Posted on February 27, 2025
By Lani E. Medina
Imagine a construction giant, once a titan in the industry, suddenly collapsing under the weight of its mismanagement. This was the reality for Carillion in 2018, a British multinational that left hundreds of thousands affected by its downfall. The Carillion catastrophe serves as a stark reminder of the critical importance of effective contract management in any organization.
In my four years of service in the U.S. Air Force right after high school, I was trained in organization and attention to detail. Little did I know these skills would lay the foundation for my future career as a corporate/M&A deal lawyer. My journey from military service to corporate law has given me a unique perspective on the significance of contract management.
The Financial Impact of Inefficient Contract Management
Inefficient contract management can have devastating financial consequences. Studies reveal that companies lose an average of 9.2%1 of their annual revenue due to poor contract management practices. The stakes are incredibly high for large enterprises managing thousands of active contracts. For example, business-to-business transactions are governed by contracts, with Fortune 1000 companies managing between 20,000 and 40,0002 active contracts at any given time. Mismanagement in these scenarios can erode a contract’s value, underscoring the necessity for robust contract management systems.
The Role of Automation and Technology
During my service as an Information Manager in the Air Force, I learned the value of systems and processes. Similarly, embracing automation in contract management offers solutions to many business challenges. Implementing contract management software has been shown to reduce administrative costs by 25% to 30%3. Moreover, contract digitization can boost compliance by 55%4, and organizations utilizing such software report an 80%5 faster contract administration time. The right technology doesn’t just improve efficiency—it can prevent costly mistakes.
The Human Element in Contract Management
While technology plays a pivotal role, the human element remains equally vital. Approximately 29%6 of an average company’s workforce is involved in contract management activities. This statistic highlights the importance of training and empowering employees to manage contracts effectively. Focusing on all parties fulfilling their obligations maximizes the value derived from each contract and helps safeguard the organization’s financial health.
Reflecting on my military experience, the discipline and structure I developed continue to serve me well in corporate law. Effective contract management requires the same attention to detail and process-oriented thinking I honed in the Air Force. Organizations can protect significant portions of their revenue by addressing inefficiencies, leveraging automation, investing in employee training, and enhancing overall operational efficiency.
