Legal, Procurement, and the Power of Better Partnership
Most management experts agree that there’s no one-size-fits-all rule for a winning business. But if a universal principle is out there, Harvard Business Review suggests that strategic alignment might be it.
In order to achieve the alignment necessary for success, legal and procurement teams need to reexamine how they work together. For functions like finance and legal, the penalty for misalignment is costly. But once barriers to collaboration get eliminated, these teams generate tremendous operational value.
In this guide, we outline principles for silo-breaking between legal and procurement teams to establish better contracting interactions.
Different teams, same goals.
We recently interviewed a seasoned finance and procurement leader. When asked about the necessity of a fine-tuned relationship with legal, he shared this:
“We must avoid the mindset that business activities like contracting and review are department-specific. These aren’t legal or procurement responsibilities, they are both. This perspective reorients us toward collaboration, not a set of tasks.”
For legal and procurement teams, contract management is a primary interaction point where business value is created (or destroyed). Today, both functions face growing concerns around issues like cost efficiency, corporate risk, and regulation. As such, leaders on these teams are expected to deliver tangible business value and savings together.
Better “Alignment:” A must-do practice, not textbook topic.
Bring up the word alignment and watch some eyes roll. But alignment doesn’t have to be relegated to buzzword status.
It may be the answer.
In a recent report, LawGeex shares a perspective from in-house counsel that reflects business as usual for most legal and procurement teams.
“[...] the legal team has anywhere between 10 to 30 deals pending at any point in time. Procurement was often left waiting for legal to prioritize and approve agreements – and those delays caused unnecessary tension between purchasers and the legal department internally, as well as external stress with suppliers."
They conclude that without well-defined processes, teams end up working on things they’re ill-equipped to do, like procurement worrying about legal language instead of maximizing commercial value.
Eventually, “the goal of closing profitable deals” gets missed.
Six simple ways to integrate legal and procurement.
Through discussions with legal and finance staff who acknowledge having healthy collaboration, these partnership principles surfaced.
- Lead with respect
Respect means recognizing the importance of one another in the contracting process. Whether establishing (or critiquing) rules for working together, leaders must remember that they need one another. Prove it through gestures like introducing yourself to new hires, checking in genuinely, emailing notes of gratitude, and sharing ideas. These actions eliminate any sense of superiority or primacy and set the stage for collaboration.
2. Reengineer (don't duct tape together) bad processes
Minor fixes to a broken process create long-term pain. One leader told us, “If you start a process the right way, then workflows have a better chance to be clean and efficient. This benefits everyone, from legal to finance to IT.”
Improvement requires upfront time and energy, but limping along with weak, undocumented, or ambiguous processes may prove more damaging. According to leaders surveyed by the International Association for Contract & Commercial Management (IACCM), impacts from weak contract management processes include:
• Negatively impacted cycle times (82%)
• Negatively impacted decision quality (71%)
• Negatively impacted value achieved from trading relationships (63%)
3. Define a proper order of operations
While connected to the above process point, this practice emphasizes optimal sequencing of your process steps (e.g. - who does what, when). Leaders pointed out departmental clashes often spark from disordered sequencing in pre and post-signature process steps.
As you coordinate process steps, be mindful of where you can eliminate a handoff or operational step with purpose-built technology. For instance, leading CLM platforms, like LinkSquares, connect critical finance and enterprise applications and pull data from other enterprise systems, enabling efficient contracting.
4. Communicate early and often
A healthy working relationship is a cornerstone of process improvement – and sustainable relationships rely on connection. “We meet weekly and are always chatting in Slack,” shared a procurement lead. This reduces confusion and puts an end to squabbles before they erupt.
While department head (CLO and CFO) interactions are useful, front-line relationships arguably generate more value because mid-level leaders intimately experience the pain (or benefit) of well-oiled processes.
Worried there’s no time for this kind of regular connection? Think again. Consider where you and your teams are already expending energy unnecessarily. As studies show, overburdened legal departments spend up to 20% of their time on “low complexity, routine tasks.”
5. Build an internal customer success manager function
Yes, operational teams have customers too. So companies with high-volume contracting may opt for a unique hire: an internal CSM. This individual eats, sleeps, and breathes inter-department efficiencies– surfacing process
issues, assigning fixes, and creating improvement roadmaps.
A Bloomberg Law survey found that 93% of corporate respondents had a legal operations function responsible for activities like project management and innovation. This internal CSM can fit alongside legal ops to reduce value leakage.
However, even without a dedicated internal CSM hire, legal and procurement teams should incorporate the spirit of the role into their routines.
6. Use technology for (scalable) efficiency
With charming bluntness, one procurement lead said that without a contract lifecycle management solution, “we’d be a sh*t show.”
Technology replaces manual, repetitive tasks for teams with a well-established legal and procurement partnership. In particular, leaders pointed out the benefit of using self-service workflows to generate contracts from boilerplate language and pre-approved legal templates.
Others pointed to time savings from automated approvals that allow procurement to approve contracts independently based on conditional factors, like dollar amount thresholds.
Cohesive departments stay in the loop without burying one another in one-off emails. They rely on centralized CLM software for progress updates and self-serve for data like contract status, negotiation updates, or renewal dates.
“Procurement teams need to be in the loop on contract progress, but this should not be a one-way street, where procurement is constantly pinging legal for updates.” - Sunil Berry, Finance & Strategy, LinkSquares
For companies with high-volume contracting, moving the needle on performance is both a people and a process problem. And by putting these principles into place, you’ll hit both.
LinkSquares can help
LinkSquares is the company behind the AI-powered contract management platform of choice for legal teams aiming to move their business forward faster. With LinkSquares, you can develop standardized legal agreements with maximum speed and minimal staff oversight. With LinkSquares, you can parse and extract critical data from every legal agreement in your portfolio, then use that data to drive tasks in your other critical applications. With LinkSquares Sign, you can keep everything from draft to management in one place thanks to our built-in e-signature solution, reducing bottlenecks and unlocking unparalleled contract visibility.Together, they form the best end-to-end contract lifecycle management money can buy.
If you’re ready to write better contracts, close deals faster, and understand every aspect of every contract, contact LinkSquares today.