.
Now that you know what ideal legal-sales cooperation should look like, let’s find out how to build one.
How to create synergy between legal and sales
Sales and legal share a common goal but don’t work closely enough to understand each department’s specifics. How can you turn that conflict into a harmonious relationship?
Here are four suggestions to help you smash the wall between legal and sales.
Changing the mindset
If you focus on how different sales and legal ops are—that’s all you see. Changing the mindset starts with understanding common goals and risks. Here are several ways to help you bridge gaps and achieve win-win results.
A mutual understanding of each department’s motivations, KPIs, and pressure points is key to cultivating empathy. To achieve it, legal should open up on the nature of risk and potential liabilities the company might face. And sales should show that not closing a deal on time might affect their bonuses, promotions, and the whole company’s financial well-being.
Bridging the jargon
Professional jargon may come as another source of irritation. You can’t get rid of it, but you can teach basics or even add jargon dictionaries to your internal wiki or helpdesk.
Maintaining control that doesn’t suffocate sales folks
Legal can give more freedom to sales teams by setting out clear parameters and fallback positions for commonly negotiated points. They can do it through automated contract templates, internal wiki guidelines, or a shared knowledge base. The key point here is to review and update the self-service information constantly.
Cultivating continuous innovation mindset
The only way to keep up with an ever-changing business landscape is to be willing to adapt and evolve. The ELR study shows that about half of employees believe that legal make a positive impact on innovation at their companies. This includes product development, research, patents, and intellectual property.
Yet, fostering innovation doesn’t limit to these activities. To enhance workflows and cooperation between departments, legal teams need to modernize their operations and digitize processes. Employing automation and CLM technology can take the burden of repetitive actions off their shoulders and make processes transparent and fast.
Shaping the processes: people, process, technology
Your business stands on three pillars—people, processes, and technology. It’s simple. People use processes to do specific jobs, and technology helps to streamline and improve them.
People play a major role in this golden triangle. They leverage technology to optimize workflows and complete tasks. So, the first step toward success is hiring and nurturing the right people via legal-sales workshops, presentations, or roundtable discussions. Once your sales and legal clearly understand each other’s functions and pains, it becomes easier to handle their processes.
Processes are actions your people take to deliver the expected value. They are repeatable by definition and should produce the same result every time, no matter who performs them. To create efficient processes, you should assess the current performance by setting metrics and KPIs (we’ll talk more about it later in this article).
Yet, things change constantly, and you might have to reevaluate, improve, or even overhaul your processes to continue providing value. For instance, by automating contracting activities.
Technology is a set of solutions people use to implement processes. The right technology should:
To successfully implement new technology, you should first take care of the other two parts of the triangle: your legal and sales teams and their processes.
Addressing sales pain points with legal processes
Did you know that sales teams spend 65% of their time on administrative tasks? Manual sales contract management takes up the lion’s share of this time. Running focus groups with sales folks can help you see where your sales processes lag. For instance:
- Long deal cycle
- Inefficient cross-departmental collaboration
- Lack of necessary tools
- Manual processes
Some of these aspects may need deeper investigation, while you can quickly solve others by encouraging sales to use a centralized legal information management system. It can help sales optimize how they search, review, and manage agreements.
Fostering legal tech usage across sales units
One of the biggest challenges when implementing change is getting buy-in from departments. If you want your sales to use legal tech, ensure it seamlessly integrates with the processes and tools they already use.
For instance, connecting CRM and CLM systems can serve as a good start for effective and efficient sales contract management. It will prevent overlapping and duplication of work and let your sales freely share contract information between systems.
Now that you know how to ruin walls between sales and legal, let’s see how contracting can enhance sales processes.
How to improve sales operations through contracting
The contracting process is a set of tasks and activities your team performs to manage contracts. Contracting may vary between companies, but in general, it incorporates the following steps:
- Gathering requirements
- Preparing a contract
- Negotiating terms
- Approving changes
- Managing obligations
- Renewing and keeping up with changes
Successful contracting requires strong cooperation between your sales and legal ops.
Here’s what you can do to encourage both teams to collaborate early on.
Design a process for interdepartmental collaboration
Sales and legal should outline how their departments cooperate to ensure a smooth deal lifecycle. It includes integrating systems and designing workflows that let both departments:
- Have better visibility into ongoing deals
- Stay on top of the latest changes
- Step in only when necessary
- Measure and scale their progress
Sharing access to contract lifecycle management (CLM) system, customer relationship management (CRM), and document management system (DMS) can help both departments be on the same page. It will also cut back on time spent requesting the contract’s status, prospects’ contact information, or any related info.
