Legal and sales teams often operate in separate worlds with different priorities, although both support their organizations in achieving the same goal: to secure customers and increase revenue. One particular area of friction is contracts.
Contract negotiation is a critical function in any business. It’s bundled with post-execution tasks that can burden the legal team and force sales teams into a holding pattern. The result is a disconnect between sales and legal because they lack insight into each others’ roles in the process. Sales teams are driven to expeditiously close deals and make their goals. Legal departments are tasked with identifying and mitigating risk. To merge these priorities, businesses should view contract negotiation as a shared responsibility between the business stakeholders and legal.
Technology can help resolve interdepartmental friction by facilitating collaboration and communication to accelerate contract approval. AI creates a more streamlined and efficient process to increase sales velocity and protect the organization’s interests.
The dichotomy between sales and legal teams
Sales and legal teams have faced challenges for decades, especially regarding contract lifecycle management (CLM). This complex process involves many different stakeholders, and it is challenging to coordinate the work of every team to ensure contracts are negotiated, approved and executed efficiently and effectively. Additionally, these factors may hamper CLM:
- Lack of visibility and collaboration. Individual teams operate in silos, which obscure contract status tracking, impede collaboration and create delays and frustration on both sides. Contracts drafted and reviewed via multiple software programs muddle version tracking.
- Reliance on manual processes. Many CLM tasks are still performed manually, which can be time-consuming and error-prone.
- Increasing contract complexity. As businesses operate in an increasingly interconnected, globalized and competitive business landscape, contracts have become more involved and require more complex structures and additional scrutiny.
- Regulatory compliance requirements. Businesses must comply with ever-changing regulations that put additional pressure on review processes.
Although each team is working toward the same goal, their responsibilities and, thus, their approaches are different. Sales teams want to accelerate the deal cycle and often view the legal team as too cautious. Meanwhile, legal teams may think sales teams are too willing to take risks.
When they send a contract to the legal team for negotiation, sales teams may neglect to provide important context, which slows the process as legal professionals waste valuable time gathering missing information or seeking clarification. The longer negotiation timeline can lead to lost business and missed opportunities.
Because legal departments are often not staffed for peaks in deal flow, personnel become bogged down with lengthy review processes and buried under paperwork. Increased contract complexity requires employees to pay meticulous attention to details. These conditions can create bottlenecks and frustrate sales teams driven to close deals more quickly and efficiently.
While most contract negotiations traditionally fall under legal’s purview, this arrangement leads to silos and delays. By collaborating from the beginning, sales and legal teams equip themselves to better understand each contract’s goals and identify potential risks. Collaboration promotes consensus, reduces back-and-forth discussions and accelerates deal approval.
In an ideal scenario, sales teams provide legal teams with early input on deals that help legal teams understand the business context and surface potential red flags. Legal teams could increase sales teams’ effectiveness by providing training on contract basics and best practices.
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Strategies to mend the relationship between legal and sales teams
Sales and legal teams should leverage technology to reduce friction and enhance communication during the contract negotiation lifecycle. The proper solutions can streamline many functions organization-wide.
Collaboration
Sales teams typically rely on customer relationship management (CRM) software and send documents as needed to the legal team, which uses a CLM solution. However, this workflow requires additional steps to move documents from one department to the other — and back again.
Additionally, separate tools hinder individuals’ abilities to accurately see document statuses, leading to unnecessary overlap and redundancy. Version control becomes almost impossible as documents bounce back and forth between teams.
Using technology to break down silos and collect documents in a centralized database enables collaboration among all stakeholders. With integrated tools, everyone can view and work on the same document, ask and answer questions, and track a contract’s progress through the approval cycles. This level of visibility empowers sales and legal leadership to identify and resolve bottlenecks.
AI-driven review processes
The time and effort required for manual contract reviews frequently extend approval timelines. Even the most straightforward contracts need multiple evaluations, monopolizing time that could be spent working on more complicated, high-value documents. Artificial intelligence (AI)-powered tools can shorten sales cycles by reinventing the workflow to streamline review processes.
Because it is faster and more accurate than humans, technology should conduct the first review to flag problem clauses and surface potential risks. AI executes a granular risk evaluation and redlines contracts with preferred language — tasks previously only achievable via an exhaustive, experienced lawyer review. With this strategy, lawyers focus on mitigating and resolving risks — not finding them.
Companies can use generative AI trained specifically for legal use to compose initial drafts and situation-specific, nonstandard clauses aligned with business goals. AI streamlines the contract review process, breaking the logjam and enabling legal departments to accelerate sales velocity via expedited approvals.
Empowerment
Most deals entail standard contracts, like non-disclosure agreements (NDAs). Despite the documents’ low-risk nature, legal teams must still review them. But what if, instead of immediately tasking legal departments with these common agreements, the sales team could review them?
Training AI on a company’s legal playbook ensures everyone organization-wide has access to best practices. This strategy empowers sales teams to redline high-volume, low-risk contracts, resolving many issues on their own and directly handling more deals. Because the resulting documents need less hands-on work, negotiations are fast-tracked.
Another benefit? Sales teams involved more directly in the CLM process understand the contract’s legal implications more deeply, which could avoid potential misunderstandings and delays and inform future deals.
Technology as the remedy
The human element is vital to a successful partnership between sales and legal. AI removes friction and creates new opportunities for collaboration. While it does not replace either job function, it is a tool teams can use to share responsibilities and communicate goals, needs and expectations. This dialogue fosters understanding and transparency between teams, equipping them to work together efficiently to create exemplary contracts.
When exploring technology solutions:
- Identify both teams’ requirements and address those needs. Prioritizing one over the other will not achieve universal buy-in and will limit any implementation’s effectiveness.
- Maximize your tech solution’s value and benefits by clearly defining workflows and expectations with everyone involved.
- Monitor and evaluate any new process’s results, adjusting as necessary to ensure continued efficacy.
While sales and legal teams’ seemingly disparate functions may put them into different orbits, these departments serve the same purpose: to help the company achieve its goals. Technology removes friction to streamline and strengthen business outcomes. AI facilitates collaboration and communication to align priorities and accelerate negotiations and reviews. As a result, sales and legal teams unite to become a powerful, harmonious, productive entity.