For legal operations, transformation can partly be achieved by automating manual processes, minimizing risks, enforcing and improving compliance, and gaining greater insights into business performance - all with the help of effective contract management solutions. With regulatory boards always calling for better predictability and transparency, in-house legal teams today are embracing digital contracting transformation for engineered workflows, better collaboration, tracking contractual obligations and delivering a significant impact on the business bottom line.

Host Guru Venkatesan is joined by Eric Schultenover, Executive Director, Enterprise Legal Solutions, Legality, a global, new law company that provides consulting, technology, managed solutions, and flexible legal services to corporations and law firms. They exchange views on enterprise legal operations, performance undersupplies in legal tech, current trends in outsourcing contracting services and more.

Listen to the Contract Management Podcast

Conversation between Eric and Guru:

Guru: Hi, I am Guru and I would like to welcome you all to Clause & Effect a podcast series presented by SimpliContract. Joining us today is Eric Schultenover, a legal expert and a business with over two decades of experience across verticals and industries, Eric co-leads enterprise legal solutions at Legility, a global new law company that provides consulting technology and managed solutions and a flexible legal services to corporates and law firms. He specializes in M&As, compliance project management, contract review negotiations, and litigation management solutions. Prior to agility. Eric was a partner at Waller Lanston and dosh practicing in corporate restructuring in finance with extensive experience in automotive and healthcare industries. Eric, glad you could join us today on this podcast. I'm excited for our chat about the world of enterprise legal operations.

Eric: Thank you very much Guru. It's my privilege and pleasure to be here with you today.

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Guru: You know, the world is coming back to the new normal, world is opening up. You know, we had a tough two years of pandemic. Every sector is growing. There is a huge tailwind across verticals industries, domains that you and me have been talking and witnessin. Just want to know about, you know, hear thoughts about what's driving this growth in the enterprise legal management space? We see quite a bit of adoption, lot of legal spend increasing what's your view around it, Eric?

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Eric: Yeah. Guru, great question. I mean, I think  there's a number of factors that are pushing innovations within the legal department generally. I mean, before the pandemic there was quite a ground swell of activity around clock, the association of corporate council, moving beyond, areas like e-discovery and litigation spend management into other areas of enterprise legal operation, such as contract management, or looking at different ways to deliver M&A projects and to handle due diligence. Looking at, you know, the increasing amount of compliance work, around data privacy, specifically, around GDPR initially, and then moving into the CCPA here in the United States, but other, privacy, regulations that are now being set forth by various state governments. And so that was all happening pre-pandemic. There was quite a bit of discussion around that.

Obviously the pandemic occurred and pressed pause a little bit around those types of discussions, or at least initiatives within companies. But I think the discussions actually might have picked up a bit during the pandemic because people had a chance to spend some time and think about these other areas with an eye to implementing change coming out of the pandemic. Obviously now, in addition to there’s just being thought leadership around, these other areas of enterprise legal operations, there are cost pressures, those cost pressures existed pre pandemic, but, they're even, more significant now I think as businesses try to navigate, the various global difficulties, stemming from the pandemic and now stemming from, what, you know, appears to be conflict in Europe, that is further stressing, businesses that, that are global actors.

And so, you know, I think that there was an eye pre pandemic, to the fact that there was a better, more efficient way to accomplish legal work. To get more work done per dollar or per, or per Euro spent. But now there's an absolute push and it's coming from outside the legal department as well. I think the COO's office and the CEO's office has tasked a lot of the new legal operations officers and general counsels with exploring new ways, both from a staffing perspective, also from a workflow perspective, but then ultimately from a technology perspective to drive innovation, cost savings, and better service from the legal department back to these corporate businesses. And, it's very much front and center now coming out of the pandemic.