A platform like AXDRAFT allows you to construct your own automated contract lifecycle to create, collaborate, approve, sign, store, and analyze your agreements with zero friction.
Streamline contract negotiations
A well-established collaboration process between sales and legal can significantly limit the time and effort spent on negotiations. By drafting clause libraries and playbooks, you can give sales more flexibility and options during their talks with clients. They won’t have to rush back and forth between the client’s wants and legal’s constraints.
Use the power of contract automation
According to McKinsey, 43% of all contracting activities can easily be automated by using modern technology. Automation lets you draft contracts eight times faster. So your sales team can completely take over drafting and create error-free agreements on their own. They can easily tailor every template to their need. So once the document is drafted, all your lawyer has to do is skim it and hit ‘Approve.’Back to top
The role of CLM in sales operations
Sales contract management is a complex process that requires careful oversight throughout every stage. Doing it manually leaves room for human error, decreases productivity, and may cost you clients and legal troubles.
Automated CLM software can speed up every contracting phase—from drafting and redlining to e-signing and execution. It reduces legal’s workload, fosters decision-making, and shortens the average sales cycle by 24%.
Here are the benefits CLM software can bring to sales contract management.
CLM software offers a fully optimized process to create, manage, amend, store, and track agreements. Features like live collaboration, version control, and automatic alerts let sales act fast and know exactly when they need to take action.
Using CLM improves legal-sales collaboration and helps them be on the same page. Automatic contract drafting gives sales more freedom and shortens review and redlining cycles.
CLM software minimizes contract management bottlenecks like lack of organization and miscommunication. It lets your teams easily track contracts and ensure nothing falls through the cracks.
Regulations and legal guidelines change from time to time. This may affect your deal’s legal validity. Intelligent CLM software keeps track of regulations and notifies your team when they change.
If all this sounds tempting, let’s look at how CLM adoption changes sales contracting workflows.
How CLM solution can enhance sales workflows
Typical sales contracting workflows become much more effective with a CLM solution. It ensures contract consistency, helps avoid friction, and lets legal and sales increase operational efficiency.
Let’s explore how CLM can come in handy at each contracting stage.
Once legal fed CLM with the company’s corporate guidelines and clause playbooks, sales can generate error-free contracts in minutes. No need to use MS Word or offline template assembly.
CLM allows you and your parties to edit documents in live mode. Platforms like AXDRAFT require no registration for counterparties to work with a contract. All sales need to do is send them an invitation to collaborate. So no more time wasted on emails, phone call reminders, and lengthy approvals.
A contract lifecycle management solution lets you assign responsibilities and outline actions to be taken. It also sends reminder alerts once a party needs to take action, like approving changes, etc. This frees salespeople from sending annoying reminder emails or switching between inbox, task management, and collaboration software. It also strengthens legal-sales collaboration.
Most CLM solutions provide their own electronic signing capabilities or easily integrate with eSign providers. So no more pestering people for wet signatures, buying envelopes, waiting for couriers, and scanning agreements.
You are already behind the curve if you don’t keep your documents in a single location. It’s not a secret that using CLM as a document repository makes contracts more accessible. Unlike a cloud provider, CLM offers you much more than just secure storage. It allows you to search by metadata, analyze contracts, and stay updated about contract expirations, renewals, and other important deadlines. This saves your sales time on performing regular checks or creating calendars with contract milestones.
CLM software like AXDRAFT allows you to build custom reports based on metadata, team performance, and contracting information. It also helps you:
- Check deal lifecycle time and value
- See the causes behind bottlenecks
- Ensure that contract workflows align with benchmarks
You need to set benchmarks and define KPIs to use your CLM solution’s analytics. Our next chapter will help you with it.Back to top
Data both sales and legal could benefit from
The contract lifecycle generates huge amounts of data. Analytics is key to your department’s growth, efficiency, and effectiveness. To develop your business, you should also set KPIs and track metrics to see how well your teams perform.
