Founded in 2011, Vectra AI is a San Jose-based networking security company that offers modular solutions & services to help businesses deal with threat detection and response. The company is a leader in the cybersecurity space, catering to businesses of all sizes, from startups to Fortune 500s.
Vectra AI has been extending its operations across the globe aggressively. In 2022, they wanted to hire a seasoned GC to head their legal function in the EMEA region and help them stay compliant with all EU policies pertaining to SaaS companies. This was when Igor Poroger joined Vectra AI as Director of Legal, EMEA.
“As a B2B SaaS company in the cybersecurity space, we deal with sensitive customer data. My objective here is to uphold the standards of data privacy and help the company with SaaS licensing and compliance.”
Before joining Vectra AI, Igor had worked as an in-house attorney for more than a decade. Having worked in companies like Cisco, BRE Global Limited, Sodexo, Mercer, Masabi, and SITA. He has extensive experience in the B2B space devising privacy, data protection, and cybersecurity protocols.
In a conversation with SpotDraft, Igor spoke about the significant challenges that B2B SaaS companies face while scaling up and how implementing a CLM solution could help address those challenges.
Contract management: a major bottleneck for legal teams in B2B SaaS companies
Igor believes the major predicament that legal teams in B2B SaaS companies are exposed to revolves around contract management.
“B2B SaaS companies are commerce-driven. Commercial deals take precedence over any other function, and consequently, the number of contracts they roll out is always on the rise.”
The lack of an operationalised contract pipeline increases the workload on the legal team. Therefore the turnaround time for processing contracts decreases, which in turn slows down the process of closing deals and puts forth the legal team as an entity that is not proactive.
“Yes, sales deals must close promptly, and legal teams prioritise the same. However, they must also ensure that contracts are future-proofed, with zero margins for error.”
According to Igor, the major roadblocks for the legal team are
#1 - Non-standardised contracts
An increase in the commercial headcount of the company directly leads to a surge in contract requests. In growth-stage B2B SaaS companies, the legal team is usually lean. Therefore, the contract management pipeline is, in all probability, not optimised - contract templates are not in place, and there is no centralised dashboard that could track the status of contracts.
“The absence of contract templates leads to non-standardisation and makes contracts prone to errors. The legal team, therefore, is required to delve deep into contracts and proofread all clauses with a fine-tooth comb to identify and rectify the simplest of human errors.”
#2 - Use of legacy contract templates
Before forming an internal legal team, B2B SaaS companies outsource most of their legal work to external counsel. The scope of legal work done by external counsel varies from company to company, but it is usually around company structuring and creating templates for the most commonly used contracts.
And these templates are shared with growth and customer-facing teams to roll out commercial contracts faster. The problem arises when these teams use legacy templates even after the internal legal team creates contract templates for the same purposes.
“Use of legacy contract templates makes the process of contract approvals slow. Legal teams might not be familiar with those templates, and therefore, despite having internal contract templates, they spend a lot of time redlining agreements.”
#3 - Contract version control
A centralised system to manage contracts is essential when any given contract is in the redlining stage. The lack of centralisation leads to stakeholders referring to different versions of contracts, which consequently furthers the to and fro and increases the TaT.
“In many cases, a particular version of the contract might be approved. But the required stakeholders might not have access to that version, and they work on older versions.”
The solution to these problems, according to Igor, is implementing a CLM tool.
Using CLMs to operationalise the contract pipeline and establish order
Igor believes B2B SaaS companies should implement a CLM tool as early as possible.
“Although a CLM solution might seem costly in the early stages, companies should have it in place and build workflows within the tool to process contracts better. By doing so, they can keep legal costs low in the growth stages and close deals faster. Moreover, they will have clear visibility into the contract pipeline and use their legal resources to optimise workflows better for yielding maximum results.”
Igor has implemented CLM tools at previous organisations, where legal teams were able to achieve great results. These are the main changes they saw:
#1 - Reduced TaT
After implementing the CLM tool, the turnaround time for contract approvals reduces significantly. CLMs allow the legal team to set up approval rights and e-signature workflows within the tool. Once approvers and counterparties sign off the contracts are registered in the system, they can quickly approve and execute contracts.
#2 - Centralisation of contracts
When a CLM is implemented correctly, and stakeholders leverage it to process contracts, it becomes the one trustworthy source for everything related to contracts. CLM dashboards provide filters to segregate contracts better, navigation capabilities, and clear insights into the status of all contracts. Stakeholders could access the contract dashboard and see why exactly contracts have not been approved yet.
There is another advantage - version control.
“We are able to draft and redline contracts inside the CLM tool. Therefore, we no longer need to rely exclusively on tools such as MS Word and Google Docs. Now, all stakeholders can view and access just one true version of the contract.”
#3 - One-click insights into contract data
Using CLM tools, GCs and Heads of Legal can generate reports and analyse how contracts perform. They can garner insights into valuable information, such as which contract types are processed most by the company, what the TaT is for contracts, and more.
“These insights can help the legal team identify gaps in the system and work toward improving workflows and building solutions that would increase efficiency.”
Choosing the right CLM for your company
There are numerous CLMs in the market, and not all of them would have the features and functionalities that you are looking for. So, picking the one that works best for the company is crucial.
“I suggest GCs involve stakeholders early and make a solid business case to implement a CLM tool in the system. Once you get the approval from the management, take some time to find the right CLM tool for your company.”
- Explore vendors until you find the perfect fit: Technology is growing by the day, and in the wake of this situation, you have the option to explore as many vendors as you can before shortlisting a couple of CLM tools that cater perfectly to your business requirements.
- Sandbox products: Once you shortlist a few CLM tools, ensure you use them in a sandbox environment for at least a couple of weeks. This process will help you understand if the tool is helpful in the long run.
“Yes, the advantages of implementing a CLM tool are many. However, you should first look at leveraging your system's existing tools and templates before considering a CLM implementation.”
Igor suggests that GCs make the most out of existing resources to keep costs low. There might be instances where some already existing tool or technology, which is not used often, could be recalibrated to operationalise the contract pipeline.
“However, if implementing a CLM tool is the best course of action, head to the drawing board and pin down exactly how you are going to use the CLM tool and how it will impact revenue. Then convey the same to stakeholders.”