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Guru: Great. So, I mean, that's a very interesting point to bring in. In fact, just eluding on that, right, one of our guests in the previous episodes spoke about this, performance under supply in the legal tech, right? So I having built a company, having been a tech enabler for legal, I definitely feel there's a lot, a technology industry owes to the legal team. So it's completely understaffed. I think there's a lot more solutions that can come up from the legal tech vendors. We see a lot of momentum with many interesting startups coming with some legal solutions, litigation management solutions, IP related solutions, and many, right. And I'm sure, you know, most of them, if not all of them, We want to hear from you about, you know, CLM contract, lifecycle management, what's the role of a CLM in enterprise legal operations, and little bit more about how do we deliver increased value to the business?

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Eric: Well, that is a broad question and  we could probably have an entire podcast just around that. And I know a lot of it is gonna continue to touch on that.

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Guru: I know I touched your hot subject.

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Eric: Absolutely, It is a hot subject. And I would say this is probably the area within enterprise legal solutions that has the most current traction globally. And I do think it's because, there was momentum around the new software solutions that was really starting to take hold, pre-pandemic. And now a lot of the tools are very robust, that are being introduced into the CLM space. I started back in 2011 in the LPO business coming out of my private practice as a corporate finance and restructuring attorney. Back then really the only software that was making significant impacts in terms of legal spend and efficiency was, in the e-discovery markets, and even then it was somewhat early days, but, but you could see adoption in litigation matters, compliance matters, investigations and things like that, of technology tools to make lawyers more effective and more efficient when they were performing those projects.

There really wasn't much outside of  those litigation support tools and maybe some matter management, litigation management, tracking tools, that, that was really changing the way that legal practice occurred. Because of that for the first, probably six or so years, with veryvery few exceptions, most of my clients were handling their contracts like they've handled contracts for the last hundred years. In some instances, they were still being done on paper. There was a very  lengthy negotiation process around large contracts and things like that because they're, the best technology that existed was just simple redlining technology. So there was a lot of back and forth. There was no tracking of information, that was, being negotiated in those contracts. Or if there was, it was being done in spreadsheets and things like that. So, again, I would, I would call it a very analog process. One that, that took a lot of time that cost a lot of money if you were using outside counsel to handle that but also a lot of resources if you were use using your in-house legal team to handle all of those negotiations. There just was not much in the way of innovation, outside of a few large enterprise systems that were starting to be developed in the early 2010s.

We did have a few clients that were working with some of the large systems, and it was clear that once more cloud based systems could be developed, and rolled out to the marketplace, there was likely going to be adoption. Because at that time I really only saw significant CLM solutions within the fortune 100, not even really in the fortune 500, fast forward now to today, and we see a very robust marketplace in terms of CLM solutions that exist. I think what's driving the adoption of those systems is that the cost has started to come down to some degree. They are easier to implement because they are cloud based as opposed to being behind the firewall.  Now obviously,  you can have it behind the firewall if you'd like it but it's easier. And, companies have become more comfortable adopting cloud-based solutions. So when you start to reduce the friction around implementation, you reduce the cost and you now have 10 years of in-house legal teams starting to use CLM technology solutions as part of their contract process. You're definitely seeing that adoption curve, ramp up significantly and a lot more, deployments, around the world. I think all of this goes hand in hand with some of the discussion that's been happening in the thought leadership, at Clock and ACC and other places like that, legal tech, recognizing that there is a tremendous amount of business intelligence and value that exists within your contracts.

Tthere are opportunities to not only manage contracts relationships better, much better. Well, not only I should take one step back. First of all, negotiate your contracts in a much more efficient and effective way with tools that enable your team to negotiate better and to do it more quickly. So there's certainly that front end piece, but then there's also the ability to maintain and track data that comes out of those contracts for business intelligence purposes, and for contract relationship management purposes that is critical. I think, you know, there's a huge store of value, data is the one thing now that in any business and is proving to be the lifeblood of the business that flows across all of the various C-suite offices and contracts contain a lot of that. So I think that's really, what's making, what's bringing contracts in particular front and centre.

