If we’re being honest, most companies don’t allocate tons of money for legal tech. Instead, legal teams are forced to scrutinize every single expense and jump through the nine circles of hell (as well as traverse the seven levels of purgatory, scale Mt. Everest, discover Atlantis— you know, no big deal) if they need money for new software.
Five years ago, in 2017, it was reported that the biggest hurdle to improving tech was getting the budget. Fast forward and general counsels, IT departments, and C-level executives have become increasingly supportive of digital strategies in legal departments. Half the legal departments in Europe state that they use legal tech for just under 20% of their overall workload. Over the next few years, this number is expected to increase considerably.
Money is already slowly but surely finding its way into legal tech budgets. Despite a global slump in spending in 2020, a majority of cuts have already been reversed in 2021 with 62% of firms reportedly increasing their tech budget. In fact, 2022 is projected to witness a 5.3% increase in worldwide IT spending. The United Kingdom even announced a special fund in their 2021 budget that provides small and medium-sized enterprises with free digital skills training and discounts on software.
Half the legal departments in Europe state that they use legal tech for just under 20% of their overall workload.
As the world of legal tech grows and develops, the number of available tools is also increasing. Some will even become as essential as Microsoft Word. It’s predicted that by 2025, organizations will rely on their contract lifecycle management (CLM) system as the source of all truth regarding their contracts.
Furthermore, this reliance will help businesses boost their capabilities, cut costs, manage risk, and, most importantly, improve the bottom line. And as time passes, the pressure to reduce expenses and automate routine work will shift from the legal team to the business side, allowing legal specialists to most on higher-value work.
So why not start now? Poor decisions waste resources, while no decisions waste opportunities. This only amplifies the importance of selecting the right CLM software.
That’s why we’re here. We’ll be quickly going over some of the worst things you can do that will quickly drain (or waste) your budget for legal technology.
1. No gameplan
Before you even begin thinking about adopting new tech, you need a gameplan. Your goals and KPIs should be defined. A schedule should be drafted. Pain points and priorities should be mapped out. And acceptable costs should be understood.
Finding the right contract lifecycle management solution requires all this and more. Otherwise, you’ll have to constantly adapt to situations and ignore pressing needs. This may cause data loss, workflow interruptions, poor organization, and wasted time.
If you’re trying to justify the expenses for legal software, it’s important to highlight more than the immediate benefits. Try to specify the major improvements.
Take file storage. Having a centralized location for all documents makes life more convenient as it’s easier to find information. More importantly, you’ll have an accurate, up-to-date record at all times that can be easily backed up and secured.
But what if you’re already in the middle of digitalizing? Your best course of action is to simply finish the process. Once that’s done, you can start surveying the field and find the optimal CLM solution for you.
2. Failing to get on the same page
There once was a period during the digital transformation when the goals of IT teams were considered out of sync with business priorities. Somehow, the department with the most digital expertise was believed to not be driving the most important digital initiatives.
Times have rapidly changed since then. The COVID-19 pandemic forced many organizations to scramble and transform their IT departments from a function-driven, reactive technology ‘gatekeeper— to a proactive, business-driven, strategic partner.
While this process is still ongoing, legal departments were largely left behind. Most of the focus had been on how to make sure employees could keep working from home or how products and services could be delivered.
But with that done, and now that some degree of normalcy has returned, many companies have begun to transform their legal teams. By establishing an integrated business model where legal departments are a strategic partner, all processes can be united.
Legal functions can focus on business growth, while tech solutions can support legal teams. And with everyone on the same page, all efforts can concentrate on the primary objective — building the organization’s success.
3. Focusing too much on the tech—
We understand. There’s nothing cooler than shiny, new tech. After years of unwrapping the latest game console or smartphone under the Christmas tree, we’ve learned well.
However, material gratification is a very dangerous trap. Think about it. Smartphones and consoles were tested countless times, and each successive test shaped and honed the user experience into what it is today. But not all tech is created equal, and not all tech is designed with the user at its core.
That’s why your focus shouldn’t be on the tech. Your focus should be on the people who will be using it.
Adopting such a continuous innovation mindset will enable your team to provide clients with a better, more personalized experience. Innovative ideas both large and small will flow back and forth, allowing your company to consistently develop valuable products and services supported by a viable business model.
The markets are constantly evolving every day. So letting your team evolve to fit the times is a powerful motivator.
4. — and not enough on the money
Money is a scarce resource. If you’re not careful, you may pay too much because you didn’t research other options. Only the lucky few will come across a hidden gem — something whose value is off the charts while remaining extremely affordable.
More often than not, people select the first impressive-looking service because they don’t know any better. Others will opt for established brands. In the end, both end up paying a premium. Most likely, the value gained won’t justify the premium.
Companies and teams should think carefully and evaluate how well certain CLM softwares can accommodate their growing needs while providing room to scale.
This applies as well to contract lifecycle management software pricing. As many CLM systems are specialized, the price tag can quickly skyrocket. So identifying an all-in-one CLM software like AXDRAFT that can satisfy all your job requirements is critical.
The platform should also support scaling efforts. Not all systems are capable of scaling efficiently and effectively.
Companies and teams should think carefully and evaluate how well certain CLM softwares can accommodate their growing needs while providing room to scale. As the business develops, even more contracts will need to be processed, a greater number of people will become involved, and more workflows should be automated.
5. If it ain’t broke, don’t fix it
Just like we mentioned earlier, software upgrades are always tempting. Maybe you discovered something with a sleeker interface, or one of your friends is head over heels about a certain program. You might have even tried a demo of the latest next-gen software and fell in love with it.
