Breaking Bottlenecks: How Legal & Procurement Can Work Together to become Strategic Business Enablers

Deal or no deal? 

Historically, both Procurement and Legal teams have taken their share of the blame as being bottlenecks for getting deals done. 

But times are changing – and those days of bottlenecking business may be over. In fact, thanks to the digital transformation generated by  Contract Lifecycle Management software, Legal and Procurement teams are now emerging as centers of business enablement.  

So how does a team make that shift from bottleneck to business enabler? 

That was the topic of discussion in a recent LinkedIn LIVE webinar event with Prashant Dubey, Chief Strategy Officer of Agiloft, and Dawn Tiura, President of Sourcing Industry Group (SIG). The webinar was a sneak-peek of Prashant’s speaking session on the topic at the 2023 SIG Procurement Technology Summit in Amelia Island, Florida next week. 

Below is a brief recap of their conversation. 

Legal and procurement must come together to collaborate

Once seen only as a discipline of managing vendors, sourcing and procurement has really evolved into becoming “strategic business enablers,” Prashant said.  

“But because of all the disruptions, macroeconomic disruptions, unpredictable events like the pandemic, the invasion of Ukraine, the resulting sanctions on Russia, procurement has also been looked at as a risk mitigator or a steward of risk in the organization,” he said. 

Similarly, Legal has historically been treated as a risk mitigator, but more and more, Prashant said, these General Counsels are also being seen as strategic business enablers.  

So what does the future hold for legal and procurement roles? 

“You can see these two roles converging around a joint business driver of risk management and business enabler,” Prashant said. “The need for these two organizations to productively collaborate has never been greater.” 

The ‘finger-pointing’ between departments must end

It’s no secret that Legal and Procurement haven’t always been seen as a harmonious pair.  

“I’ll tell you from having been a sourcing consultant for so many years, legal and sourcing did not usually get along. They were both seen as finger pointing quite a bit, ‘You’re the problem.’ ‘No, you’re the problem.’ ‘You’re the problem. You’re slowing it down,’” Dawn said. 

With that historical dynamic in mind, Dawn asked, how can Legal and Procurement teams collaborate more closely together and improve their working relationship? 

“Number one, a lot of organizations have realized that a contract is not a legal document, it’s actually a business document with legal provisions,” Prashant said. “And the second thing is that contract management is not a legal business process. It’s actually an enterprise business process that’s very multidisciplinary and interdisciplinary.” 

Contract management often gets in the weeds of so-called “finger-pointing,” Prashant said, due to its somewhat “adversarial” transactional nature, but he believes contract management can be used as a vehicle for more productive relationships and can help converge the interests of legal and procurement teams. 

Just take selecting a CLM solution, for example. 

“We’ve now seen a more collaborative discussion where procurement may be funding it, but they’re proactively bringing Legal in as a stakeholder” when selecting a CLM, Prashant said. “They’re jointly making a selection of a system, and they’re jointly and collaboratively creating a process that drives the configuration of these systems.” 

Technology isn’t an ‘elixir, it’s an enabler’

Everyone knows a company that still does their contracting the old way, their legal documents collecting dust on bookshelves, only to be accessed rarely when an issue arises.  

But if we want to truly extract value out of our contracts, those days must end, Dawn said. 

“Obviously, [contracts] shouldn’t be in binders on a shelf, they should be online and accessible to everyone, everyone that should have access to it. But how should this relationship to our contracts themselves, how should that evolve?” she asked.  

One benefit of implementing a CLM system is that the organization doesn’t have to rely so much on institutional knowledge, when “all heck breaks loose” just because “Jane took a two– week vacation,” Prashant said. 

“So codifying it in a contract management system and really influencing the process starting at the front end can create a lot of efficiency throughout the process,” he said. 

He continued:  

“The contracting process, especially on the buy side – as you know very well – starts from a business need. And the business need is typically articulated to the sourcing and procurement group by some business leader or business person outside of legal or procurement,” Prashant said.

“When that business requirement is articulated, it’s the procurement organization‘s responsibility to say, ‘Okay, we need to figure out the commercial terms around this relationship, maybe go through some kind of RFX process, but ultimately we’re codifying this relationship in a contract document.’ That contract document needs to reflect the business purpose and the business needs of that business requester.” 

That front end of the process, if not done well, can create a “tremendous amount of inefficiency throughout and volatility throughout the contract process, which oftentimes will manifest in the legal organization being used in an inefficient manner.”

“So that very front end of the process, if done right, can actually be very, very productive,” he said. 

But, Prashant warned, technology is not “an elixir – it’s an enabler.” 

“The business process has to proceed [technology] because that’s used to codify how the technology’s actually automating the process,” he said. 

Hear more next week in Florida

To hear Prashant’s full speaking session about procurement transforming legal from a deal-making roadblock into a business enabler, be sure to attend the 2023 SIG Procurement Technology Summit in Amelia Island, Florida where he’ll be speaking on April 18th at 9:05 a.m. in the Innovation Hall.