The Role of Legal Agreements in Modern Businesses
Legal agreements govern how people do business. These agreements hold a lot of information companies need to make strategic and data-driven decisions. Unfortunately, contracts haven’t always kept up with the speed of modern business.
Too many companies continue using slow or unwieldy contract processes. These businesses aren’t taking advantage of clickwrap contracts and general contract management innovations. As a result, they are more likely to miss opportunities.
Understanding how modern businesses use legal agreements is fundamental to improving your company’s contract management. Keep reading to discover the role of legal agreements in modern enterprises and how innovative companies make the most of contract technology to support their strategic goals.
How legal agreements are used in modern business
The purpose of a legal agreement is to allow people or organizations to work together while protecting everyone involved from liability or financial losses. This task is just as important today as before the internet, especially for businesses.
Companies use legal agreements in almost every aspect of their operation. Some of the most common situations in which modern businesses use contracts include:
The most fundamental relationship within most businesses is employment. Organizations rely on employees’ performance to function, and workers rely on their employers to fulfill their pay and benefits. Employment contracts formalize this relationship and give both parties grounds to fight back if the terms of the agreement aren’t fulfilled.
They also give employers and employees legal protections. For instance, an employer can use a thorough employment contract as a defense if an employee sues for wrongful termination. Employees can also use these agreements to ensure they are fairly compensated for their work.
A legal partnership agreement is helpful if an organization wants to work with other parties outside of employment situations. Partnerships include contracting out tasks to another business and setting up co-marketing campaigns with other organizations.
These arrangements can be valuable to businesses, but they also pose risks. Without a legal agreement, it’s much harder to make sure both parties deliver on their promises. Instituting a contract quickly and effectively makes it much easier for your organization to make the most of partnership opportunities.
Purchases and sales
Any sale involves a legal agreement of some kind. The act of exchanging money for goods or services meets the basic definition of a contract by supplying an offer, acceptance, and consideration. However, instituting a standardized sales contracting process makes it easier for both buyers and sellers to make it to close.
Written contracts protect both buyers and sellers by clarifying what is being sold and the conditions of the sale. Without a written legal agreement, there’s little evidence that the seller requested a particular price or that the buyer expected the item in a specific condition.
Many companies generate significant intellectual property (IP) over time. A business’s IP may include:
- Trade secrets
- Marketing materials
- Market strategies
- Future plans
These items aren’t just important to the business’s operations. They can be vital to maintaining a competitive edge. If a company loses control over its IP because of a fault contract, it can suffer significant profit losses as competitors copy its offerings.
Legal agreements help companies protect IP in several ways. Non-disclosure agreements (NDA) are the most common solution. With an NDA, a company can ensure that all employees and partners are legally bound to protect any sensitive information they may learn during the duration of the contract.
Similarly, businesses can include specific IP clauses in sales and partnership contracts that clarify who will retain ownership of any intellectual property involved. These clauses leave no doubt about who can use the IP and how.
How innovative companies make contracts work for them
There are many situations where legal agreements are essential, and businesses benefit from a solid contract management process. At a minimum, a contract management solution should make it easier for organizations to create and finalize contracts of all kinds quickly.
However, some innovative companies have gone above and beyond with the help of modern technology. These organizations have used techniques like clickwrap contracts to make their agreements a core part of their strategic approach. Approaching contracts with modern technology has let these companies accomplish tasks such as:
Digital advertising company PubMatic has recently re-envisioned how it approaches the contracting process. The company’s previous manual contracting methods were preventing PubMatic from moving forward. Its sales, legal, and finance departments struggled to communicate effectively, making it challenging to manage contracts requiring input from all three teams.
PubMatic looked to modern contracting technology to improve this situation. The team chose to implement a comprehensive contract lifecycle management (CLM) solution. Their goal was to use the digital tools provided to streamline collaborating on contracts without the overhead necessary to transfer physical documents across departments.
With the new CLM in place, the company saw immediate improvements. The CLM allowed them to automate significant elements of the contracting process, including notifications about new agreements and sending contracts for signatures. It also made it easy for Sales to submit contracts for financial and legal review.
The results were significant. PubMatic’s transition to digital contracting allowed the company to communicate internally and externally with much less effort. The company’s contracting process went from a hurdle to a growth opportunity. With faster contract communication, PubMatic’s legal, financial, and sales teams save hours each week they can spend on other, more valuable tasks instead.
Increasing sales and reducing time to sign
Some innovative companies have used modern contracting technology to do more than improve internal communications. Personal storage provider Extra Space Storage has made the most of its new CLM tool to increase its online mobile lease signing rate by 48%.
Extra Space Storage was looking for a solution to increase sales and reduce time spent on contracts after facing surging demand. The company had implemented digital agreements, but the process was unwieldy and required potential customers to download and review PDFs. As a result, Extra Space Storage’s leadership believed they were losing potential sales.
The business turned to clickwrap contracts to streamline the process. Instead of requiring visitors to download and read PDF files of up to a dozen pages, the team used its new CLM to create native HTML contracts on its website. At the bottom of these contracts, visitors were presented with a simple click-to-sign field. Accepting the agreement and signing up for a storage space lease was as simple as clicking a button.
Customers seem to be thrilled with the implementation of clickwrap signatures. Extra Space Storage saw mobile lease signings increase by 48% after making the change. It also reduced the time to win customer signatures by 63% on mobile devices and 80% on desktop computers. The company significantly increased its sales and reduced wasted time simply by updating its contracting processes with the support of modern technology.
Developing new offerings
Social media giant Snap Inc owns Snapchat, a unique socializing and communication app. Snap Inc. is dedicated to helping people be more creative, which is why it wanted to develop a new way to contract with advertisers on the platform.
The company’s solution was to develop a new contract it calls a Creative Services Agreement. This contract allows advertisers to work with Snap Inc.’s internal creative agency to generate branded video ads, filters, and augmented reality lenses presented to users. However, Snap Inc. needed a way to handle dozens of Creative Services Agreements per client every year.
That’s why the company chose to implement clickwrap contracts. Legal found that clickwrap agreements were the best way to handle these high-volume, low-value contracts at scale. Advertisers could quickly sign up for another ad or campaign with the company without talking to Legal every time.
The results speak for themselves. Snap Inc. continues to attract new advertisers and release new branded ads through these contracts. Meanwhile, its legal team saves dozens of hours a month since they don’t need to field these simple contracts. Implementing reliable clickwrap contracting technology has improved the process for everyone.
Modern technology supports faster, more effective legal agreements
Legal agreements are fundamental to modern business. They’re a core part of many business processes, from hiring to sales to protecting intellectual property. However, traditional contracting techniques haven’t kept up with modern expectations.
Implementing contract management tools like Ironclad’s Contract Lifecycle Management solution can help your business get back up to speed. Innovative companies have demonstrated that the right clickwrap agreement provider can help you improve collaboration within your organization, increase sales, and even access new markets. Modern technology is key to structuring your contracting process, so each legal agreement supports your strategic goals.