Changing Your Templates: Slow and Steady or All at Once?

A participant at a recent “Drafting Clearer Contracts” seminar sent me an email saying how much they had enjoyed the seminar. They went on to say that “incorporating the concepts into our templates and drafting will require a slow, steady cultural change.”

Regardless of whether cultural change has to be slow and steady, I suggest that it doesn’t reflect reality to think that you can change your contract templates gradually.

Invariably, traditional templates use dysfunctional prose. Fixing that requires addressing many aspects of contract language—verb structures, archaisms, redundancy, defined terms, ambiguity, rhetorical emphasis, layout, arrangement, and so on. It’s not realistic to expect that you can limit your scrutiny to a selected topics and leave the remaining dysfunction untouched: once you start pulling at a thread, the fabric of dysfunction starts to unravel. And there’s substantive change to consider on top of that. So meaningful change in your templates either happens all at once or it doesn’t happen at all.

Only in one sense can change be gradual. That’s when you redo your templates one, or a few, at a time. That’s probably how you’d have to handle it anyway.

What about the cultural change that the seminar participant mentioned? Ideally, it would be irrelevant. Your templates and your contracts process should establish the reality on the ground, with your contracts personnel adapting to that. If you’re allowing a group of people with different experience, different aptitudes, and different training call the shots, you have mob rule.

I’ve written often about how you go about effecting change, once you’ve decided that you can tolerate change. Want your in-house lawyers to redo your templates? They’ll probably take too long, and it’s unlikely that they have the necessary expertise. Want your law firm to redo them? They’ll probably charge to much, and it’s unlikely that they have the necessary expertise. You need a contract-drafting specialist; I’m one of those. (See this blog post for more about that, and see this blog post for what I think about your reasons not to hire me.)

The Adams/Cummins Debate on Sweeping Away Traditional Contracting: Ken Says “No”

Tim Cummins is the head of the International Association for Contract and Commercial Management (IACCM). Over the years I’ve discussed with Tim the future of contracting. After a recent exchange of emails, we decided try a more formal approach. We agreed to address on our respective blogs the following proposition: We want new technologies to sweep away traditional contracting, so we can have faster, more efficient, and more cost-effective contracting. In this post on his blog, Tim gives a hearty “Yes” to this proposition; below, I give an equally hearty “No”! We invite you to chime in, whether on Tim’s blog, my blog, LinkedIn, or Twitter.

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For most companies, the contracts process is a problem. It’s too slow, too expensive, and too often it results in disputes and other unsatisfactory business outcomes.

Tim Cummins and I agree that change is desperately needed, but we have different ideas about what that change should look like. Tim wants cutting-edge technology to sweep away the old order. I want change that’s driven by human expertise, with technology—and relatively unglamorous technology at that—only helping to scale up that expertise. So I say “No” to the proposition under debate.

The Problems

Let’s start by considering the different stages in the contracts process and the problems associated with each.

  • Drafting: Contracts use archaic, bloated, legalistic prose; drafters rely on misbegotten conventional wisdom; deal terms don’t make sense, express inefficient deal mechanics, or are too one-sided; and contracts are cumbersome because drafters are too risk-averse.
  • Reviewing counterparty drafts: It’s time-consuming, and it’s made worse by drafts exhibiting shortcomings listed in “Drafting,” above; and improvised review has the potential for human error.
  • Negotiation (before and after drafting): It’s time-consuming, and it’s made worse by drafts exhibiting shortcomings listed in “Drafting,” above; and lawyers are prone to “negotiation theater”—haggling over legal issues that are peripheral to the deal.
  • Signing: It’s an administrative nuisance.
  • Monitoring performance: It’s an administrative nuisance, and it’s made worse by drafts exhibiting shortcomings listed in “Drafting,” above; and improvised monitoring has the potential for human error.

Not a Technology-Only Solution

It’s clear from this summary that the biggest source of dysfunction in the contracts process is shortcomings in what contracts say and how they say it. And the harsh reality is that because of an insurmountable garbage-in-garbage-out problem, technology can only ever play an ancillary role in fixing that.

The technology that Tim appears most interested in—artificial intelligence, natural language processing, advanced analytics—can tell you how contracts address specific issues, but it can’t tell you what’s clearest and what makes most sense for a given transaction. Good luck drawing any conclusions about the implications of, say, efforts provisions or the phrase represents and warrants from letting technology loose on a bunch of contracts.

The Foundation

Instead, we need to offer a new model, one based on old-fashioned expertise.

The first step toward a rational contracts process is implementing comprehensive guidelines for clear contract prose. My book A Manual of Style for Contract Drafting, now in its fourth edition, is the only work that fits the bill. It’s aimed at an international readership, it has sold tens of thousands of copies, and no one has seriously challenged its authoritativeness. If you make decisions regarding contract language without consulting it, it’s likely that you’re copy-and-pasting, relying on flimsy conventional wisdom, or improvising. That’s unlikely to lead to optimal contract prose.

