How In-House Legal Teams Can Quantify Hard-Value Impact

Especially in a startup culture, all modern in-house counsel and legal departments want to have a strategic impact on the business.

They want to have an impact that's measurable in hard value — in other words, measured in dollars.

In many job roles, saving time is more of a soft-value impact. With contract negotiation, it’s different. Time savings equates to hard-value impact.

Faster contract negotiations mean faster cash

Let’s take the example of a legal department that invests in analyzing past contracts and developing a playbook. If they can explain that the result of that effort is that contract negotiation of MSAs (master service agreements) is reduced from eight weeks to four weeks, that's a huge win.

Closing that contract sooner typically means being able to count that revenue sooner. It's revenue that you would never have gotten without this effort. It means more revenue faster for the company. That's a huge impact on any business, being able to quantify the success or the satisfaction of internal stakeholders with the legal department.

Measuring stakeholder satisfaction

The legal department, the business itself, is like a customer. Not only is it important to report on the quantifiable improvements to the contract negotiation process, but they can also point to improvements in the satisfaction of sales reps or the executive team.

For example, the CFO might place a high value on risk reduction by limiting liability, indemnity, and insurance clauses and ensuring that the business can be more compliant and more consistent across all the attorneys in the legal department.

Three ways in-house legal teams impact the money

Legal teams are bringing the money, they're keeping the money, and they're finding the money.

1. Bringing the money

They're bringing the money because they're part of the revenue generation machine of a company. They work seamlessly with sales and are part of the sales team.

2. Keeping the money

Keeping the money is where they limit company exposure to fines and regulatory issues. The company is compliant and takes calculated risks.

3. Finding the Money

Lastly, they can find and save money by locating agreements with automatic renewal that might be extraneous. That can save hundreds of thousands of dollars per contract by finding agreements that have automatic renewal which the company doesn't need.

Another way of finding money is when they can cut legal spending. One example is that outside legal work often has to be redone because the company doesn't keep a record of it. When the legal department can keep a record of their work with outside counsel, they can avoid that duplicated effort and find more money.

Even more ways for in-house legal teams to have an impact

Another way in-house legal teams can have an impact is by enabling the business to handle things without coming to legal at all. That’s a success because it cuts cycle times and it cuts business costs to get deals done.

Often, success for an in-house counsel is building trust with the business team, whether it’s the sales team or the executive team, to the point where business stakeholders come to them in advance with a problem rather than as an afterthought to solving a problem.

That is often a stereotypical challenge for in-house counsel, where a sales rep asks for a contract review just before it's supposed to be signed the next day. It’s a stereotypical example, but it happens because executives have a mindset of “don't talk to legal because they'll just say no,” or “don't talk to legal because you'll never hear back.”

It’s a success for in-house counsel and the legal department to build trust and good processes to flip that around. Legal is seen as a business partner and having strategic value, providing real valuable business impact, not just as a drag on business or a cost center.