Huron Legal Contract Management Survey reveals high levels of concern among professionals over existing contract management procedures and huge potential for improvements.
Huron Consulting Group, a leading provider of business consulting services, has released the results of a Huron Legal survey of 100 legal technology professionals in which 57% of respondents expressed concern about their company’s existing contract management procedures. This concern is well merited, given that nearly 65% of respondents indicate having over 1,000 contracts in effect, with over half of that group reporting 1,000-25,000 active contracts and the remainder having even more. Huron Legal’s survey was conducted at a leading contract management conference held on June 16-18, 2014 in San Francisco.
“This survey confirmed statistically what we have heard anecdotally for years,” said Jeff Catanzaro, managing director, Huron Legal. “In many organizations, the contract management process is still a manual, slow, inefficient, and ineffective process. Given the sheer number of contracts under management by organizations today, it is critical to have a clear picture of how contracts are created, how many there are in total and where they are ultimately stored.”
Corporate Contract Creation and Storage
When asked how their company’s contracts were created:
- 42% of survey respondents indicated that they were drafted primarily through in-house law departments
- One-fifth of respondents (22%) said they use a contract development software tool
- 20% noted using a contract template
- Only 4% said they use an outside law firm to draft a majority of their contracts
Despite the large percentage of organizations with more than 1,000 contracts in effect, a surprising number of professionals (75%) stated their contracts were not stored electronically in a single repository. An additional 24% said their contracts were stored electronically in several different places (or repositories), while 36% said their contracts were located in a combination of hard copy and electronic storage. Interestingly, 10% of respondents said they did not know where their company’s contracts were stored.
Contract Management & Enforcement
When asked how often their company reviews standard contract terms and conditions, a majority of legal professionals (58%) said they review them at least once a year. Another 17% said every two years and 13% said only whenever a new client is signed.
On managing and enforcing the terms and conditions of the company’s contracts:
- Only a third (34%) said they use a contract management tool
- 26% use an internal company department
- 17% stated their contracts were managed on an ad hoc basis
- 14% indicated that one person is dedicated to the task
“For companies that are not effectively managing all of their active contracts, they are almost certainly leaving money on the table,” said Catanzaro. “By having a complete picture of all contracts within an organization, contract management professionals will be able to leverage sales buying power, optimize spending across multiple vendors and stem revenue leakage from contracts that are not being properly enforced.”
Spending Trends in Contract Management
Despite technology advances in contract management tools aimed at reducing overall spend, more than half of survey respondents (56%) said their company’s investment in contract management has remained consistent over the last few years. Only 15% stated that they are spending less money while 28% noted an increase in contract management spending.