Shared KPIs for legal and sales teams
Key performance indicators provide insight into what your company needs to measure and achieve to reach its long-term objectives. Tracking the following metrics can help you gauge how good your sales-legal collaboration is and set growth benchmarks:
- Contract quantity is the number of contracts your team closes during the measurement period. You can sort contracts by type, value, or complexity and compare the numbers with previous periods. Then you will see whether and how your capacity has changed and why.
- Contract quality is based on grouping contracts by effort and involvement time. This metric shows how many contracts require templates, custom creation, or additional legal involvement.
- Contract review time helps you understand how well your legal and sales teams cope with their workload. It also shows if the work is fairly distributed and what causes friction in your workflow.
- Error rate indicates the number of errors found in your documents throughout the contract lifecycle. Tracking this CLM metric is essential to understand what causes mistakes and what the company can do to reduce this number in the future.
- Average closing time refers to the amount of time it takes for leads to go through the sales lifecycle stages until becoming a closed-won deal.
- Contract turnaround time indicates the time from initial sales contact to the final signing. Determining what causes the delay can help focus on the best solution to fix the bottleneck
- Contract maintenance costs are about how much money your organization spends on creating and keeping your contracts up-to-date
- Dollar value determines the money the contract brings into the company. It helps benchmark the contract costs that need legal attention and, therefore, are expensive.
An advanced CLM solution is instrumental in measuring metrics. It can automatically build custom reports showing whether your contracts meet your goals. No need to spend hours on calculations.
But a platform like AXDRAFT is much more than that. Check out how its document automation and AI-powered CLM can streamline your sales contract management.Back to top
How AXDRAFT can help shorten the sales cycle
AXDRAFT offers an AI-powered web-based CLM solution to help your team streamline contracting and accelerate sales. Armed with it, your team can process contracts 40% faster and remove human-caused bottlenecks. It’s an all-in-one tool allowing your parties to draft, discuss, redline, and sign agreements without leaving the platform.
The benefits of AXDRAFT cover:
- Quick rollout time (under two weeks)
- Template automation
- Easy way to engage with counterparties
- Auto-fill data across documents
- Contracts accessible from any device
- Milestone tracking
- Multiple integrations
- Quick time-to-value
- Flexibility to fit any budget
AXDRAFT empowers sales to handle more negotiation and deal-closing processes on their own. It positively impacts legal-sales relations, boosts sales productivity, and speeds up the whole sales cycle. The results are higher profits and improved customer relations.
You can easily customize AXDRAFT CLM and add only the features that match your workflows. No overspending—you’ll only pay for what you use.Back to top
The volume and complexity of contracts an organization handles grow steadily each day. Every contract requires careful legal oversight throughout its stages, and poor legal-sales collaboration may negatively impact the bottom line. Yet, quite often, sales see legal as a bottleneck and shun their involvement. It results in rough contracts and non-compliance with laws and regulations, which may lead to litigations, penalties, and lost profits.
But it doesn’t have to be like that. You can ease the tension between legal and sales by:
- Building a mutual understanding of each department’s specifics, tasks, and pains
- Upgrading your processes to meet your departments’ needs
- Letting sales handle more of the negotiation and deal-closing processes on their own
- Automating routine, repetitive tasks
One of the ways to improve legal-sales relations is by employing CLM technology. Using CLM can streamline legal-sales collaboration early on. Embedded clause libraries and playbooks let sales draft agreements within minutes without having to discuss all details with legal.
A CLM solution covers the whole sales cycle. As a platform to create, negotiate, store, and sign contracts, it cuts the need to switch between tools and empowers sales to do more. This positively contributes to legal-sales relations, deal velocity, and your company’s revenue.
To find out what AXDRAFT can offer your business, try our demo, or compare our solution against leading industry CLM solutions. If you have any questions, feel free to book an intro call today and discover how we can bridge your legal and sales teams with document automation and our feature-rich CLM solution.
Legal ops safeguard your organization’s interests and help it avoid legal complications. Legal ops not just assist sales in closing deals but also:
- Optimize workflows within the legal department
- Initiate and drive strategic and operational initiatives
- Identify and implement legal department tools to streamline new or existing practices
Sales ops secure your company’s financial well-being by supporting and enabling frontline sales teams to sell more efficiently. They also provide strategic direction to reduce friction in the sales process.
You can optimize sales operations by:
- Implementing effective sales methodologies and best practices
- Establishing KPIs and sales metrics
- Improving collaboration between departments
- Optimizing processes through technology
- Adopting and customizing tools like CRM and CLM