Efficiency is one of the ultimate goals of any corporate department — and the same goes for legal efficiency. We’ve seen shifts in how legal departments are perceived in recent years, evolving from simple doers to more strategic advisers and enablers. Following this logic, it only makes sense that they focus so much energy on contract management — since this function has become structural to various business perspectives. Think about it: when contract negotiations drag or payment terms slip, the ripple effects can hurt cash flow, delay business execution, and stall strategic goals.
That’s why, today more than ever, legal leaders are expected not only to be efficient in their contract work but also to demonstrate the real value of those efforts.
In a recent market analysis we published at DiliTrust, we came across impactful data highlighting the need for — and benefits of — implementing a CLM tool for contract management.
Inefficient Contract Management Comes With Big Costs
Legal efficiency isn’t just about time — it goes way beyond. As a matter of fact, our latest survey on legal inefficiencies with Above the Law, points out how slow contract cycles drain resources and affect legal teams’ morale. Furthermore, such inefficiencies cause bottlenecks for other teams, such as sales and procurement. The market study we conducted demonstrates that a robust CLM can improve payment delays, reducing its time by 30%.
All in all, there’s more than operational improvements when adding a CLM to the tool stack. The financial performance optimization powered by legal teams can be drastic. Legal inefficiencies may present in different ways, but let’s explore a potential use case to better illustrate the costly risks of bad contract management.
Real-Life Scenario: The Case of Failing Audit Trails
During a routine compliance audit, a leading manufacturing company found itself scrambling. The manufacturing company didn’t work with a CLM tool and had contracts scattered across email threads, local drives and more. When auditors requested a clear approval trail of certain vendor agreements the company failed in producing the documentation on time.
In the end, the company faced costly legal fees because of the audit delay. This type of incidents highlight the pressing need for centralized contract management. With the proper tools, legal teams will enhance operational legal efficiency and be better prepared to mitigate contract related risks.
Faster Contract Intake Leads to Stronger Cash Flow
Legal teams see new contracts come in every single day. One of the most common complaints is that when a new contract arrives, whether it’s to onboard a new supplier or close a customer deal, the approval step is too slow. Contracts have a significant impact on the economy of a business. Every extra day needed to move forward with a deal can represent a lot of money. When handled manually, things such as signatures take time.
Our market analysis showed that a CLM can lead to an upgrade of +75% faster negotiation and signing cycles. This comes in turn with earlier revenue recognition, a better customer or supplier experience, and finally a reduced administrative burden.
By aligning contracts to the finance department, making customers enter the base faster is possible. As a result, revenue is boosted and all the teams are satisfied.
Real-Life Scenario: Struggling with Delayed Revenue
Imagine an energy provider facing challenges with new customer contracts. The company doesn’t have a proper digital contract management system, causing contract approvals to take up to two weeks before going live. Each delay not only postpones service activation but also impacts revenue.
To tackle the issue, the company implemented automated workflows through a CLM solution. From that point on, approvals were routed instantly and digital signatures enabled — significantly reducing the average signing time. As a result, payments started flowing in sooner, and cash flow stabilized. This way, legal became a revenue accelerator.
Legal is a Margin Driver When Contracts are Well Managed
Many departments struggle to show the real value of new tools to their work and overall business impact. For a long time, legal wasn’t associated with margin improvement — but that has changed. Ever since legal professionals have turned into business enablers, through structured clause libraries or by being able to flag risky terms in real-time, more and more leadership teams are convinced of the importance of LegalTech solutions. For instance, our market study revealed that a CLM can increase margins by up to 10% through better renegotiation and positions.
Furthermore, by providing better visibility into contractual obligations and standardizing high-value terms, all the necessary parties get to understand the company’s position vis-à-vis their suppliers and more. When legal teams have the tools to act strategically, their impact is felt across the balance sheet.
Real-Life Scenario: From Overspending to Strategic Wins
A government agency had been operating under the same vendor contracts for years — with terms that hadn’t kept pace with market realities. While the services remained adequate, the costs had increased. On top of that, the legal department is already constrained to a tight budget.
When the legal department adopted a CLM, they gained full visibility into contract timelines, renewal triggers, and benchmarking data. All the information was available at a glance, and for all the interested parties. The legal department uncovered outdated agreements and flagged them. Now they had a better understanding on why the overspending was happening. The vendor was offering prices significantly higher than industry standards.
Armed with data, the legal team led a renegotiation initiative. Not only did they recover lost margin, but they also realigned vendor spending with the agency’s strategic goals.
The Key to Legal Efficiency is the Right Partner
As we’ve seen, when legal operations are optimized, the benefits extend far beyond the legal department. Contracts move faster. Payments arrive sooner. Margins improve. And the business runs with more confidence.
It’s time to stop viewing legal as a cost. Start leveraging it as a catalyst for performance. Discover how the DiliTrust CLM can help you close contracts faster. It will improve your financial outcomes and turn legal into a growth engine.
