Every business leader knows the obvious costs: salaries, technology, office space, external consultant/counsel spend. These show up neatly as line items on spreadsheets, and get scrutinised, debated and optimised relentlessly.
But there's another cost quietly bleeding your organisation dry. It rarely surfaces in any budget meeting and it’s not a line item on a spreadsheet; therefore it almost never gets addressed. And yet, it's a cost being incurred dozens, possibly hundreds, of times every month across your business.
It's the cost of answering questions about your contracts.
Answering contract questions requires an understanding of the underlying contract data. This data, including the commercial details of business deals, the obligations of parties, allocation of risk, and what happens when there is an issue, is relevant for many stakeholders across the organization:
Once a contract is signed the focus shifts to performance, and with that comes the potential for many things to go wrong, such as:
The risk of things going wrong only increases across businesses with higher contract volumes. One way to mitigate this risk is to make sure that everyone who needs it has timely access to accurate contract data, enabling the business to actually respond to critical questions. Unfortunately, this is not the current reality for most stakeholders.
Think about the last time someone in the company needed to know something about a contract. What happened when a salesperson needed to check whether a customer was still within their minimum commitment period, or an operations manager needed to know what service levels were promised to a particular client. How does Finance confirm payment terms before chasing an invoice?
Even answering seemingly simple questions takes time. In order to answer the question, someone senior enough has to stop what they were doing, hunt down the right contract, wade through pages of dense legal language, interpret what they found, and then relay the answer to whoever asked.
That's not a five-second task. It can easily take anywhere from ten minutes to an hour depending on the nature of the question, and sometimes it involves two or three people. And then it happens again the next day (and the day after that).
The insidious thing about this particular pain is how insignificant the time drain seems on its face. No single instance feels catastrophic. One question here, one contract review there — it all seems manageable and normal. Just part of doing business.
But think about it... If your business has 10,000 contracts in place and 1 in 20 contracts generates just one question a month, you're looking at potentially 500 interruptions every single month, each one pulling a skilled employee away from other value-generating work.
Multiply that by average salary costs. Add the knock-on effects of delayed decisions. Then factor in the optics with customers when your organisation can't give a quick, confident answer about commitments you've made. Suddenly, this "invisible" cost starts to look very real indeed.
These costs increase even more when businesses turn to external lawyers, alternative legal services providers (ALSPs), and/or other consultants if internal teams don’t have the capacity to answer questions. These expensive external resources end up being paid, at least in part, to access and interpret data that already exists within your own contract portfolio. It's one of the most quietly wasteful dynamics in modern business, and it's alarmingly common.
The time drain is significant, but it's only part of the story. There is also the problem of what happens when the questions don't get answered well, i.e. people make mistakes.
When contracts live in shared drives and the memories of a few key individuals (or, even worse, in filing cabinets), your business is exposed.
These aren't hypothetical scenarios. They're happening in businesses now, maybe even in yours. Each one carries a price tag that goes well beyond the hours spent searching for documents.
The dependency on key individuals is a much-overlooked risk and creates vulnerability in an organization. Being deluged with questions and having to prioritize what other important things to drop means longer hours and potential for burn out. This is not a scalable process so getting answers to queries perceived as lower priority will be much slower and the risk of error increases with time pressure on these individuals. When these people leave it is often expensive to pick up the pieces.
Perhaps most damaging of all is when the answer arrives, but the window has already closed.
A renewal deadline passes unnoticed. A rate adjustment kicks in that could have been challenged. A dispute escalates because the relevant clause couldn't be located quickly enough to resolve it early. A customer relationship sours because your team couldn't give a confident, timely answers about how you view what’s been agreed.
Slow access to contract information doesn't just cost money in the abstract. It costs money in very specific, very avoidable ways — missed deadlines, unfavorable outcomes, damaged relationships, and decisions made on incomplete information.
We hear often hear: "Our team knows our contracts well. We've got it under control."
That may be true today, but it means your contract knowledge is not systematically accessible, and it’s locked inside people's heads. It only takes one resignation/long-term absence, one fire drill, or a period of rapid growth for this approach to break down entirely.
It also means that every time a new person joins the business, they have to spend weeks (sometimes months) building up that institutional knowledge from scratch by shadowing colleagues, asking questions and making mistakes. All while the clock is ticking on your customer relationships and commercial obligations.
Institutional knowledge is valuable but also very fragile. It's also an extraordinarily expensive way to manage something as fundamentally important as your contractual commitments.
Another response we encounter regularly: "We're already sorting this by implementing a CLM." On the surface, that sounds like exactly the right move. A Contract Lifecycle Management (CLM) platform promises to bring order to the chaos — a centralised system for storing, creating, executing and managing contracts going forward…
For many businesses, it feels like the comprehensive answer to every contract-related frustration. But here's the problem that rarely gets discussed until it's too late: a CLM is not a contract data solution — it's a contract process solution. CLM platforms are designed to manage the lifecycle of new contracts moving through your organisation from that point forward. What they are not designed to do, and what most of them do very poorly, if at all, is unlock the data buried inside the large population of contracts you already have.