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Guru: Can agree with you more, right? Every conversation that we have across the globe customers keep looking for what sort of data can you provide, can you provide data for procurement? Can you provide us data for finance? A little more building on that about, little bit, your views about outsourcing contract services? So there are many areas that the legal operations are, the GCs office is looking at leveraging external support from partners. You spoke about some of them, right? Are there any trends that you see and what are those interventions where enterprises look for outsourcing any of the contracting services?

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Eric: That, that certainly is at the core of our business  at Legility Consillio and  I would be remiss, if I didn't make note of my bio of course, says Legility, but we are within a week here of switching over completely to Consillio. So that is gonna be my new home and, and a much larger, global, resourced organization at Consillio, very excited about that. But we here at Consillio do provide those types of legal outsourcing opportunities and services. And I think one of the reasons why the general counsel's office is looking at outsourcing opportunities is number one, because a lot of the outsourcing firms, like ours and like some of our competitors, are very versed in technology tools as well.

And each one of these solutions really is a three-legged stool there's, people process and technology. That's something that we always talk about. In terms of the, the dials that you might be able to turn to increase the effectiveness of your internal legal team, and the efficiency of the services they're delivering back to the end client. So far, there's not a technology that just negotiates these contracts back and forth by themselves and gets it right a hundred percent of the time. So we're firm believers that there's going to be a human element, for the foreseeable future, probably forever, at least, with respect to final review of contracts and making sure that business critical contracts are negotiated properly and that the language is correct. So we, we're a big believer that there's always going to be a human element. And today there certainly is.

For large organizations that generate a significant amount of customer agreements, paper, who are big, procurers of goods and services, and have large vendor contracting operations and procurement contracting operations. There's going to be, you know, oftentimes thousands and thousands of agreements that are working through that funnel every year. And the days of perhaps allocating expensive in-house counsel resources to handle relatively routine contracts, certainly for large organizations has passed. So the big companies are looking for combinations of contract managers, lawyers from companies like Consillio, you know, operating in a team based environment with clear playbooks and, and following instructions to be part of that negotiating environment. It not only saves the company money versus full-time employee resources and expensive lawyers, but it also frees up the in-house legal team to focus on the more strategic, higher value contracts perhaps that an organization has, or the more pressing strategic legal needs of an organization.

It allows those in-house lawyers to spend more time with the other business leaders within an organization and to drive value and provide good counsel and to allow some of the more routine tactical day to day contracts to be addressed at a lower cost point. But also at at a point, where, when you enable these outsource teams with clear process and workflow design, and good playbooks. So it's clear, what their, what their orders are in terms of what they can and can't do with respect to negotiating agreements, and then through very elegant technology, interfaces now, and that are, or cloud based. You can really empower those teams to focus on the regular routine agreements and handle them more efficiently.

So, companies across the globe and really, companies, I would say, even outside of the fortune 500 into the largest 2000 or 3000 organizations that are operations around the world are looking for, process design and good outsourcing partners to handle a lot of this routine work in a more efficient way.

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Guru:Three, three top points you spoke about, right. The first is about the playbook. Second is about the workflow. And third is about the whole simplicity of a tool or a platform that helps - either you have an in-house or have an outsourced partner that you work with is very critical for enterprises to do. Do you want a little more elaborate on these three things and why are they so critical for a good responsible product to, or a tool to help the counsel's office?

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Eric: So with respect to playbook development, it's absolutely critical, that any team that is being integrated into an existing process, within an organization has clear direction as to what they can and can't do. So either a client or company that is engaging our team has existing playbooks where they've reduced their  preferred language to a document of some sort, or if they do not have one, they develop it. And it is a very worthwhile exercise for an organization to undertake the development of playbooks. Because people may come and people may go within a legal department throughout the course of a company's life cycle, but if, a company has spent time to reduce all of that language to internal documentation through a six Sigma process or something like that, then, it's very easy to bring in new resources, whether they are internal resources or external resources to be part of the contracting process within an organization.

