The contract visibility crisis

The single biggest problem that I’m seeing with my customers right now sounds like a simple one. Nobody can find any of their contracts. Most legal teams can tell you where their contracts are stored. Very few can tell you what's actually in them, and even fewer can act on that information in real time. And that creates a lot of unanticipated problems. 

The research confirms what my customers are saying. On average, organizations keep their contracts in 24 different systems. This means that there is an incredibly high reliance on institutional knowledge within legal teams to find anything. It also creates enormous onboarding problem which can have far wider business impact. How do legal departments train someone to find answers to questions about their agreements when they themselves don’t know where to look? 

It’s having a profound impact on how legal teams are doing their work. We hear from attorneys that “we don't know what we've agreed to.” There are so many obligations, auto-renewals, and pricing issues buried across hundreds of contracts that teams have no visibility into. Those obligations affect the entire business but because no one has any visibility into the agreements, decisions are made without keeping these obligations in mind. “Legal is always the last to know,” one attorney told us.

This isn’t just a people problem, it’s a financial one too. According to Gartner, lawyers spend 25–40% of their time on the administrative burden of unmanaged contracts. It’s not just reviewing them; it’s finding them and figuring out what’s actually inside them. Businesses lose an average of 9% of annual value through poor contract management, due to cost overruns, invoicing errors, delayed delivery, and avoidable disputes.

Ultimately, it forces in-house lawyers to still behave like private practice lawyers, where the company is their only client. They have to operate in a 24/7 always-on mode where they don't get to do anything but react to their client. But they're actually in the business. They could have a bigger impact. They’re full time employees and they have access to all the documents, so why can't they go and proactively solve problems?

Most executives know this is a problem. They’re absolutely aware that this is a slow drain on their business. I believe that’s why the first piece of technology many legal teams turn to is a CLM. If they’re having trouble managing contracts, then it makes sense to choose software that’s designed to take care of that job. But when I hear from people who actually have experience implementing them, it just sounds incredibly painful. They have to do so much work to get a CLM maintained properly that it just becomes something they're not really interested in.

I think it’s important to shift legal teams from a bottleneck to a strategic asset. No one really wants to spend ages doing admin on documents. But when I was trained to be a lawyer, one of my consistent problems was making sure the name of the document was right and it was in the right folder. I’d be working with documents which are titled v.1, v.2, "FINAL VERSION ALL CAPS," and you're wondering, which one's the right version?

It’s a core principle of how Ivo is built; we treat contracts as a specific type of document and understand how they relate to each other. But most contract management systems treat documents like they're just files that are separate and distinct from each other, not understanding their relationships. So showing legal teams Ivo Intelligence is like going from a system of record, like putting books on a shelf, to seeing a complete 3D map. It's going from a 2D world to a 3D world. So when I show them relationship mapping, this is something they're wowed by. They breathe a sigh of relief. They say, “that would solve me spending ages organizing folders in a drive.” That’s the kind of admin work that nobody really wants to do.

I try to conceptualize this like building blocks.  I think that starts to get the wheels turning. The first step is that they have systems which have files and then subfiles and then subfiles, and they have to be really pedantic about naming conventions and knowing which one's the correct version. And now they can do this instantaneously. And the next piece is, what do you then do? Now you've got the documents in an organized way, how do you extract the data in a way where it’s useful to you and you can see everything you need? 

I recently worked with a customer that has quite specific SLAs about their platform’s uptime, performance and support. And just tracking that is something so simple for Intelligence, but before they had the product, it was almost impossible. They discovered that they have lots of unique clauses in their contracts that they weren’t really aware of before. But they’ve gone from a system where they didn't know, to now they know. And now they can do something about the situation.

The technology exists where legal teams should be able to be proactive, not reactive, about renewals, obligations, and risks, and they should be able to answer questions from the business in minutes, not days. And being able to show people that technology, and help them move their way of working to a more strategic, proactive role in the business, that’s a really satisfying part of my job. 

_________

Want to help companies re-imagine how they work with contracts? Take a look at our open Account Executive Roles.