Your existing agreements, negotiated and signed over years or decades, sitting in shared drives, email archives, and filing cabinets, remain just as inaccessible after a CLM implementation as they were before it. You've invested significantly in a platform that manages tomorrow's contracts while the existing contracts remain locked away and largely unreadable at scale. Your existing live contracts are the source of most of your immediate questions and obligations. A CLM solves for contracting process but not for contract data. Confusing the two can be an expensive mistake.
If you haven’t implemented a CLM yet, starting with fit-for-purpose contract analytics allows you to analyze existing contracts, unlock the data, and ensure greater value from any subsequent CLM or similar implementation.
More recently we have heard: "We are more focused on trying to automate contract review/redlining." The irony here is that accurately extracting data across all of your existing contracts first and then ‘feeding’ relevant parts of that data to a redline tool is going to be the best way to achieving the goal of automating contract negotiation.
Why this is the case? There are already many automated mark-up tools with overlapping capabilities and, as the underlying frontier LLMs improve, these offerings will become more commoditized and like each other (the frontier models themselves may well become good enough to use directly). At this stage companies are much better off spending less time on which redlining tool to choose (because you may end up swapping it) and focusing on the key thing that will really make a difference in terms of the performance of these tools. That key thing is context data – if you can extract accurate data from your portfolio of contracts and then ‘feed’ relevant data for context to the review/redlining tool, the performance of the review/redlining tool will be so much better.
Extraction of contract data is foundational for automating contract review/mark-up well.
Extracted contract data is also foundational for articulating good templates and playbooks. Many companies’ templates and playbooks do not reflect what happens in actual negotiations because they were created based on anecdotes and impressions (rather than data) and/or they are out of date. Dynamically leveraging data across a contract population means that you can generate multiple templates and playbooks which can be surgically reflective of particular negotiation contexts taking account of agreement type, recency (agreement date), specific counterparty or counterparty type, region, direction (is company selling versus buying) etc.
We often hear “We’re actually building our own data extraction capability using our enterprise LLM tools”. This is often driven by a mandate from senior management in large organizations that employees try to solve for their use cases leveraging tools that the organization has enterprise subscriptions to such as large language models from OpenAI, Anthropic or Google and/or generalized legal AI tools (such as Harvey or Legora which leverage these same large language models).
Organizations that go down this path and try to build a contract data extraction capability themselves using LLMs are likely to fail. They are going to spend an inordinate amount of time iterating prompts and running documents through LLMs to get results that look plausible for a few documents. However, when they try to run this across larger groups of documents and scrutinize the results they will realize that the data accuracy is not good enough to be fit for purpose and having to verify the accuracy of everything defeats the purpose of automating in the first place.
In contrast, tools purpose-built for structured extraction at scale combine multiple methods (analytical models, rules-based systems, and validation mechanisms alongside LLMs) to deliver data that is reliable enough for real business decisions. Building this kind of capability is complex and resource-intensive, typically requiring teams of subject matter experts and developers and significant time, which is why organizations are generally better off buying rather than attempting to build it themselves.
When you know what’s in your contracts and can access that information when it matters, the hidden costs of answering contract questions start to disappear.
Imagine a different scenario. A salesperson needs to know whether a customer's contract includes a particular service tier. Instead of calling a colleague, digging through emails or submitting a request to the legal team, they simply ask a plain English question and get access to accurate relevant data from the contract itself. Or, if someone doesn’t actually know what question to ask, key relevant data is made easily accessible in reports to inspect and review.
Imagine your finance team being automatically alerted when a renewal window is approaching, with the relevant terms surfaced and ready for review. Imagine your customer success team being able to walk into any client conversation knowing exactly what was promised, when, and under what conditions.
Imagine contract knowledge being something your entire organisation can access – not a specialist skill reserved for the few who happen to have read the right documents. This isn't a fantasy. It's what businesses that have tackled this problem head-on are already experiencing.
There's one more dimension to this that business leaders often overlook: the competitive advantage of being the business that gets this right. When your team can answer contract questions quickly and confidently, something powerful happens. Customers trust you more. Deals close faster because commercial conversations are grounded in clarity rather than uncertainty. Disputes get resolved before they escalate. And your people spend less time firefighting and more time doing the work that actually grows your business. Your competitors are carrying this hidden cost too. The question is: who's going to address it first?
The businesses that will win in the next decade are those that treat their contract data as a strategic asset rather than an administrative burden. Those that make knowledge accessible, decisions faster, and obligations impossible to miss. The technology to do this exists. The business case is hiding in plain sight. The only thing standing between you and a smarter way of working is the decision to stop accepting the status quo.
The questions aren't going to stop, but the pain of answering them can.
Want to see how much time your business is losing to contract questions? Get in touch with us today and let's start with an honest conversation.