Sales cycles dramatically lengthened over the last year — many now stretch more than two weeks longer than in 2022. Extended contract negotiations are costly, resulting in lost customers and revenue. More than half of companies report inefficient contract processes costing them business. Unfortunately, legal departments often still carry the reputation of being a “bottleneck” in the sales process, but delays don’t have to be part of the contract process. To expedite approvals, organizations should transition contract negotiation from a legal task to a shared responsibility.
Technology can help legal and sales departments collaborate to accelerate deals.
SALES AND LEGAL RELATIONSHIP CHALLENGES
The sometimes discordant nature of the relationship between sales and legal stretches back decades. Sales teams often feel that legal teams are too slow or cautious, while legal teams think sales teams are too willing to take risks. This disconnect creates frustrations on both sides.
Traditionally, most tasks related to contract negotiations fall under legal. Many organizations bundle contract negotiation and execution together when, in actuality, sales and legal teams should share responsibility. Most organizations’ processes happen within functional silos. Sales and procurement people do extensive work before delivering a contract to the legal team, which then redlines and approves the document in isolation. The organization is better served if both departments collaborate from the beginning.
Legal professionals should support salespeople during the sales process to understand each contract’s goals and identify potential risks, such as increased liability or problematic payment structures. This approach gets everyone on the same page, reduces back-and-forth discussions between departments and accelerates deal approval.
HOW CAN LEGAL AND SALES TEAMS BRIDGE THE GAP?
Businesses can leverage technology to enhance communication and reduce friction in the contracting process. The right solutions streamline many functions.
Collaboration
The sales department typically completes its work within customer relationship management (CRM) software and then kicks documents to the legal department, which uses contract lifecycle management solutions in its processes.
This workflow creates inefficiencies, such as the extra steps to transition documents between programs. Version control becomes difficult as emails fly back and forth between departments. Separate tools also impede visibility, preventing staff from seeing a document’s status and leading to overlapping efforts.
Technology integration overcomes these challenges by creating a centralized database where both parties can collaborate. Integrated tools enable everyone to work on the same document, leave notes and track progress as the contract moves through a clearly defined approval process. Sales and legal leaders can use this visibility to spot and resolve holdups.
Review Processes
Artificial intelligence (AI) streamlines review processes to shorten the sales cycle. Manual contract reviews require significant time and effort, extending approval times. Even the most basic contracts go through multiple rounds of evaluations, tying up lawyers who could be working on more complex and high-value documents.
AI reinvents the workflow. The technology conducts the first review, identifying problem clauses and flagging potential risks faster and more accurately than humans. AI solutions can automatically redline contracts with preferred language and perform an exhaustive risk evaluation previously achievable only through an experienced lawyer’s review. Meanwhile, lawyers can focus on resolving the risks rather than identifying them.
“Traditionally, most tasks related to contract negotiations fall under legal. Many organizations bundle contract negotiation and execution together when, in actuality, sales and legal teams should share responsibility.”
Generative AI can further enhance the process by composing initial contract drafts and situation-specific, nonstandard clauses that align with business goals. Such algorithms must be designed specifically for legal use and implemented with thoughtful evaluation.
Sales Team Autonomy
Many contracts required to secure a deal are standard — such as nondisclosure agreements (NDAs) — yet still require legal review. Rather than immediately shifting responsibility for these low-risk documents to the legal department, organizations can empower their sales teams to draft them.
AI trained on the company’s legal playbook makes best practices accessible to everyone in the organization. Sales teams can use the algorithm to redline low-risk, high-volume contracts, allowing them to resolve many issues on their own and handle more deals directly. The resulting documents require less work from legal and fast-track negotiations.
Involving sales teams in handling contracts also helps them understand a contract’s legal implications, potentially avoiding misunderstandings and delays later in the process and informing future deals.
Technology as a Bridge
The human element is the most critical component of a successful partnership between sales and legal. Technology supports the relationship by removing friction and creating opportunities for renewed collaboration. AI does not replace either job function. Rather, teams can leverage these integrative tools for sharing responsibilities and communicating goals, needs and expectations. The resulting dialogue builds trust and understanding between teams and allows them to work together to efficiently build optimal contracts.
A few items to bear in mind when implementing a solution:
- Consider and acknowledge both teams’ needs. Solutions catering to only one department will not receive universal buy-in, ultimately limiting their effectiveness.
- Clearly define workflows and expectations to maximize the solution’s benefits and value.
- Monitor and evaluate the new processes’ results to ensure utility and identify improvement opportunities.
The functions of sales and legal may seem to place them in separate worlds, but ultimately, these departments are working toward the same goals. Building a bridge to connect them is key to streamlining and strengthening business outcomes. Communication aligns priorities, while AI facilitates collaboration and accelerates review and negotiation. Combining these elements unites efforts, turning sales and legal teams into a powerful, harmonious force.
