Contract Closure Time

Why This Single Metric Defines the Real ROI of Contracting Transformation

In most organisations, contracting is discussed in terms of risk, templates, and negotiation positions. Rarely is it discussed in terms of time economics.

That is a serious oversight.

Contract Closure Time — the elapsed period from when the business raises a contracting request to when the agreement is fully executed — is one of the most powerful, under-utilised performance metrics available to an in-house legal team.

It is not just a legal metric.
It is a business throughput metric.

And once properly understood, it becomes the time-cost model that underpins ROI for every contracting function transformation investment.

What Is Contract Closure Time (Really)?

At its simplest, Contract Closure Time measures:

How long it takes the organisation to turn commercial intent into a legally binding agreement.

But that simplicity hides two distinct — and critically important — dimensions.

(a) Elapsed Time to Signature

This is the calendar time from:

• the moment a contracting “ticket” or request is raised, 
• to the moment the contract is executed.

This metric matters because it tells the business:

• how long it may take to book revenue,
• when financial exposure begins,
• how quickly suppliers can be onboarded,
• and how fast commercial intent can be operationalised.

In short, it is a deal-velocity indicator.

(b) Total Time Cost of the Contracting Process

This is the aggregate internal time cost involved in getting the contract signed, including:

• legal team time,
• operational support staff,
• commercial teams,
• finance,
• tax,
• procurement,
• and any other category of personnel involved.

When converted into cost, this becomes the true cost of concluding business.

This is where the metric stops being “interesting” and becomes transformational.

Why Contract Closure Time Is a Foundational Contracting Metric

Most legal teams instinctively focus on:

• legal risk,
• negotiation difficulty,
• or external law firm spend.

But Contract Closure Time reframes the discussion in terms senior business leaders immediately understand:

• time is money, and
• slow contracting is a structural tax on the business.

Just as:

• fuel efficiency matters in aviation, or
• equipment productivity matters in manufacturing,

contracting efficiency matters in deal-driven organisations.

Once this metric is visible, it is impossible to unsee.

Why Legal Is Best Placed to Own This Metric

While Contract Closure Time is not exclusively a legal dependency, the legal function is best placed to measure and steward it because:

• legal sits at the centre of the contracting workflow,
• legal controls (or strongly influences) intake,
• legal owns templates, playbooks, and risk positions,
• and legal has visibility across contract types, jurisdictions, and counterparties.

In hybrid legal models, this is often one of the few end-to-end performance metrics legal can credibly own.

The Strategic Power of Elapsed Time Metrics

Elapsed Contract Closure Time provides immediate business value by enabling:

• revenue timing forecasts,
• realistic commercial expectations,
• prioritisation of high-impact deals,
• identification of bottlenecks (inside and outside legal),
• benchmarking across regions and business units.

Crucially, it:

• de-personalises delay, and
• shifts conversations from blame to structure.

The Hidden Weapon: Total Time Cost of Contracting

Elapsed time tells you how long.
Total time cost tells you how expensive.

This second dimension is what allows legal to:

• price inefficiency,
• quantify improvement,
• and justify investment in transformation.

This is the data CFOs and COOs respond to.

Why Contract Closure Time Is the Legal Equivalent of Cost of Goods Sold

No serious business would ever price a product without understanding:

• how it is manufactured, and
• what it costs to produce and sell.

That would be commercial negligence.

Yet this is precisely what many organisations do with legal.

They debate:

• the “value” of legal,
• whether legal is too slow,
• whether legal is over- or under-resourced,
• whether legal technology investments are justified,

without ever understanding what it actually costs the business to conclude a contract.

This is an intellectual inconsistency modern legal teams can no longer afford.

Normal Business Logic Applies to Legal

In every other part of the organisation:

• manufacturing understands unit cost,
• sales understands cost of acquisition,
• operations understands throughput and bottlenecks.

Legal is no different.

If legal is:

• enabling revenue,
• managing commercial exposure,
• and operationalising business decisions,

then two questions become non-negotiable:

1. How important is this legal activity to the business outcome?
2. What does it actually cost the business to deliver it?

Contract Closure Time — combined with total time cost — is how legal starts answering both.

This is not about commoditising judgment.
It is about placing legal inside normal business and financial modelling.

Measuring Time Cost Without Recreating Law-Firm Timesheets

There is understandable resistance to time recording in-house.

GLS is not advocating:

• six-minute units,
• law-firm billing discipline,
• or culturally toxic time-sheet regimes.

Precise data is useful — but directionally accurate data is usually sufficient.

Practical, Low-Friction Measurement Techniques

1. Subset Recording
 

Capture detailed time data for a week or month, then extrapolate annually.

2. Agreement-Type Tracking
 

Measure time spent on specific contract categories, such as:

• revenue contracts,
• strategic supply agreements.

3. Estimate-Based Modelling
 

Use low / medium / high time estimates.
Not precise — but trend-correct and defensible.

4. System-Generated Signals
 

Modern CLMS, matter management tools, and AI-assisted platforms increasingly infer time spent based on activity, workflow steps, and document interaction.

This data will only improve — legal teams should be ready to use it.

Where the Cost Data Comes From

Once time is estimated, cost calculation is straightforward.

Finance and ERP systems already hold:

• fully-loaded internal cost rates by role,
• including salary, benefits, and overhead.

