Contract management statistics for 2024 and beyond

Contract management processes and challenges are evolving daily, and the data we're seeing in the legal industry reflects that.

These contract management statistics will bring you up to speed, covering everything from the challenges teams are facing today to their attitudes and use of generative AI in contracting.

Let's kick off with the challenges first.

Statistics on: contract management challenges

Contract management challenges different businesses in different ways. It all depends on the contracts they manage, the volumes they manage them in, and the tools they have in place already.

How effective are most contract management processes today?

Contract management statistics give us a good idea of how businesses are managing their contracts today, and only 11 per cent of businesses believe that their contract processes are "very effective".

When we take a closer look at the data, there are a few clear points of friction:

• No clear roles and responsibilities: 40 per cent of the organizations surveyed admit that it's not clear who is in charge of contract-related tasks
• Unmanageable contract volumes: 89 per cent of businesses say they're managing large volumes of simple contracts, meaning lots of repetitive admin.
• Weak contract storage solutions: 9 in 10 contract professionals feel like finding specific contracts is a challenge, with many spending up to two hours looking for specific terms and language within an agreement.

How much does inefficient contract management cost businesses?

Contracts are used to capture revenue, but they're also a cost-centre for businesses that spend too much time and resource managing them inefficiently.

After all, every hour spent searching for contracts, or drafting them, has a cost attached. That cost is the salary of your in-house legal teams. Too much time spent on manual contract admin that could could otherwise be automated is money down the drain.

The following contract management statistics support this conclusion: 

• 40 per cent of a contract’s value can be lost as a result of inefficient contract management processes.
• Businesses lose $122 for every hour an in-house lawyer spends working on a contract, based on salary estimations. 
• WorldCC estimate that contract value leakage costs businesses up to 9 per cent of their annual turnover. 

How much time is lost to contract management?

The amount of time lawyers spend on contract management varies depending on the complexity of their contracts, the tech stack they have in place, and their contract volumes. However, some studies have estimated how much time teams lose to manual contract processes:

• Human-led contract review processes take 92 minutes on average - this adds up quickly if you have hefty contract volumes
• Contract professionals spend up to two hours searching through a legal document for certain data points, terms or language
• Inefficient contract workflows can result in delays of between three to four weeks on average, which slows sales and hiring cycles down

Are legal teams feeling the pressure of increased contracting?

It’s estimated that between 60 to 80 per cent of all business-to-business transactions are governed by a contract of some sort, with Fortune 1000 companies estimated to manage between 20,000 to 40,000 active contracts at a time. According to Gartner, managing these contracts can consume up to half of the legal department’s time and capacity.

‍

‍

And this pressure to take on more contract-related tasks is only growing. 

Last year, research by FTI Consulting found that 47 per cent of the general counsels they surveyed were experiencing an increase in contract management demands.

But our survey last year revealed that 75 per cent of in-house lawyers were experiencing a freeze in legal headcount, despite projections for their businesses to grow up to or more than 2x that year. 

If one thing is clear, it’s that lawyers are feeling the pressure of more contracting and enablement work and fewer resources. When we asked lawyers about their top three challenges ahead of 2024, the results looked like this: 

• 76% – Being buried in low-value work
• 69% – Limited budget and resource
• 49% – Aligning priorities with the business

Statistics on: the role of contract management software

The contract management statistics we've just explored paint a pretty bleak picture. Fortunately, they don't tell the full story. Many businesses are using contract management solutions like Juro to solve for these problems, so let's cover that now.

How can a contract management solution help?

Our recent research revealed that lawyers are 1.5x more likely to feel the pain of misaligned expectations and priorities when they don’t have a contract management system in place. 

In fact, almost a fifth of in-house lawyers say that they’re facing issues with misaligned expectations of how fast contracts can be turned around. This is reduced to just 13 per cent for legal teams with a contract platform in place. 

Our customers report similar, or even better results after implementing our contract management software:

• Paddle save 3+ hours of legal time per contract with Juro, and the sales team can generate and approve a contract in Juro in just four clicks.
• Funnel reduced legal contract reviews by 88 per cent and automated thousands of manual touchpoints by implementing Juro.
• Placemakr save 50 per cent of time on contracts by integrating Juro with their CRM (HubSpot).
• Podimo send contracts out for signing 2x faster, with 80+ users self-serving on contracts with Juro

‍

Adopting a contract management solution like Juro can transform the way you agree contracts, unlocking shorter time to revenue in sales cycles and more time back for legal to focus on higher-value work. To find out more about Juro and how it can enable you to agree contracts 10x faster, hit the button below.

How many businesses are using contract management software?

Forrester estimate that the contract management software market will be worth $12 billion by 2025, and research by WCC found that 81 per cent of those they surveyed planned to implement contract automation software in the future.

Yet, when we surveyed lawyers recently, more than half of them (51 per cent) said that they were yet to implement a contract management solution for their business. 

So, what’s causing this misalignment between intention and delivery? 

Well, what we do know is that a staggering 44 per cent of in-house lawyers say that getting buy-in for process changes was one of their biggest challenges ahead of 2024. 

How long does contract management software take to implement?

While Juro’s average implementation time in 2024 is 29 days, a huge proportion (92 per cent) of CLM implementations take longer than that.

In fact, 72 per cent of legal teams report that their implementation took at least two months, with 20 per cent of the implementations taking six months or longer to complete. 

Statistics on: the role of AI in contract management

If tech is front of mind, you'll probably have considered what role generative AI should play in your contract management process - if any. At Juro, we've covered this in detail, speaking to lawyers about everything from their favourite ChatGPT use cases to how they can use AI responsibly. Here's what we found.

Are legal teams using AI for contract management?

Not long ago, Goldman Sachs estimated that legal was one of the top two industries most vulnerable to AI disruption, and that 44 per cent of legal tasks might be automated with AI. 

This stacks up with what we’re seeing today. As it stands, 44 per cent of legal teams we surveyed are using generative AI either daily or weekly. It’s hard to remember a new technology being adopted so widely and quickly by legal teams.

Why is this relevant for contract management?

Well, in-house lawyers are increasingly using generative AI to improve their contract management processes, with our recent State of In-house report revealing that 46 per cent of those using generative AI are leveraging it to draft contract templates, and a further 21 per cent are using it to review contracts. 

How do lawyers feel about using generative AI in contracting?

Lawyers naturally have a lot of mixed emotions about AI, much like the rest of the population.

Almost half of them do believe that it'll have a "significant or transformative" impact on legal practice, and a further 45 per cent believe it'll have at least some impact.

But even if legal teams predict a lot of change as a result of generative AI, that doesn't mean they're fully onboard with the shift.

When we surveyed lawyers for our Tech GC Report last year, 45 per cent told us they definitely wouldn't be using generative AI. This trend has changed since, though. When we spoke to them this year, only 14 per cent said they wouldn't be leveraging it in their work.

The statistics suggest that legal teams are now more willing than ever to adopt generative AI for contract management, and we can expect this trend to continue in years to come, especially as in-house lawyers put the focus back on their careers.

As fractional GC Lucy Ashenhurst told the delegates at Scaleup GC 2024:

“We can offer so much more as strategic partners, problem solvers and project managers - if we can automate a lot of simple work, we can ask for the more interesting work and engage on the big topics that legal brains can be so powerful in solving.”

And lots of lawyers will feel this way. Right now, repetitive routine admin tasks are blocking them from taking on the things they trained years to do. Generative AI applications have the potential to change that.

If you want to find out more about automating routine contract management processes, fill in the form below to find out more. If you want to explore applications of generative AI in particular, check out our library on AI for lawyers.