How to implement legal tech: Focus on the biggest pain point

contract tech

We have highlighted some of the shortcomings with contract lifecycle management (CLM) adoption before on this blog, recommending a more incremental approach to adopting legal technology. It is vital to first address the largest time and resource sink in the CLM process – the contract negotiation phase – before trying to implement CLM across multiple departments and stakeholders. 

However, the recent rush of investment into legal AI startups and scale-ups, especially in what is being termed “CLM 2.0” companies, would seem to suggest that investors don’t necessarily agree! Yet a recent survey carried out by Onit’s ContractWorks group, (as reported on Artificial Lawyer), does support our view. Although the survey isn’t specifically focused on CLM, the questions and responses do suggest that when it comes to implementing legal technology platforms, things aren’t as rosy as they seem. Many factors are cited as reasons for technology adoption failure, including resistance to change, too many stakeholders, implementations taking too long, complicated technology, and a lack of management support. The survey also highlights the human cost of these failures. A failed legal tech implementation can undermine the confidence in leadership, frustrate users with the tools chosen, and even make employees wonder whether they want to stay in the company if they have to use suboptimal technology. These are indeed, disturbing outcomes. 

So why is there such optimism with CLM right now, and why have we seen such a significant scaling of investment in funding? In spite of some economic headwinds approaching, from the war in Ukraine to the global cost-of-living and inflation increases, there is still a lot of money in technology funds within venture capital and growth equity firms looking for opportunities to invest. Technology at a broader level is seeing a lot of investment, although if it continues into the second half of the year remains to be seen. Secondly, CLM vendors are building out their technology stacks, getting better at explaining their features and benefits, and are recruiting B2B enterprise software executives with sharp sales skills. It all becomes a bit of a self-fulfilling prophesy. Zach Abramowitz writes about the attractiveness of CLM to investors, corporates, consultants, and the general public in a recent blog post, but predicts that those legal tech tools that will succeed “will focus on optimizing those aspects of CLM that reduce costs.”

However, what successful enterprise software vendors like Salesforce, SAP or DocuSign know only too well, growth only truly comes when existing customers renew and buy more. Getting a customer and then losing them a year later is often worse than not having the customer at all. Customer churn is the absolute enemy of SaaS growth. To avoid this, these companies focus on customer success with extreme rigor. They move mountains to ensure their customers have a great customer experience and do whatever it takes to get them to renew. One aspect of that is to listen to them and respond accordingly. This survey from Onit then gives a good pulse as to what is really happening with legal technology adoption. Legal tech firms need to sit up and pay attention. They need to internalize these results. The discrepancy between the views of investors pouring funding into legal technology startups and scale-ups, and the reality of ROI and adoption on the ground, will need to be addressed sooner or later, if their substantial investments are to pay off.

The most expensive aspect of the contract lifecycle: Contract negotiation

In BlackBoiler’s view, these results ratify the approach that we have taken to the market from day one with our contract review AI tool. We believe simplicity needs to be built into legal tech, from the user interface to throughout the process of automating the contract negotiation process. Accordingly, we have designed a contract review AI tool based on that premise – simplicity, and ease of use being built into the design. Secondly, we are passionate that legal technology gets a better press – and that means a narrative built around customer success and an ROI which reflects the focus on “time to value”. Our raison d’etre is all about short implementation cycles, delivering value, and delighting our customers. We chose to address the most important and expensive aspect of the contract lifecycle – that of contract negotiation and redlining. We believe that focusing on this task first and foremost, and then subsequently on post-execution, takes the friction out of implementing legal tech and delivers faster and more tangible ROI to the business. In fact, a focus on automating the contract negotiation phase to gain quick wins will afford more confidence from users as the firm moves to adopt broader legal tech platforms like CLM.

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