But a comprehensive set of guidelines for clear contract prose isn’t enough. In a copy-and-paste world, it’s unrealistic to expect those who work with contracts to stop the contracts machinery, dismantle it, retool it, then put it back together. Furthermore, it’s unrealistic to expect countless companies and law firms to each tackle that task and devote to it the necessary resources. And they wouldn’t have access to the necessary expertise—contract drafting is best left to specialists. There are precious few of those, as I explain in this post.

Template Library

But I’m not about to recommend that we train an army of contract-drafting specialists. Instead, what’s required is a public, subscription-based library of templates prepared by contract-drafting specialists who follow a comprehensive set of guidelines and are assisted by subject-matter experts. If automated, the templates would allow a considerable amount of customization. (Technology for automating templates has been around for years, in various forms.) No such library yet exists, at least not one as ambitious as what I have in mind.

Instead of just building templates, parking them online, and waiting for people to use them, it would make sense to work with companies, law firms, and trade groups to identify where there’s a real need for templates that would allow them to quickly create contracts that are clearer, more relevant, and more cost-effective than anything they could build on their own.

Such a library would also make ancillary technology more effective. For example, technology aimed at speeding review of counterparty drafts has to be told what to look for. That information could readily be gleaned from templates in the library.

Prospects for Change

It would be rash to assume that any initiative to improve contracts would bring sweeping change to what is a precedent-driven corner of a notoriously conservative profession. In any process of change, the laggards might well outnumber the adopters. But give people something that makes their lives easier, saves time and money, makes them more competitive, and reduces risk, and there’s a good chance they’ll use it.

Contract managers should consider being more assertive about seeking change this kind of change. I’ve noticed two recurring themes in commentary coming from the contract-management community: first, that lawyers are responsible for screwing up the contracts process, and second, that technology will save us. Both threads are present in Tim’s post in favor of the proposition under debate.

Those themes suggest that the contract-management community has ceded to lawyers primary responsibility for what’s in a contract. That’s unwarranted. Yes, lawyers might have some additional years of education, and they’re notorious for poaching on others’ turf. But nothing about contracts mandates that lawyers call the shots. (See this blog post.) Contract provisions that require lawyer expertise—primarily those addressing dispute resolution—tend to be a peripheral part of the deal. Anyone who is familiar with deal mechanics and is an informed consumer of contract language can call the shots, whether they’re a lawyer or a contract manager.

If the contract-management community would like to take greater responsibility for contract language without succumbing to the dysfunction of traditional contract language, a template library of the sort I have in mind would be the way to go.

The Difference Between Selling Widgets and Buying Widgets

You’re general counsel of Widgetco, the world’s leading supplier of widgets. When anyone needs widgets, they come to you!

But you’re also a big buyer of widgets. The primary raw material for widgets is … widgets!

You have one contract template for selling widgets and another for buying widgets. How do they differ? Bear in mind we’re not talking about, say, computer equipment—just widgets.

London “Drafting Clearer Contracts” Seminar on 5 November 2018

I’m delighted that on 5 November 2018 I’ll be doing another “Drafting Clearer Contracts” seminar in London for UCL Faculty of Laws. For more information, go here.

I seem to be making inroads in the UK market. For example, go here for my Practical Law Company video with Daphne Perry; go here for a recording of the 7 November 2017 panel discussion I organized with UCL Faculty of Laws; go here for the Law Gazette’s article about the 2016 panel discussion; go here for my 2015 Law Gazette conversation with Mark Anderson; go here for Charles Drayson’s review of the fourth edition of MSCD; and go here for Mark Anderson’s review of the third edition.

What makes my English activities particularly interesting is that English courts are prone to fits of semantic cluelessness. I feel compelled to push back. For an example of that, see my 11 October 2017 article in The Lawyer, here. (Free registration required.)

(Reminder: on 1–2 November 2018 I’ll be speaking at “The Legal English Event” in London. See this blog post.)

Automating Law-Firm Contracts: A Q&A with Rob Sawyer of McDonald Carano

When Thomson Reuters told me about how a Contract Express client, the Nevada law firm McDonald Carano, has gone about automating contracts, I volunteered to write about it—case studies make a nice change from free-floating speculation. So here’s my Q&A with Rob Sawyer, IT director at McDonald Carano. (That’s him in the photo to the right.)

Ken:      Hi Rob. Please tell me a bit about yourself. And out of curiosity, what makes for a good law-firm IT director?

Rob:      Hi Ken. I’ve been a computer geek since I got my first PC when I was eight, and I’ve been in the IT profession for almost 20 years now, working exclusively in the legal industry. As IT Director for McDonald Carano for the last 14 years, I manage our technology initiatives and budgets, and I create or advise on technology policies and best practices. As part of that, I oversee our automation initiatives. I believe a good law-firm IT Director takes the time to understand, to an extent, the various practices the firm handles, and how the lawyers and support staff approach those practices, in order to come up with targeted solutions for each group.

Ken:      And tell me about McDonald Carano and, in general terms, how it’s positioning itself to compete effectively.

