For years, I thought contract operations was just another way to describe legal ops or contract management. In practice, it is its own discipline, and companies that ignore it are leaving serious money on the table.

According to Gartner’s 2024 Legal Technology Impact Study, Fortune 500 companies lose an average of $15.8 million each year to contract inefficiencies. More than half of legal departments have legal operations managers, yet only a quarter have optimized their contract lifecycles. That gap, worth $347 billion by Gartner’s count, explains why some organizations are outpacing their peers.

Why legal ops alone is not enough

Legal operations has helped legal departments run smarter, but it was never built to unlock value from contracts. Deloitte’s Legal Operations Survey found that only 55 percent of legal ops professionals manage contracts directly. That is not a sign of poor performance, it is simply a matter of scope. Legal ops spreads itself across vendor management, budgeting, technology rollouts, and strategic planning. Contracts become one task among many.

Contract operations is different. It is entirely focused on the contract lifecycle. These professionals specialize in workflow engineering, data analytics, and technology integration for agreements. Where legal ops is broad, contract operations is highly focused. Companies that invest in it see cycle times cut by 42 percent, compliance improvements of 67 percent, and cost savings that average $2.3 million per year for mid-market organizations.

Making the business case

One of the hardest conversations I have with executives is moving beyond the view that legal is only a cost center. Contract operations helps change that perception.

Harvard Business Review research shows that traditional contracting often undermines partnerships, while contract operations creates flexibility and measurable business value. Bloomberg Law found that more than half of organizations still rely on generic document storage systems for contracts. That approach creates “contract leakage,” where the expected value of a deal never shows up in practice.

The math is straightforward. Contract operations professionals regularly identify cost reductions equal to 12 to 18 percent of total contract value and improve compliance by 30 to 50 percent. For a business with $100 million in annual contracts, that represents $12 to $18 million in savings, plus meaningful risk reduction.

The five core functions

From my perspective in-house, the strength of contract operations comes from its clear focus. It rests on five areas:

1. Workflow automation and standardization: mapping bottlenecks, reducing manual work, and building repeatable processes.
2. Performance metrics and value tracking: agreement-specific measurements that tie directly to ROI.
3. Cross-functional orchestration: connecting legal, finance, procurement, and business units so contracts serve the business instead of slowing it down.
4. Technology integration: choosing tools that connect with ERP and CRM systems rather than adding another silo.
5. Risk management through operational controls: compliance monitoring and performance tracking that prevent disputes before they reach legal.

Clearing up misconceptions

There are a few common misunderstandings that keep companies from getting this right.

• Some think contract operations is just better document management. In reality, it is about outcomes, not storage.
• Others assume it replaces lawyers. The opposite is true. It frees lawyers to focus on negotiation, risk assessment, and strategy.
• Many treat it as only a technology project. Without process and measurement, even the best software turns into shelfware.
• Some leaders see it as a cost center. Mature programs show the opposite, operating as profit centers.
• Finally, many assume it requires a major reorganization. In practice, most companies start with a single role, a matrixed approach, or a hybrid model.

Getting started

When I began building this function, I did not start with technology. I started with a baseline assessment: where contracts were stalling, how long cycle times ran, and what tools we already had. Only after that did we align roles, choose technology, and set measurable success metrics.

The hardest part was change management. Contracts touch every corner of the business, and habits are hard to break. With executive sponsorship, clear metrics, and a cross-functional approach, the value became clear.

Contract operations is not a buzzword. It is a discipline. In a business environment where agreements define revenue, risk, and relationships, investing in it may be the most strategic move a legal department can make.

Sources:
Corporate Legal Operations Consortium (CLOC)
Gartner Legal Technology Research
American Bar Association Legal Technology Survey 2024
McKinsey Legal Operations Analysis
Deloitte Legal Operations Survey 2023
Harvard Business Review Contract Research
Association of Corporate Counsel Legal Operations Guide
Bloomberg Law Contract Management Analysis