A sensibly run finance team can readily provide hourly or daily internal cost equivalents.

The Basic Calculation Model

For each contract type:

1. Estimate average time spent by role
2. Apply fully-loaded cost rates
3. Multiply by contract volume
4. Average across the population

The result is a defensible per-contract cost baseline.

This becomes the reference point for all transformation ROI claims.

Why Contract Types Must Be Segmented

Not all contracts are equal.

Revenue-Generating Contracts (Highest Priority)

These directly affect:

• revenue recognition,
• sales velocity,
• commercial momentum.

Reducing closure time here delivers:

• cost efficiency and
• revenue uplift.

Operational & Cost Contracts

Supplier and operational contracts:

• represent ongoing operational cost,
• compound inefficiency over time,
• and often dominate volume.

They are prime candidates for:

• standardisation,
• automation,
• and workflow optimisation.

Feeding Contract Closure Time into RPLV Decision-Making

Agreement types with:

• the highest time cost,
• the longest closure periods,
• or the greatest variability,
• or highest revenue outcomes,

should be run through RPLV decision-making.

This data objectively supports:

• template redesign,
• risk tolerance optimisation,
• negotiation strategy changes,
• automation investment.

Without it, decisions are subjective.
With it, they are strategic.

The Insights This Metric Unlocks

When implemented properly, Contract Closure Time enables:

• prioritisation of contract optimisation,
• credible CLMS business cases,
• data-driven hiring decisions,
• law-firm panel rationalisation,
• realistic SLA design,
• benchmarking across regions,
• and defensible performance reporting.

This is not “legal analytics”.

It is enterprise performance intelligence.

A Regional Transformation Advantage

This metric is especially powerful for regional legal teams because it can be:

• implemented in-region,
• measured without global system approval,
• demonstrated quickly with data.

It is a classic example of: regional execution producing globally relevant proof within hybrid legal models.

The Intake Dependency (Non-Negotiable)

Contract Closure Time cannot be measured properly without disciplined intake.

The Legal Service Request Form:

• defines the start point,
• captures contract type and urgency,
• anchors all downstream metrics.

This is why:

• intake,
• contracting,
• performance,
• and analytics

must be treated as a single integrated system.

Final Thought

Most legal teams talk about efficiency.
Very few can prove it.

Contract Closure Time is where:

• value becomes measurable,
• investment becomes rational,
• and transformation becomes a business decision.

That is why this metric sits at the heart of modern contracting performance.

Contract Closure Time:  Frequently Asked Questions (FAQs)

1. What is Contract Closure Time?

Contract Closure Time is the elapsed period from when the business formally raises a contracting request to when the contract is fully executed.

It measures how long it takes the organisation to convert commercial intent into a legally binding agreement and is one of the clearest indicators of contracting efficiency and business velocity.

2. Why is Contract Closure Time important for the business, not just legal?

Because slow contracting directly delays:

• revenue recognition,
• supplier onboarding,
• risk allocation,
• and operational execution.

Contract Closure Time is therefore not a legal metric in isolation — it is a business throughput metric that reflects how efficiently the organisation gets work done.

3. Is Contract Closure Time a fair performance metric for legal teams?

Yes — provided it is used correctly.

While legal does not control every dependency in the contracting process, legal is uniquely positioned to measure and analyse the full lifecycle. 

When segmented by contract type and context, Contract Closure Time enables:

• objective performance discussion,
• identification of structural bottlenecks,
• and informed improvement initiatives.

The metric should be used to improve systems, not to assign blame.

4. Do legal teams need detailed time recording to calculate Contract Closure Time costs?

No.

While precise time capture can be useful, directionally accurate data is often sufficient for decision-making. Legal teams can rely on:

• subset or sample-based recording,
• agreement-type analysis,
• estimate-based modelling, and
• system-generated activity data from CLMS or workflow tools.

The goal is insight, not billing-grade precision.

5. How does Contract Closure Time support ROI cases for contract transformation?

Contract Closure Time provides a baseline for:

• how long contracts take,
• what they cost in internal effort,
• and where inefficiencies sit.

Once that baseline exists, legal teams can credibly demonstrate:

• time savings from process changes,
• cost reductions from standardisation or automation,
• and revenue acceleration from faster deal execution.

Without this metric, transformation ROI remains speculative.

6. Should Contract Closure Time be measured differently for different contract types?

Yes — absolutely.

Revenue-generating contracts should be prioritised because improvements affect both cost efficiency and revenue velocity.

Operational and cost contracts remain important because inefficiencies compound over time and often dominate contract volume.

Segmentation is essential for meaningful analysis.

7. How does Contract Closure Time relate to CLMS and legal technology?

CLMS and other legal technology platforms rely on accurate lifecycle data to deliver value.

Contract Closure Time:

• defines the end-to-end timeline,
• highlights where technology can remove friction,
• and provides the baseline against which technology ROI is measured.

Without this metric, CLMS benefits are difficult to quantify.

8. Why is Contract Closure Time particularly useful for regional legal teams?

Because it can be implemented locally, measured with limited tooling, and demonstrated quickly using real data.

For regional teams operating in hybrid legal models, Contract Closure Time is an effective way to:

• show measurable improvement,
• support evidence-based change,
• and provide globally relevant insights that can be scaled across the organisation.