Rob:      To stay competitive, we often avoid looking at regional firms our size for inspiration, and rather we look at larger firms from more consequential markets. We don’t want to be on the bleeding edge, necessarily, but we do want to embrace newer software and technologies that make us more productive and able to compete at a larger scale, such as predictive coding and automation.

Ken:      What made you investigate using automation to create documents?

Rob:      The attraction of automation for creating documents has long been obvious, so it’s not as if we needed some sort of crystal ball. We noticed that the lawyers in our trust practice didn’t have a consistent drafting style and tended to use different set of documents for the same kind of matters. That’s inefficient, and it can lead to confusion.

Ken:      What prompted you to actually do something about it?

Rob:      We acquired another firm with its own estate planning templates, so that added to the complexity and inconsistency. Copying and pasting to merge the different document packages led to issues with numbering, styles, pagination, and document corruption, not to mention inconsistent wording. Our lawyers were spending too much time word-processing and proofing documents.

Ken:      Why did you choose Contract Express?

Rob:      We were eager to fix this problem quickly, but we were nervous about some products out there, notably HotDocs. We looked at HotDocs many times over the course of 15 years, but we were always made nervous by how complicated it seemed. We would have had to either dedicate more IT resources to implementing HotDocs or pay hourly for programmers to automate each template—a process that might require 50 to 100 hours of work for each major document.

We learned about Contract Express after Thomson Reuters acquired it. I asked for a demo and saw how you can automate a template in 15 minutes by working in Word. It seemed like something lawyers and paralegals could handle, instead of having to rely on programmers.

We signed up for a trial, and after about half an hour of training we attempted to automate something really complicated—a married-trust template package. We knew that if Contract Express could handle that, it could handle anything. It contained as many as 15 documents. It ultimately took several months to automate all those documents, but that was because of substantive complexity, not the technology. Simple documents that took two to three hours to automate using HotDocs took only minutes with Contract Express.

Ken:      What functions of Contract Express did you find particularly appealing?

Rob:      We really liked how you could use a single questionnaire to create a group of documents. That spares you having to do documents one at a time, finding and replacing all the names as you go. And we liked how answering one question could result in all sorts of clauses being inserted throughout the package.

Ken:      How did your rollout of Contract Express go?

Rob:      We demoed Contract Express for our estate planning attorneys and got their feedback on which templates to automate first. We followed up with one-on-one training sessions, and we had a couple of key attorneys champion Contract Express throughout the firm. For a technology initiative to work, it has to save time or improve quality, ideally both, and sharing success stories is key. Those attorneys who used our Contract Express template to assemble a trust package reported how much quicker it was compared to doing it the old-fashioned way.

Ken:      What is it about estate-planning documents that’s conducive to automation? I know that one of the earliest automated-drafting products focused on trusts and estates.

Rob:      It’s probably because the work tends to be both price sensitive—your clients are mostly individuals—and complex. A single estate-planning document set could produce over a dozen documents and nearly 100 pages of content.

Ken:      Automating documents forces you to examine closely what they say and how they say it. Have you found that automating your estate-planning documents resulted in your revising them? I confess that all estate-planning documents that lawyers have prepare for me as a client have been pretty much unreadable.

Rob:      Yes, in a way. The initiative to automate these documents and roll out Contract Express forced us to consolidate the many different drafting styles and standardize to one new style. We didn’t want to program five different estate-planning document sets for five different styles. It’s still a work in progress, but standardization is something we’ve wanted to do for a long time, and this new software roll-out gave us an excuse to move forward with it.

Ken:      Do you plan on expanding your use of Contract Express into other practice groups?

Rob:      We hope to expand into corporate law and other practice groups. Whether it makes sense requires considering deal volume, deal value, and whether you need a meaningful amount of customization. We think it would also make sense to automate certain litigation documents, particularly in workers’ compensation and employment law.

We’re also exploring allowing current and potential clients to use some of our Contract Express templates. That makes sense if we can offer them a straightforward questionnaire and keep all the complexity under the hood, in the form of how the template responds to answers given when a customer completes a questionnaire. Having customers complete a questionnaire saves us time, and it saves the client time and money.

Ken:      Do you have any suggestions for law firms planning to implement document automation?

Rob:      Sure. Train some legal assistants and IT staff so they can help on projects. Contract Express is intuitive enough that non-tech-savvy staff members can program templates and questionnaires, but some projects might require IT expertise.

Ken:      Yes—most of what Contract Express does is straightforward, but it can do some amazingly intricate stuff, if you need it.

Rob:      And start by identifying the top 10 documents you want to automate—documents that will give you the most bang for the buck. Let one person handle the automation, then have several people perform quality control and provide feedback before rolling them out to the firm.

Ken:      So what has been the impact, overall.

Rob:      We’re providing better service to our clients. They don’t want us reinventing the wheel every time we take on a new project. We owe it to them to explore using technology to make us more productive and efficient. With Contract Express, we’ve achieved that.

Ken:      Thank you, Rob.

Rob:      My pleasure!