Before you do anything, take a step back and think logically. If your current system is doing the job, don’t replace it. Buying all the latest software will rapidly drive up expenses and deplete your funds. So take a breath and walk away.
Many of the tasks you complete on a daily basis can probably be completed with what you already have. PowerPoint, as an example, can be used to create an interactive tutorial.
But if you can’t fight the urge, or if the potential return on investment justifies the extra cost, ask around. There’s a chance another department might already be using the system.
6. Not putting in the time and energy early on
When people talk about investments, the first thing they think about is money. And while prices need consideration (most tech isn’t free), some other investments frequently get overlooked: time, energy, and training.
The acquisition of legal tech, and by extension contract lifecycle management systems, doesn’t end once the contract is signed. Teaching your team how to use CLM software takes time, as well as energy.
Investing more time in the beginning may even generate some additional benefits. As more CLM processes go completely online, less time will be needed to complete deals, which may lead to more (and more lucrative) contracts.
Some CLM companies like AXDRAFT can help by providing free training. Others, however, charge significant sums on tutorials and setting up. In some cases, CLM system developers may leave you to figure it out on your own.
The last thing you should want is for the contract lifecycle management software you purchase to not be used.
And if we’re being realistic, new software platforms can be a nightmare at times to figure out, even when there’s a helping hand to guide you. Salesforce is a good example: Although it’s a phenomenal CRM that allows you to process hundreds of tasks simultaneously, the learning curve is fairly steep. And that requires time.
The last thing you should want is for the contract lifecycle management software you purchase to not be used, which might be the worst-case scenario. If this happens, what was the point of ordering it? Either you’ll have to invest more money into training (possibly a second time?) or search for a different solution. Because if no one can use it, no one will use it. That means a whole lot of money went down the drain for nothing.
The optimal approach would be to find a CLM software provider that’s willing to quickly and thoroughly take you through the ins and outs of their CLM system for free. And if such training is provided by the CLM’s developer, the process will almost always go much smoother.
7. Getting married on the first date
Some people believe in love at first sight. We can’t say whether or not it exists, but when it comes to new tech, a full commitment on Day 1 is never a good idea.
There’s a reason why you shouldn’t judge a book by its cover. Something might look good at first, but you probably won’t notice the pitfalls right away. If you rapidly migrate your entire workflow and all your documents, you’ll probably end up wasting precious resources.
That’s why taking software like a contract lifecycle management platform for a limited test run on a smaller scale is a better approach. At AXDRAFT, for instance, we start you off small and with a 60-day trial period so that you can scale later down the road.
8. Overlooking security
In today’s digital age, security should be one of the first concerns taken care of. Yet many fail to do so, putting their personal information and finances (maybe more!) at risk.
Don’t fall into the same trap.
If your software has poor security, you should change it as soon as possible. Although this means that all the resources you spent for onboarding amounted to nothing, it’s better than the alternative. At best, onboarding for a new system will incur additional expenses, but at worst, if you fail to ensure proper security, sensitive data could be compromised, which may spell ruin for your organization.
Avoid all the hassle and headaches by confirming that your CLM software satisfies security requirements before you complete the purchase.
While there is a certain logic to having a specialized tool for a specific process, a general rule of thumb exists. The more specialized the product, the higher the price tag. So not only will you overpay for such products, but you’ll lose valuable time by having to constantly switch between programs. Moreover, each time you switch, there’s a chance data can get lost in the process.
For contracts, CLM software is a wiser choice. Instead of standalone programs for document generation or collaborative work, solutions like an all-in-one CLM platform such as AXDRAFT help keep everything in a central location that’s easy to manage.
Or, if you’ve already got a workflow and software suite you’re happy with, then try to find a tool that allows integrations. This will let you seamlessly connect it with your existing workflow.
9. Not putting your interests first
At several points of the contract’s lifecycle, legal teams need to involve other departments. This might result in those departments advocating a specific software package. But don’t give in. Stay strong. The decision on what software to use for legal tasks ought to remain in the hands of the legal team. Allowing other departments to pressure you into purchasing software you don’t need is an easy way to blow your budget.
An average lawyer bills just 2.5 hours each workday, which may be partly due to inefficient processes.
A smart approach to optimizing your budget is to speak with teams you often collaborate with. Most workflows (including contract management) often involve individuals from various departments, such as business or HR. By speaking with other teams, you might learn that everyone’s using the same tools. And if you agree to share the costs, you’ll find some additional funds, which might be enough for you to get the software you definitely need.
Here’s an additional trick. The powers that be who approve the budget often focus on the costs. Try to switch from a cost-focused conversation to a profit-focused one.
Finding a way to measure future value and expected ROI is one of the easiest ways to get the funds for new software. This can be time saved, revenue realized, or even opportunities lost. For example, the average lawyer bills just 2.5 hours each workday, which may be partly due to inefficient processes.
A good CLM platform will be able to remove many of these inefficiencies and generate immediate returns. Thanks to legal tech, Louis Dreyfus, for example, achieved over a $400,000 annual gain while the game developer Plarium recorded a 94% faster workflow and $114,000 in annual gains.
These are just some common mistakes that can quickly drain your budget. By successfully avoiding them, you’ll be able to save critical time and funds that can be put to better use. Plus, if you begin now, you’ll be ahead of the herd. Remember that by 2025, organizations will be reliant on CLM systems to manage their contracts.
So the sooner you get started, the greater your opportunities. Just make sure you avoid these same mistakes when it comes time to spend the money you saved.
Want to start now? Book a session with AXDRAFT and try out an instant demo.