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Building and Maintaining a Precedents Collection – Part II: Crucial Elements

In my previous column, Building and Maintaining a Precedents Collection – Part 1: Getting Started, I reviewed the benefits and challenges of creating such a collection and noted several threshold issues. In this column, I will address certain elements that you will need to keep in mind as you attack this problem.

Contract maturity model. Kingsley Martin, in a three-part series of blog postings on the Thomson Reuters site (see Part 1, Part 2, and Part 3), develops the concept of a “contract maturity model,” based on Richard Susskind’s analysis in his book The End of Lawyers?.

His analysis identifies four essential elements of developing a precedent initiative, namely

  • people: setting strategic approach and ensuring accountability
  • process: workflows and tasks
  • technology: creating an assembly line of automation and workflow tools
  • content: reusable, interchangeable contract building blocks

In my experience, law firm and law department precedent initiatives tend to focus almost exclusively on the content that is being developed, without devoting adequate time to the other three elements. A successful initiative is not possible without equal attention to all four of these elements.

The usual approach to precedent drafting is to try and gather the appropriate subject matter experts around a table, start on page 1 of the particular agreement, and hope to get as far as possible. Indeed, almost no time at all is devoted to the process. Such an approach is hugely time-consuming and the end result is generally meagre, especially given the time devoted to it.

The important thing is to apply proper project management principles to ensure that you have a plan, agreed to by all participants, that effectively integrates all four of these elements into an efficient process for precedent drafting.

There are at least three other aspects to your project that you need to address appropriately to ensure success, namely your style guide, the consistency of your approach, and the tables of contents.

Style guide. It is crucial, ideally before starting your initiative, that you adopt a style guide, so that all your precedents are consistent “horizontally” as well as “vertically.” Adopting a style guide, and then rigorously applying its tenets, will ensure consistency in your agreements, which will then improve all your drafting.

The most important rule of your guide is, of course, that your agreements be drafted in what legal drafting guru Professor Ken Adams refers to as “standard English” and is usually called “plain language drafting”. You are drafting so the business people who are your clients can understand the document you’ve drafted, not to impress other lawyers. The style guide will address all other relevant drafting issues, large and small.

See this blog posting, which I wrote recently, provides further guidance as to your style guide. See also the Contract Standards Style Guide for a sample guide that you can use as the basis for your approach.

Consistent approach. One of the most important things to do when building a precedents collection is to ensure a consistent approach to the organizational structure of your documents, so that similar content is dealt with in the same places in each of your documents. This will, among other things, make it easier for your, and your clients, to navigate your document.

This may seem self-evident, but if you have ever tried to use your own blacklining software to compare your precedent against a document prepared by another lawyer, you will know that there is no consistency in how lawyers daft agreements. If, however, your agreements are all drafted in the same way, with the same elements always appearing in the same order, with consistent drafting of the clauses contained within those elements, your drafting will be both faster and more focused.

The 80/20 rule. Precedent initiatives frequently bog down in trying to create a document that will address myriad fact situations, even if many of those occur infrequently. It is important to have your documents conform to the “80/20 rule,” so that they contain the essential and the standard clauses, and that any optional clauses relate to frequently occurring scenarios.

Avoid the “kitchen sink” approach to precedent drafting, where every possible clause that might be useful is added “just in case”! Rely instead on the intelligence of those using your precedents to shape them to meet the particular needs of any given matter and pull any necessary additional clauses from their own repositories.

Table of contents as checklist. When you adopt an approach of having only one, single substantive item per section, with a clear descriptive title, your table of contents then becomes a checklist you can use when reviewing agreements drafted by others and submitted to you for your review.

I have seen many examples of very long M&A agreements, where detailed representations and warranties of both parties take up at least a third, if not more, of the substantive part of the agreement. If those sections are simply labelled “Representations and Warranties,” you will have no way of quickly checking whether a particular rep is included in the agreement, and if so, where. By having a detailed section for reps and warranties, where each clause is clearly captioned and addresses only a single substantive issue, you will be able to quickly verify that you have covered all the points you need to and to identify any issues that still need to be addressed.

I am not saying, simplistically, ensure you have a table of contents for all your agreements. I am rather seeking to convey that the table of contents can serve a very important function in your review of every agreement you draft. You should have in mind a good overview of your agreement; your table of contents serves as your guide in ensuring your agreement covers all necessary elements and does not include any unnecessary elements (which may have crept in if you have simply done a “keep and re-do” of a previous, similar document).

In my next posting, I will look at the most overlooked aspect of a precedents initiative, namely the need to maintain your collection.

Comments

  1. The 3 major requirements of any collection of legal materials for re-use are: (1) to maximize cost-efficiency, catch all finished work-product in a single database. (2) Index all new material, and do it when the final draft of each text is completed, and place the index strings in a separate database. And, (3) purge the database of superseded material. Purge as the database grows, otherwise each search will draw forth more and more duplicative and overlapping texts. As a matter of abundant caution, they will all have to be read in case one of the texts contains something useful the others don’t, which means doing a lot unnecessary reading. So, as each new text is finalized it is to be indexed and the database purged of those texts superseded by the new text created from those to be superseded. Purging can be done by simply removing the index strings for the superseded texts. Therefore the superseded texts do not have to be deleted from the main database of re-usable materials. Thus they will continue to be available.
    Each index string is to end with the name of its text, and a 6-figure number representing the date of its completion. Such text names can be client surnames: e.g.¸ “Smith 161205” [for, December 5, 2016]
    If litigation lawyers taught their clients these rules, the problem of the high cost of electronic discovery would not exist. Lawyers could search their clients’ indexes for purposes of making production of relevant records, instead of having to “read for relevance,” or use very expensive predictive coding devices.
    Apply these rules to all materials that can be re-used by all members of the law firm.
    See these articles:
    1. “Indexing,” at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2511400 ;
    2. “Solving the High Cost of the ‘Review’ Stage of Electronic Discovery,” at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2438509 ; and,
    3. “Records Management law – A Necessary Major Field of the Practice of Law,” at:
    https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2723629 .

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