Specifically with respect to process, you know, as I was hinting at, before maybe 10 or plus years ago, it was a very analog process. I think within a lot of organizations and contracts would come in, oftentimes from the business. They would find, you know, the internal lawyer that had some availability and capacity, and they would just start emailing contracts to particular people within an organization. Sometimes relationships would develop between certain business units and certain lawyers.so all the contracts would go to certain people. It was kind of a wild west, process for, allocating work within a legal department. And it was, oftentimes driving choke points within an organization and places where some folks may have had too much work. Some, some other people, had too little.

I think, you know, going back 10 years ago, there was some thought as to how do we start developing even internal workflows that make more, so we need to route contracts through contract managers. We need to have one single point of contact, in order to do that. And a lot of those process, and you know, allocating certain types of contracts to certain types of attorneys or certain levels of attorneys based on this. The value of a particular contract to the organization was something that needed to happen. And so I think there's been, and a lot of thought to doing that over the last 10 years. Again, I think companies built their own internal processes and workflows in order to make that happen. But it really hasn't been, until recently with the creation, I think of intelligent, CLM solutions and elegant, user interfaces that are easy for lawyers to use because we're not technologists, that has really enabled that workflow.

So the playbooks were developed. People reduced their preferred language to clear documents that outside vendors could follow over the last 10 years. They also gave some thought as to what's the best way to route contracts through an organization. But now when you combine that with the technology tools that exist, it integrates those workflow decisions into the tool itself, have access to playbook documentation within the tool itself. That's now the marriage that we're finally seeing of all three of those legs to the stool that I was referring to before come together so that they're truly effective. One without the other  two even, without the third, are not ideal. But now we're in a situation, I think from a technology perspective where you can marry up playbook processes, into a simple to use tool.

I mean one area that I think is, is, is really worth noting, and I, I think I touched on it a little bit earlier, but it's certainly something that I've seen from a lot of the new tools that are, are coming out is, is the amount of business intelligence that can be gleaned by tracking the metrics and the data points within a contract, but within the CLM-CMS system. So not only can you better manage the relationships with your counterparties and to the contracts and understand when contracts are going to expire or better understand your pricing terms with them. There's a lot of information that is within those contracts that can be pushed to the other officers, and the other C-suite functions within a company. So I think oftentimes contracts, even though they're the lifeblood of an organization, have been, again not managed particularly well and the data that comes out of those contracts, is mission critical data that, is important to the CFO’s office, the COO's office, and ultimately the CEO's office. So, again, that underlying theme of data across an organization, exists within all of the departments within an organization.

And now it's the CLMs-CMS solutions that are pulling out probably the most business critical information for a company from a legal perspective. But, because they also contain so much in the way of, of commercial terms, it really is transferable data that the rest of the organization needs to see. So that's a way I think that the legal department can drive a lot of value, and not just be a cost centre. It can become an intelligence center for the organization so that the entire organization is ultimately more profitable or stronger. And so I think it's just important for people to consider that when they're deciding whether or not they want to invest in this people process and new technology solution, that's capturing a lot of this data for companies.

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Guru: Absolutely absolutely. Data is on top of contracts. Data is hidden within the contracts. Data is all over the place. How do you get them and enable the business decisions based on data and insights is I think responsible for every vendor, tech vendor to provide it to the enterprises.

Thank you so much, Eric, thanks so much for the time. And, you know, it was a pleasure having you this evening. Looking forward to catch up soon.

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Eric: Absolutely. Thank you, Guru! Appreciate the opportunity.

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Guru: So listeners that was Eric Schultenover sharing with us his views on enterprise legal operations, a performance under supply in legal tech, and the current trends in the outsourcing contracting services. Contract lifecycle management has the power to drive value for in-house legal teams and can be used strategically to have a very positive impact on business bottom line.

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That was an interesting chat with Eric. Many more such conversations with industry leaders coming up in the next episodes. Stay tuned and catche us on the next episode of Clause & Effect. Subscribe to our podcast or visit simplicontract.com for more information.

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